Repairs

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One of the nation’s top homebuilders plans to buy its own homes and rent them out.

Beazer Homes introduced its “Pre-Owned Homes Division” today, which will acquire, improve, and rent out recently built and previously owned homes in markets where the company operates.

“Homes targeted for inclusion in the Pre-Owned Homes program will have been built since 2004 by a reputable builder, including homes built by Beazer Homes,” the company said in a release.

“All Beazer Pre-Owned Homes will receive necessary repairs and upgrades to bring them up to strict Company standards.”

Beazer expects to acquire homes at a discount as most will be distressed sales, including foreclosures and short sales.

And Phoenix seems to be the test market, with more than 100 homes expected to be purchased in fiscal year 2011.

Beazer said it chose the desert metro because the rental market for recently-built homes is strong, with an estimated vacancy rate below five percent.

If things work out, Beazer may expand the program to include homes in Nevada or California.

The company said it will target consumers who have elected not to become homeowners, along with those unable to fully qualify for mortgage financing.

The move should help Beazer on a number of fronts, as they’ll be able to remove eyesores in the very neighborhoods they created, which should boost home prices and investor/homeowner confidence, while reducing foreclosures and upping home sales.

Those who rent the properties will eventually be given the option to buy as well.

Source: thetruthaboutmortgage.com

Apache is functioning normally

When you move into your new apartment, it’s easy to get caught up in the excitement of decorating, unpacking and getting used to your new environment. However, planning for the future — even for potential problems — is essential. Apartment insurance may seem like an unnecessary additional monthly expense, particularly if you’ve never experienced problems such as break-ins, fire or water damage. It’s enough to make you question if you really even need renter’s insurance.

The answer? Yes, you do.

Why Do I Need Renter’s Insurance?

Though most apartment communities and owners will have their own insurance, it generally only applies to the actual structure and dwelling. That means if there’s a fire or damage, their policy will not cover your personal belongings, leaving you forking out the money for replacements or repairs. Some communities even make having renter’s insurance policy in place a requirement on your lease.

What Exactly Am I Supposed to Purchase?

When it comes to getting yourself set up with basic renter’s insurance, you’ll need to look at two types of coverage:

  • Renter’s Insurance Policy. This protects your belongings in case of fire, theft or damage. There are some things that renter’s insurance may not cover, such as in the case of earthquakes or floods. Discuss any concerns you have with your agent while setting up your policy.
  • Liability Coverage. This protects you against any possible damage caused by negligence on your part. For example, if you accidentally leave your bath running and it overflows, causing damage to your downstairs neighbor’s apartment, you could be held responsible for everything from repair to medical bills. This policy will also help if you are taken to court in relation to that, covering your defense costs.

What Does This Likely Cover?

Though you will have to pay a deductible, which you agree to at the start of your policy, most renter’s insurance policies are likely to cover the following:

The personal property in your house.
This can include everything from your clothes to your computer. Keep in mind, your policy may have limitations on payouts for certain items, such as electronics or jewelry. If you have specific items that you’re concerned about, such as an expensive bike or high-end stereo equipment, you may want to look into getting additional coverage.

“Loss of Use.”
Something happened at your apartment that’s made your space unlivable, such as a fire or severe water damage? That’s deemed as “loss of use” in the insurance trade. This covers you for staying elsewhere such as at a hotel and for living expenses such as food while your apartment is repaired to a liveable standard.

Liability for accidents.
Like the overflowing bathtub that ruins your downstairs neighbor’s ceiling discussed above, liability coverage ensures that you’re protected from any negligence on your part that causes bodily harm or damage. Someone comes into your house, trips on a rug and breaks their leg? Your cat bites the woman next door? All of these can be covered by your liability insurance.

While it may seem annoying to have to shell out for yet another expense on a monthly basis, apartment insurance is certainly more affordable than trying to replace everything yourself if the worst happens.

Apache is functioning normally

Last Updated on March 29, 2023 by Mark Ferguson

2013 has been an incredible year thanks to aggressive real estate goals and I believe 2014 will be even better! My real estate investing continues to pick up momentum thanks to some major changes in 2014. I changed my attitude, hired a personal coach, bought a new personal residence, took over my parents’ business, bought three long-term rentals, purchased three fix and flips since September and sold four fix and flips since September. I also hired a good friend to help manage my business and help our real estate team continue to grow and expand.

