Buying A Real Estate Note Is Like Buying A Boat

When you get right down to it, buying a non-performing real estate note is like buying a boat; the two happiest days are the day you buy it, and the day you sell it! Investing in a non-performing note (NPN-NPL), and cashing out for a profit, are my two happiest days as a note investor.

You have heard the old saying in real estate, the profit is made when you buy. How true that is, especially in the note world! We have found that you have to take into account all the costs you will run into from the day you buy it, until the day you sell it, and use that to make sure you are not overpaying. If not, you can lose money; sometimes a lot, sometimes all of it.

While there are some warm and fuzzy feelings experienced when you own the boat, like taking it out on the water for the first time, you are going to have a lot of ongoing costs. If you store it in the water, there are dock fees, maintenance fees, insurance, and if you financed it, monthly payments. If you store it at home or a parking facility, you will have to protect it from the elements, possibly pay rent, and you could destroy it in an accident towing it to, or putting it in the water.

With NPN’s, finally making contact with a homeowner who wants to stay, despite doing his best to be invisible is equally as thrilling. This usually leads to either attempting to work out a payment plan to get them repaying, or settling for a lump sum to pay it off is a great feeling.

Otherwise, it’s practically death by a thousand cuts.

Sometimes I feel like we are being nickeled & dimed to death by a plethora of service providers; lawyers, note servicers, document custodians, rehabbers, lawn cutters, property preservationists, appraisers, photographers, house cleaners, city agencies, code enforcement, county tax collectors, Realtors, health inspectors, zoning ordinances, Home Owners Associations, utilities, forest divisions, trash haulers, flood areas, etc., that all want to extract as money from you as possible every time they move or type something.

So the most important thing I do now is come up with as many costs as possible before we make an offer to buy a note, so we can factor that into our purchase price. One of the biggest we have found in working out over fifty notes is the expenses are usually higher, and it takes longer to exit in judicial foreclosure states. And now that we know something about rehabbing real estate, we have been equating possible home repair costs into our note buying bids now, so we know if we can still make a profit, or suffer a potential loss.

Now is the time to factor in the old carpenter’s phrase; “Measure Twice, Cut Once.” With notes, you want to make sure you run the numbers inside and out before you commit to buying a note with “Calculate Twice, Buy Right.”

Tips To Help You Achieve Success As A Real Estate Investor

If you are looking for a great way of building your net worth, investing in real estate is a great idea. You can make a lot of money if you do it the right way. However, if you don’t follow the right techniques, this venture can cost you a lot of money. Therefore, we have shared a few tips with you that can help you achieve success as a real estate investor.

Opt for a Good Location

Location is the first thing that people consider when they need to buy a residential, vocational or commercial properly. Ideally, the property you are going to buy should be near a workplace and school. Similarly, if it’s close to the marketplace, people can go there without burning a lot of gas or killing a lot of time. Therefore, it’s much better to choose a better location.

Upgrade or Renovate Your Property

It’s better that you upgrade your property features to make it more appealing. For instance, you may add home automation, such as automated lighting. The same is true about commercial real estate as well.

If you offer wheelchair lifts, for instance, it can make your property more useful for people with disabilities. This will attract many more buyers. Actually, it all depends upon how convenient your property is. If your property offers features that can help people make their lives easier, more people will show their interest in what you offer.

Improve Property Conditions

More buyers will contact you if your house or apartment is well maintained. However, make sure you don’t go beyond the limits. In other words, you may not want to spend an arm and a leg just to make your property more beautiful. It won’t increase the value of your property exponentially. Although it may be worth it in certain situations, spending too much is not a good idea.

Let’s take a look at a few tips that can help you make your property well-maintained.

Kitchen: if you do it right, your kitchen can increase the value of your property by up to 80%. Therefore, if you renovate your kitchen by spending $15,000, you can sell your house at 80% higher price.

Plumbing: we all need clean running water. Keep in mind that rusty pipes pose a health hazard in addition to reducing the beauty of your house.

Landscaping: If you maintain your landscape properly, it can add ambience to your house or apartment. In addition, landscaping helps reduce your energy bills.

Do Your Research

Make sure you consider the type of people that you think will be suitable if you want to sell or rent your house. If you want to get the highest return on your investment, make sure you contact the right people. Otherwise, you won’t be able to earn a lot of profit or find good buyers. Opting for the right clients can help you find a great deal.

Doing A Personal Financial Assessment

In order to reach the top of the real estate investing mountain, you’re going to want, and need to utilize all the tools available to you in your financial tool belt. While you can theoretically build a house with just a few tools, the quality of the house can suffer if you don’t have certain specialized tools at your disposal. The same holds true when you’re trying to finance your real estate transactions.

First, a key truth in real estate: You don’t need to have a sterling credit record or access to a ton of cash in order to make a fortune as a real estate investor. But you’ll reach the real estate investing Promised Land much more quickly if you do.

Because your ultimate goal is to create a thick real estate portfolio, and a large residual monthly income that comes in regardless of whether you decide to pull yourself out of bed every morning or you choose to sleep in, you will want to ensure that your finances are in a maximum state of health. That requires you to give your finances an intensive check-up, much like your personal physician would do to ensure that you’re the picture of good health.

