Article Category Archives: Realestate

The Middle of the Road – the Real Path to Real Estate Riches

When pondering the purchase of a real estate income property, novice real estate investors always aim to purchase the “best property” in the “best location with the “best tenants” for the “best price. They prioritize the ‘pride of ownership’ over the ‘profit of ownership’.

What they are really saying is this:

  • They want to own a property they would be willing to live in or better
  • By ‘best location,’ they mean they want to buy something comparable to their own neighborhood, or better
  • Finally, by ‘best tenants,’ they mean someone like themselves, or better.

The truth is that just as many fortunes have been made by investing in lower income areas as it has by investing in higher-end areas.

The best property in the best locations only rarely make the best real estate investment.

High-end properties demand high-end prices and as such the economics of operation are usually far less attractive.‬

As a new investor, buying a small building in an upscale area is probably out of reach for you and your bank account. Odds are you stretched your budget a bit (or a lot) when you bought your own home in the neighborhood in which you live.  Trying to obtain a second property in the same neighborhood will probably just sour you on this kind of investing before you even get out of the gate.

But there is good news to be had; that lesser buildings located in your second or third choice for location will yield you a higher percentage return in almost every case. Those are the buildings to go after.

Here are the most important things to note about that middle of the road property in the middle of the road neighborhood:

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Although it may seem self-evident, it is important to remember that most procedures involved with the purchase of U.S real estate will be different than in the purchaser’s home country and it is best to be prepared beforehand.

For example, one thing which is not often considered until well into the process is that U.S. immigration regulations may place restrictions upon a buyer’s freedom to come and go and spend time in the U.S. using, enjoying and/or managing his or her property. The United States Immigration System is complex. Here are some pointers to help you along the way.

1) Purchasing and Enjoying Real Estate Can Be Two Different Things

While foreign nationals can freely purchase real estate in the U.S., they should be aware of restrictions and provisions in the United States immigration laws which may limit their ability to use, manage and enjoy the property. These restrictions and provisions are usually defined by the type of Visa held by the purchaser.

2) Visa Waiver and NAFTA-providing simpler options for regular visits?

Qualified visitors may be able to make frequent visits to the U.S. without a visa under the Visa Waiver program or under certain provisions of the North American Free Trade Agreement (“NAFTA”) for citizens of Canada and Mexico. But, when traveling under the Visa Waiver Program, foreign nationals can enter the U.S. for no more than 90 days at a time, and may not seek employment in the United States. There are currently 37 countries participating in the visa waiver program. The list of participating countries changes regularly.

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Great Guy
I live here

The Hazards of Avoiding Due Diligence

Avoid getting a bad surprise by performing due diligence on all would-be investment properties. Many U.S. properties are loaded with baggage far heavier than when only market value and financing ruled your decision-making.

See The Big Picture and Then Zoom In

Let’s work from the outside in. Start with the property’s location and then move to the building and land. I will focus primarily on property acquisition.

You know all about location, location, location. The location dictates your strategy because of the nature of the local economy. For example, a strong economy creates a real estate sellers’ market and yells out, “Buy, rehab and flip!” in an upscale neighborhood. But, properties in these neighborhoods generally do not positive cash flow. Slow or moderate economic growth and a flat real estate market might be perfect for buy and hold.

Get very local too. Does the neighborhood have transit, shopping, schools and major employers nearby? Attract high-quality tenants willing to pay slightly higher than market rent because of nearby amenities. Or, rehab an ugly house near amenities making it a desirable buy.

A very local issue is zoning. Is a single-family house sitting on a lot (and perhaps even adjacent to one) zoned to allow a multifamily building? Or, could it be easily rezoned and turned into a duplex? Could you add a garage and enhance its income? Use, or change, the zoning rules to your advantage.

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1. It’s simple but its not easy.

2. It’s 80% mental 20% mechanical.

3. If you don’t have what you need in your current circle of friends/influence/comfort zone/etc… then get out there and get it.

4. If in doubt GO DO IT!

You can’t wait for everything to be perfect, expect to know every single outcome, and if you can’t afford to get a mentor then start with a strategy that doesn’t require you to have money.

Then I hear, “It’s too hard, I don’t know anyone, I don’t know how to use the computer/Facebook/ LinkedIN/etc..”

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You can be setting yourself up for failure if you don’t load your “HML weapon” correctly (i.e. making sure you can get your HML arsenal built). These questions are the foundation to creating the best hard money lender guide for your business.

Part of becoming a good investor is using Hard Money as a weapon to fund your profitable deals, but even more important is finding the right Hard Money Lenders to fund your deals by asking the right questions.