My goal articles for other years

What were my 2013 goals?

I started making big goals in 2013 for the first time in my life. I have no doubt they helped me achieve more than if I did not have goals, or had small goals. I won’t go into all of my goals as they constantly change throughout the year, but I will mention a few. I wanted to sell 200 houses as a real estate agent, I wanted to buy 4 long-term rentals, I made a huge income goal for myself and I wanted to improve fix and flips (not a good goal). I’ll go over how I did on these goals and how I did on other items that were not goals. I did not reach all my goals, but that is okay!

My plan to purchase 100 properties progress

Many of you have read my plan to purchase 100 properties and I am making progress! I was hoping to buy four long-term rentals in 2013, but it doesn’t look like I will get to there. I did buy three long-terms rentals and I think that is an accomplishment even if I didn’t hit my goal. I have plenty of time to buy an extra house in the next 9 years to catch up to my goal (I give details on my rental properties in the rental property section of the blog).

Right now I have 8 long-term rental properties and I am bringing in over $4,000 a month in cash flow each month. For those of you wondering about rental property number 1 being paid off in 2013; it’s not going to happen. Due to the storm and some renter issues I wasn’t able to accumulate enough cash flow to pay off the house. The biggest issue was the massive hail storm that damaged four rental properties. I had to get new roofs on four properties and replace the siding on one home. Insurance covered most of the costs except for deductibles, but the way insurance works I still have not been paid in full. I was paid the insurance money for the cost of repairs minus the deductibles and recoverable depreciation. I don’t get paid the recoverable depreciation until I send in the invoices for the completed work. I have sent those in, but I am still waiting for the insurance company to send the recoverable depreciation which is around $4,000. Right now I owe about $7,000 on the mortgage on rental property number 1. Three renters are behind in rent right now! One had a heart attack, one lost his job and the other said the government shutdown delayed their retirement checks. We are on payment plans with all of them and hopefully they can get caught back up.

2013 was a huge year for me as far as personal improvement

I was never much for self-help books and working on myself before 2013. I figured working hard on my job was what made people successful. What I didn’t realize was it is just as important to work on yourself as it is to work on your job.

I started listening to self-help audio books and reading as many books as I could find. I learned about the law of attraction, being positive and many other techniques to help me succeed. I even started a new blog with some friends at www.victorycoaches.com to talk more about using your attitude to succeed. A few of the people I listen to are Jack Canfield, John Assaraf, T. Harv Ecker, Zig Ziglar, Tony Robbins and many more. I have even started researching the history of the law of attraction which dates back to ancient Egypt. It is fascinating to see the history and how far back these ideas originated from. The thing that got me hooked was not the spiritual side of the law of attraction, but the scientific side. I learned our subconscious can help us succeed if we give it a blueprint for what we want.

I took Jack Canfield coaching, which was an amazing experience. My coach was great and a huge help personally and with my business. Personal coaching allowed me to see why I needed to take over my parents’ business. The program claimed it would increase my free time and triple my income in a year. I was skeptical about those claims, but I think I may actually triple my income in 2014! My free time has definitely increased even though I have much more on my plate now than last year.

I started InvestFourMore in March of 2013 and it has been a wonderful experience. I would not have started the blog without my personal improvement discoveries. I have learned new investing techniques, met many new contacts, and much more from my blog. My blog even allowed me to publish a few books on Amazon (PDF versions here), which I had never thought would happen.

I bought a new personal residence in 2013

I bought a new house in July and we love it! I wrote an article about it here that describes the entire process. I wasn’t planning on buying a home, but it worked out perfect and the new house felt like home right away. This was not a goal of mine, in fact many of my goals revolved around our old house, but I was able to adapt to new opportunities. Buying the new house actually took care of about ten goals I had that involved the old house or buying a shop.

I mentioned I made a big income goal in 2013 that seemed very hard to reach in the beginning of the year; well I will reach that goal. The main reason I will reach my income goal is because I sold my old house. I don’t know if I am supposed to count it as income, but I made almost $100,000 on the sale of my previous home. It won’t be taxable since I lived there for three years! That is why I love big goals; you never know what will happen to help you reach them.

