Learn Everything You Need To Know On Real Estate Investing

Aaron Keller's Blog

If you are looking for a way to invest your money, a stable option is real estate. When you realize that location is essential when choosing properties, you can find ones that are profitable undertakings. The following tips will help ensure success with real estate investments.

You need to decide the type of real estate you want to invest in prior to beginning your adventure. You may find that real estate flipping is just your style. Perhaps, you find out you like those renovation projects instead where you have to develop certain ideas from scratch. You will need to learn the basic skills regardless of what you choose.

Get a feel of the values of properties near yours. Finding out who the neighbors are and whether they rent or own can provide an idea of the neighborhood. If you view the property from a basic level, you can better make…

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Every Real Estate Investor Should Master

When you learn about something, when you are interested in new subjects, you also learn a whole new vocabulary you start using. Well, with real estate investing happens exactly the same. If you are a Real estate beginner or an experienced investor, you must understand and master all the terms and words of the investment vocabulary, especially acronyms, so here is a small list of every acronym a real estate investor should know:

1. PITI

Initials for: Principal (P), Interest (I), property Taxes (T) and Insurance (I). Essentially this means, the “bottom line” or the minimum amount needed when you estimate the acquisition of investment property with a loan. Frequently this is estimated monthly.

This amount is what you would might spend in the investment property over the life of the loan. Every and each month is the frequency of the PITI you have to pay in order to be in good standing. Thanks to this you will know how much rent you should pay.

2. GOI

GOI or Gross Operating Income, is related to the annual income that is collected from the property, including: laundry, parking, storage, etc. and consider any vacancies.

3. LTV

Initials for: Loan-to-Value, this is vital if you’re removing a loan on your investment property, it is estimated by dividing the loan by the property’s value; then, that number is expressed as a percentage. For example, to make it easy: if a loan is $200,000 and price of the property is $250,000, then the LTV is 80%.

You will have more equity in your property and negotiate more if the LTV is lower.

4. DCR

Initials for: Debt Coverage Ratio. This is referred to a commonly used term by lenders when they have to deal with underwriting loans for income-generating properties. How it is calculated? You need to divide the NOI (see below) by the total debt. If the ratios is 1.20 or higher, this is considered the average.

5. NOI

Initials for: Net Operating Income, this is the income left over from your rentals after paying all your monthly operating expenses. So, deduct your expenses from your GOI (Gross Operating Income) to get you the property’s NOI. For example, if you take in $20,000 in leases on all the units you have and spent $6,000 on maintenance including supplies, accounting, taxes, insurance, utilities and more, the NOI for the month was $2,000.

If you felt this information was useful and want to learn more about real estate. You can go to our Official Website and see all the incredible ways we have to offer to invest in real estate.

Real estate and how to avoid being scammed

 Last week, the California Bureau of Real Estate made an advisory to help consumers, especially senior citizens in order to avoid fraud on real estate for home loans, rentals, timeshares and property recordings.

Many people know how to trash unsolicited mail with official-looking seals that offer refinancing a home loan, take out a loan and find a place to rent or avoid foreclosure. But many people don’t know that exists a Department of Consumer Affairs where a consumer can recover accounts and present their cases on the California Bureau of Real Estate.

If you are an intentional fraud victim because of a California real estate licensee you can recover actual and direct losses up to $50,000 per business deal, with a total payout of $250,000 per licensee.

Want a tip? You can call the California Bureau of Real Estate at 1-877-373-4542 if you suspect you are a victim of real estate fraud.

In order to prevent those phone calls, we give you 10 fraud avoidance tips:

1) Be alert and don’t feel bad if you are suspicious of unwanted offers, suggestions and calls. Be careful with license numbers on mailings and websites.

2) Be in contact with the state business bureaus. Be smart and look for references. Do a research with the help of Google, Yelp or other websites to have important information about the company, and the most important: to see if they have a relation with other consumer scams or frauds.

3) Do not agree to pay money for a service, and always protect your personal info– specifically your SS number.

4) Avoid paying in advance for home loan or any foreclosure relief services.