Step One: Get in the Right Frame of Mind

The most critical step of analyzing your financial situation lies in realizing that the way you approach money and financial decisions plays a massive role in your ultimate success or failure. If you have a proven track record of shooting yourself in the foot with bad financial decisions, it’s imperative that you do a radical about-face and change your spending habits.

If you waste a ton of money on music downloads, splurge daily on over-priced gourmet coffee, or you are on a first-name basis with the greeter at Walmart, I have a newsflash for you: Your budget has more pork in it than a Congressional spending bill. By cutting much of the waste out of your personal economy, you can generate cash out of thin air that you can use for much better purposes than instant gratification. Instead, you can change your life for the better. But the choice is yours alone to make.

Step Two: Relentlessly Cut Expenses

When you’re done paying bills at the end of the month, do you usually have cash left over, or do you tend to spend everything within a day or two of payday – and then limp through until your next paycheck comes in? Most people spend the lion’s share of their paycheck on bills, food, and other necessities. If they’re lucky, they are able to set a few dollars aside for a rainy day. The difference between those who have control of their finances and those whose financial life is in disarray, is that having control involves taking control, and keeping control. While many people have trouble increasing their income, it is possible to reduce spending. In order to do that, you need to get a handle on your expenses and identify areas of your budget that can be trimmed back. While this isn’t the sexiest topic of conversation, it’s absolutely vital to your ultimate success as a real estate investor. Budgeting for monthly expenditures and spending only what is on your list is one of the most difficult aspects of taking control of your financial life. By eliminating unnecessary expenditures, you’ll reach your goals more quickly. Here are a few ideas to get you started:

Gut the Cable Pig: That’s right; cancel your cable. You’re constantly complaining that there’s nothing good on anyway, right? Instead, talk to your spouse, take a walk, listen to a podcast or read a good investing book.

Cut Your Cell Phone Plan Down to Size: Most people load up on costly and wasteful cell phone package deals. Unlimited texting, mobile web, and massive calling plans are great, but most people don’t use all of their phone’s features. Do you need mobile browsing, or is it just a toy you use to watch YouTube videos when you should be doing something else? Do you need unlimited texting, or can you give your thumbs a rest if it will save you $20 per month?

Go Through Your Credit Card Statement: See if you have any recurring charges each month. Are they items that you need? You may even have some small charges each month that you forgot about signing up for. Eliminate the one’s not needed and keep up on them to make sure you aren’t throwing money out the window.

Stay Out of the Drive-through – Your waistline and your wallet will thank you. These often-daily trips to McDonald’sand other fast food joints are killing your health and your budget, sometimes to the tune of $5-$10 per trip. This goes for coffee as well. Caribou and Starbucks are tempting, but do you really need to stop for a $5 cup of coffee each day, or would you save money by making some at home?

Step Three: Pay off Excessive Debt

Another area that’s probably holding you back is excessive debt. High credit card balances, store charge card balances, and computer payments are a fact of life for millions of us. However, if they’re holding you back financially, they need to go the way of the 8-track tape and join the growing list of things that once had a useful purpose and no longer do. Make extra payments, have a yard sale, or do whatever else it takes to eliminate excessive debt. If you can’t find the cash to pay off some of these accounts, consolidate them, or at least make larger payments. If what’s in your wallet, credit cards, are consuming too much of your cash, it’s time to take control and protect your financial interests. Nobody else will.

Step Four: Check Your Credit Report and Score

What’s your credit history like? Do you have a long track record of consistently paying your bills on time or do you tend to pay a lot of your bills late, if at all? If you are like most people, your on-time bill paying record is somewhere in the middle. The first step in making that determination is to examine your credit report and to find out what your credit score is. Once you know those details, you can get to work improving your credit and positioning your finances to take advantage of real estate opportunities when they present themselves to you. The good news is that you won’t have to spend a small fortune obtaining your credit report. The Federal government, for once, finally had a pro-consumer idea that makes sense. The three major credit reporting agencies, Experian, TransUnion, and Equifax have teamed up with a single website www.annualcreditreport.com that allows you to get your credit report once per year for free. Whether you get all three at the same time, or you stagger them so that you examine a different one every four months, is your choice. The important thing is that you get these reports and see what information is on them. They will have the majority of your credit transactions on them, as well as any charge-offs, late payments, etc., along with your current balances. If you find that your report contains errors, omissions, or fraudulent accounts (accounts listed in your name that were opened by somebody other than you), there is a mechanism in place to correct these entries. Because your ability to borrow money, and the interest rate you’ll pay, hinges upon the accuracy of these reports, it’s in your best interest to ensure that the story your credit report is the truth. While you may not get free credit scores with your free credit reports, it’s still important that you have an accurate understanding of your current credit score as part of a comprehensive examination of your finances. You’re much more than a number, but to a potential lender, numbers are all that matter. If your FICO score is too low, your chances of getting a loan approval are reduced. This knowledge will allow you to act decisively in improving your credit score, and the rate and terms you can demand in all your financial transactions.

Step Five: Increasing your Income

You have two choices in increasing your income: work harder at your job or find an entrepreneurial opportunity that can put you on the path of financial success. Real estate investing is a proven method of creating wealth, residual monthly income, and life-changing opportunity.

Pine Financial Group aims to continue giving you tools you can put to work in your life today to increase your income and build real, sustainable wealth. What you do with this knowledge is up to you.