To make sure you have a good HML match for your business ask the following questions:

  • What are your typical upfront costs? (Avg. is 5% to 6% of the amount requested)
  • Does the cost get rolled into your loan or do you need to pay it at closing?
  • What is their interest rate? (Typically 12% to 16% annual interest)
  • How long are your loan terms? (Typically 4 to 6 months)
  • Do you need to make monthly interest only payments?

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Investing in real estate also requires skill. There are five skills that must be learned, practiced and mastered in order to become a successful investor in real estate. I call these the “5 M’s of Real Estate Investing”.

They are:

  • Mining
  • Money
  • Maintenance
  • Marketing
  • Managing


The “Mining” skill is being able to find really good deals. Anyone can find a property to purchase. There are thousands of them on the MLS, in newspapers, at auctions and offered “For Sale By Owner”. But to become a successful investor requires the skill of being able to uncover that “golden nugget” or in other words–a really good deal.

A really good deal is a deal that will almost guarantee a good return on the investment of time and money. This kind of deal is not hard to find after the Mining Skill has been developed. There are many books and CD’s on the market that clearly detail the strategies for locating and purchasing good investment properties.

Some of the strategies are:

  • Using Realtors
  • Looking at ads in newspapers and on the internet
  • Placing ads in newspapers and on the internet
  • Bidding on Real Estate Auctions
  • Working foreclosure lists
  • Buying Short Sales
  • Purchasing REOs (Real Estate Owned By Banks)
  • Making offers on homes For Sale By Owner (FSBO)
  • Following up with the owners of empty homes
  • Working with builders
  • Buying from wholesalers

All of these strategies work–and by focusing on one or two of them, an investor will be able to develop the Mining skill needed for success.

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Professional investors and seasoned veterans know the value of having a knowledgeable agent on their team. Novice and some intermediate investors, however, sometimes think that using a real estate agent to find investment properties takes money out of their pocket. This couldn’t be further from the truth. Agents and brokers actually maximize the profitability for a real estate transaction. Here are five reasons why real estate investors should use a licensed real estate professional when buying investment property.


1. Real estate pros have access to the best and most accurate data.

If you think you can get the most up-to-date data on your own, you might be sadly mistaken. Real estate agents have access to the Multiple Listing Service, or MLS, as it is commonly referred to. The MLS has the most comprehensive data of recent home sales and values that can be found, period. The only way to get access to this is through an agent. I became a real estate agent because I wanted to specifically represent investors. Then I became an investor. There is no question that having access to the MLS was the most critical component to my success and the success of my investor clients.


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True, many markets are way down. Most of the markets that are way down are the ones that went way up very quickly, such as Phoenix, Las Vegas and parts of Florida.

Many markets are stable and some are even increasing. Most investors would agree that we are not at the top of the real estate market; we are probably near the bottom.

However smart investors do not do markets, they do deals that make them money. There are many deals that are 20-60% below today’s soft market. Many properties will cash flow like crazy, so there are many great deals and many opportunities for investing in today’s market. Inflation and interest rates are close to 0. This probably will not last.

2. No one is buying real estate in today’s market.

Though, residential sales in the US are down from a high of almost 5 Million units to around 4 Million, there are still plenty of buyers, sellers and deals.

Also, many people think there is one real estate market in the United States. In every city there are many different markets: Low income, high income, middle income, luxury properties, rentals, fixer uppers, ect…

Each of these generally operate independently and are distinct. Certain markets within markets are doing well. Though credit has tightened, many markets are doing very well in the first time homebuyer category and investors are paying cash for great deals for cash flow and fixer uppers.

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The confusion seems to arise because of the following:

1) Each state establishes their own regulations and exemptions. Therefore there are different guidelines depending on where you live.

2)  If you cross state lines with your private lending, i.e. houses in one state and lenders in another, the Federal SEC regulations come into play.

3)  There are a lot of half-truths floating around and when people hear these, they get confused and possibly fearful. To be better equipped to answer everyone’s questions, I decided to hire and attorney to do some research. What I found was that each state is able to establish their own regulations, but they all have the same pattern.

So I’ll use my state of Ohio as a model to explain what is typical for nearly all states.

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Sustainable Cash Flow and Capital Growth, the most ignored aspect of real estate investing is the most important aspect. Actually there are two, location and sustainability. These two go hand in hand, and as an investor you want to make sure you invest in a location that can SUSTAIN the cash flow and or growth.

Sustainable Cash Flow and Capital Growth, the most ignored aspect of real estate investing is the most important aspect.

With the perfect storm that makes up U.S. Real Estate investing today, it is very possible to go to any city within the U.S. and purchase a cash flowing property, or to purchase a property with anticipated capital growth. BUT; IS IT SUSTAINABLE? If your new investment purchase cannot continue to hold a strong cash flow or growth for an extended period of time, it becomes useless to you. It may even become a financial burden to you.

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