5) If you can’t afford a property, never sign the agreement for that transaction.

6) Be totally suspicious if a real estate or home loan agreement is not clear, it is difficult to understand or encloses blank spaces. If an agreement has blank spaces it is easy to be manipulated for a scam artist.

7) Don’t sign your property over to somebody who claims such a transfer can and that he or she will help you with the reparation of your credit.

8) At no time sign a “power of attorney” to give any person or company the rights to your property if you don’t know them or trust.

9) Keep a track and always check the title to your real estate properties, if you detect something suspicious or fraud act immediately. Many signs can be related to: stop getting your property taxes, some real estate documents in the mail for operations you did not make or a notice of default of your home.

10) If you are the owner of an insurance policy on your property, contact the title company and check with them if you are protected against forged deeds or fictitious documents recorded after you bought the property.

Hope this tips help you, don’t hesitate to call if you see something suspicious. Check FCI if you are interested in real estate.

What is a mortgage pool?

Many times, when we are trying to learn more about the real estate world, we see many different words and expressions we are familiar to it, but do we really know what they mean? Really sure? Today, we are going to talk about mortgage pools. A mortgage pool is a group of mortgages in a mortgage-backed security (MBS) and held in trust as collateral for the issuance of this MBS.

Some people also know them as “pass-throughs” and trade in the to-be-announced (TBA) forward market. Click here, if you want more information about them.

How does it work? Here is an example:

Once a lender finishes a mortgage transaction, it usually sells the mortgage to another unit or entity. The entities or units that buy mortgages let’s say, Company A and Company B set hundreds of mortgages together into a mortgage pool. Then is when the mortgage pool acts as collateral for a mortgage-backed security.

Why is it important?

Pass-throughs or mortgage pools are involved with mortgages with close to the same maturity and interest rate. A MBS is collateralized by a mortgage pool. Mortgages pool usually have similar characteristics.

People have to be careful to not confuse MBSs with CDOs (collateralized debt obligations) because the last one is collateralized by a pool of loans with varying characteristics and they might have different terms (10-year, 15-year, 30-year) and adjustable rates.

 

How to obtain your first investment property

When talking about real estate we notice it is a very complicated subject. The problem is that it is very capital concentrated, especially for those who don’t have assets. The truth is that buying a good rental property is hard, but it is also possible.

Steps to acquire an investment property

Step 1: Learn and study everything about real estate

This is the toughest part but if you want to be successful you need to learn how real estate actually works. Read books, even if you only understand half of it, keep working through it and eventually you will understood most of it. If you don’t know a term google it but try a way to learn everything you can.

You will see that the beautiful thing about real estate is that there are different ways to make money (investing, brokering, research, tech, appraisals, renovations, etc.). That is real estate is a huge driver for the US and global economy.

Step 2: Commit yourself to own real estate

This is vital in the process. Not everybody comes from a wealthy family but that doesn´t mean you can own something, to be able to buy properties you have to be committed.

Embrace the fight, use it as motivation. If you are really committed, you will get it done.

Step 3: Develop a strategy

An attainable strategy for most people is to buy a single-family house with an investor and rent it out for income and price appreciation. This is just to start. Focus just on achievable goals.  Your strategy is to have goods that will cash flow. By the end of the year, the outlay must be less than what the property brings.

First, find a property: Go to Fci Exhange or other listing site and look what is on the market. Once you find a deal, make an offer.

Step 4: Find an investor

How? Well, talk about your goal to buy real estate. It can be seen as arrogant or even taboo, but this really works. You need to sound and look smart when talking about real estate and have a plan, people need to see that it works.

Final step: stay persistent

This step-by-step process is simple. You need to be patient in this business, you will have difficulties, bad tenants, renovation but don’t freak out and never quit.

The strategy to building this kind of longterm wealth is having interest work for you, not against you and buying rental property is the most achievable way to do this.

 

Loan or Mortgage?

When talking about mortgages, we talk about different loans that are secured with real estate or personal property.

A loan involves an association between a lender and borrower. The lender is the creditor and the borrower is the debtor. The money borrowed during this transaction is what we call a loan: the creditor has “loaned out” money and the borrower has “taken out” a loan. The initial amount of money is called the principal. When the borrower pays back the principal, an interest have to be paid also.  Loan repayments are frequently paid in monthly installments and the duration of the loan is pre-determined. By tradition, banks and the financial system take in deposits and use them to issue loans in order to facilitate the correct use of money in the economy. Loans are also used by organizations and even governments.

Since there are different loans in the market, most well-known type is a mortgage. Mortgages are secured loans that are tied to real estate property, such as land or a house. The property is possessed by the borrower in exchange for money that is paid in installments over time. This allows borrowers to use property earlier than if they were required to pay the value of the property upfront, at the end the debtor sooner or later comes to independently own the property once the mortgage is paid in full.

Loan and Mortgage Differences

If we referred about the loan, in the relationship between lender and borrower the lender is also the creditor and the borrower is the debtor. The money used in this process is known as a loan. When we referred to mortgages, these are secured loans tied to real estate property, it can be a land or a house. The property owned by the borrower is exchanged for money that is paid in installments over time.

About the types:

Loans can be: open-end and closed-end, unsecured and secured, student loans, mortgage and payday loans. Mortgages can be: fixed-rate, FHA mortgage loans, adjustable rate, VA loan, interest-only and reverse mortgages.

Financial and Legal Definitions

Financially, loans are structured in the middle of individuals, groups, and/or firms when one person or entity provides money to another with hope of having it repaid, usually with interest, within a certain amount of time.

How a loan is treated officially differs according to the type of loan, such as a mortgage, and the terms found in a loan agreement. Most of federal laws are set out to defend both creditors and debtors from financial harm.

People frequently borrow and lend a minor amount of money with no contract but it is prudent to always have a written loan agreement, as financial disagreements can be settled more easily and fairly with a written contract than with an oral contract.

 

 

What you need to consider before purchasing non-performing notes?

Some years ago, banks would have been more persuaded to foreclose on a non-performing commercial real estate property. Nowadays there are more and more banks decided to sell their billions of dollars’ worth notes.

Why is this happening? Because banks are in the business of lending money, they don’t make money owning and operating real estate, besides, when the bank sells the note, it stays out of the chain of title and doesn’t have any concerns about the time—and expense—of other property management and ownership issues; and if you add to this the cost and energy of marketing the property to possible buyers following the foreclosure and the many existing properties already being carried on their books, there is a clear vision on why banks were looking for an alternative to foreclosures. Note selling has become a new alternative.

For people who become a buyer, the benefit of purchasing a non-performing note is simple and clear: they have the chance to acquire the loan and underlying property at a great discount from its initial price. After purchasing the note, the buyer has two options: to negotiate a new loan with the borrower, or foreclose on the property itself. It is more common that the buyer owns the site and forecloses.

Fci non-performing notes

 

There are many cases of buyer success in this depressed market. However, buyers must be aware of the business, if there are people wanting to buy non-performing notes in multifamily; they need to think about this:

1. Make sure you learn about all the foreclosure laws in the state in which the underlying asset is located. In some states, there are non-judicial foreclosures and the process can be a long one. But in other states, the process can drag on for quite some time.
2. Learn about the percentage of the multifamily asset that is leased and, of such leases, how many tenants are paying their rent consistently.
3. Find an effective way to get the original note and all related amendments and assignments.
4. Obtain as much information as possible from the lender about the asset before investing money on due-diligence investigations. The lenders have many files about each asset so you will probably have to push them to release the materials to you.
5. The situation of multifamily improvements is most of the times more critical than other property types since the turnover of leases is so frequent.

If you need more information, go to www.fciexchange.com to learn more about purchasing non-performing notes. Like us on facebook at Fci Exchange or follow us on twitter at @fciexchange.

Marketing Predictions made for this year to take advantage in real estate

When the year started, some people dared to predict some trends and technologies that were going to impact marketers this year. There are only 3 months left to this 2014 to end, do you think some of these strategies were followed? Do you think real estate investors can take advantages of this facts to improve their investments? Let’s check them out.

1. The consumer becomes the new content marketer: More brands were supposed to add more photos, video and other content from consumers and repurpose them for marketing campaigns. If you are in the real estate business you need to update all your listings constantly, upload videos and photos, you have to see the way to convince people to make business with you.  The Fact: Every time a consumer posts something on the web it is seen by 150 people. So, realtor, what are you waiting to start posting?
2. Brands weave a social layer across traditional advertising: Marketing teams amplifies the reach of TV and print campaigns by incentivizing viewers to post hashtagged content and running related social ads. Start with the #realestate #investments hashtags now!! The Fact: 44% of TV viewers use a second screen ½ the time they watch TV. Realtor: Attention to this!! 88% of marketers believe that integrated multi-screen   campaigns will become very important in the next three years.
3. Marketers connect the dots between email and social: Email and social are two powerful channels with a symbiotic relationship. In 2014, brands will use them in combination to build, target and convert audiences. The Fact: 70% of email marketers find product or prize giveaways to be an effective tactic for audience acquisition. Only 39% of email marketers use Facebook contest requiring fans to submit their own content but 60% rate it effective, so, what you need to start doing is using Facebook of course, but in a effcient way.
4. Brands run more frequent social campaigns: Social gives brands the freedom to launch content and campaigns on the fly. To stay competitive, you need to run frequent campaigns that engage multiple audience segments in different social media platforms to reach more clients.

Hope this post helps those people investing in the real estate business, if you need more info about this, just go to http://www.fciexchange.com for more information

How are you preparing for real estate’s new market reality?

You need to start to learn and understand! There are no more days when you could simply hand your clients information, now you need to explain them what are you sharing to them. It is said that there is a large gap between information and actionable knowledge.

Heart of a Teacher: This means that you shouldn’t be trying to convince someone to do something; you can help your clients trying to discover what their options are and let them make decisions that are best for them and their families.

Dave Ramsey says: “When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman”

Strong Visuals: People process visual information 60,000 times faster than text. With attention spams dropping, this can mean the difference between someone seeing and understanding your message versus missing it completely.

Go mobile or go home: Having visuals on your smartphone or tablet is just a way to earn the trust of your clients by confidently answering their questions wherever you are.

Keeping current is vital: In a day when market information and analysis are so important, staying on top of the changes and the impact they will have is perhaps most important.

For more information on real estate, go to www.fciexchange.com or follow us on twitter at @fciexchange

Are you considering real estate investment?

Some people may think that real estate investing involves risks but it also means investment success. Sometimes, what is most important in real estate, before the location, is the person who you are dealing with. In real estate most people will offer you “no-money” down methods of how to become a millionaire in a short time, but you and me know that not everyone is being honest.

Fci Exchange

If you are considering to invest in real estate property, you are going to need:

• Investment capital (of course)
• Knowledge of the real estate market and the neighborhood where the property is.
• Great administration and negotiating skills
• The ability to do repair work (it is easier than you think)

If you are not able to look for foreclosure houses, you will have to serve as a landlord for the property while it increases in value. When you rent your property you have to be very careful because the property must be well-maintained.

When talking about real estate investing, we are talking about having some money to make money, and for that you need available capital. This is why a lot of people go into real estate after coming into a sizable amount of money.

Another important thing to do is to research your location. You can start attending local town board meetings, do some research in libraries and go on the Internet to look for some data about the location today and the upcoming years.

Then you need to know about the REITs — Real Estate Investment Trusts. This is a way of investing in real estate for a lot less money and you don’t have to worry about fixing a tenant’s leaking bathroom pipes in the middle of the night.

REITS invest in many companies involved in real estate, ranging from industrial parks to shopping centers to construction companies. They work the same way as mutual funds, except they set up a diversified portfolio that deals only in real estate.

REITS have high and low periods, like: stocks, bonds and mutual funds, they can be strong investments over time and pay dividends. They are fairly liquid and are a much safer way of investing in real estate than buying property.