I took over my parents’ business in 2013

I had the idea of taking over in the back of my head for years, but never acted on it because I knew it would be a lot of work. My parents have always run the team, paid payroll, taxes and all the other fees associated with our real estate business and flipping business. My role was to sell houses, find flips, help manage repairs and make the majority of the money.

The problem with our previous deal was my parents did not like running the team and they did not do a lot to promote sales by the other Realtors on our team. I made a lot of sales, but had to give a large percentage to my parents and I made a small percentage on the fix and flips compared to what I did.

With the new deal I basically bought out my parents, which gives them long-term security and I get to run the team and keep the profits. It is scary taking over a business as we have high overhead with 8 team members and all the fees associated with the office, licensing, advertising and REO dues. I really don’t like accounting work and paperwork and that is one reason I didn’t take over earlier. I knew taking over the team would entail learning payroll, paperwork and many other unpleasant tasks that would take away from my selling houses.

The reason I made the switch, was I was able to hire my friend who took care of all the stuff I didn’t want to do. He wanted out of the corporate world and has a ton if management experience; perfect solution for both of us! He figured out the entire payroll, has been working in lead generation and helping manage everything. I love it!  My free time has actually increased since taking over the team because I let others do the work I don’t want to do. My friend also bought my house, which allowed us to move quickly into our new house.

Taking over fix and flips

Part of taking over the business involved taking over the fix and flips. The fix and up operation was not small and took a lot of money and work. I had to set up financing, a bankroll and management to take over the fix and flips. Luckily the deal we worked out allowed me to obtain all of these things.

With our deal, I took over 6 properties that we were working on, which helped provide me with a bankroll to pay for down payments and repairs. Once those properties sold, I had money available for new purchases. We have sold four of those six, one is under contract and another is being worked on.

I have been able to purchase three more fix and flip properties since taking over the business and I have been able to do that with help from my portfolio lender. Not only have they been awesome with my rental properties, they gave me a commitment to do short-term financing on my fix and flips. They will give me 75 percent loan to value, can close in less than two weeks and don’t require an appraisal if the loan is under $100,000. They charge 5.25 percent with 1.5 points; hard to beat that deal.

I also have another fix and flip that should be under contract soon and two short sale offers we have accepted by the sellers that we are waiting to see if the banks will approve.

Real estate business goals

I wanted to sell 200 homes in 2013 as an REO agent. This was a huge goal and well above my totals from any other year. I mentioned I like big goals and that is because they challenge me and constantly motivate me. If I were to make a small goal, then I may slow down or stop once I reach that goal. I was going to fall well short of my goal to sell 200 homes, but taking over the business almost got me there. Since I was able to count all the homes sold for myself for other agents on our team after September first; we sold 184 houses in 2013. There are still a few days left and we have a couple of closings scheduled, but not 16 to reach that 200 mark.

I was able to drive a Lamborghini and Ferrari!

I have always loved cars since I can remember, especially exotic cars. I have never driven a Ferrari, Lamborghini or other exotic car before this year (unless my Porsche 928 counts). This summer I found a special on Travelzoo to drive a Lamborghini Gallardo! I wrote about my experience here and it was awesome! I also signed up to race a Ferrari F430 around a race track a few times and I have the video of that here. I was at a conference in Dallas in September and I was able to see a Lamborghini Diablo they had for sale there. I always wanted a Countach, but I barely fit in the Diablo and the Countach is a smaller car. It probably is for the best as the Diablo is a newer and better car than the Countach.

My other 100 goals

I have a plan to purchase 100 rental properties and I also have over 100 other goals. Part of my coaching was to create a list of 100 goals, which I review constantly, update and change. I won’t go into all of those goals, but they range from extremely small to very large. The list helps me keep fresh in my mind what I want and when I want it. Making small goals makes me feel great accomplishing them and big goals motivate me. Many times I forget about the small goals I had a few months ago, and that is why I have a list that reminds me of what I want.

Conclusion and a sneak peak for 2014

If you know me at all, you know I will have a lot of real estate goals for 2014. I will write another article for those goals and plans, and I hope to have it ready for Monday right before the New Year. Some of my goals for 2014 are going to include big jumps in all aspects of my business and possibly a new car.

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Categories Money

Source: investfourmore.com

Apache is functioning normally

Last Updated on February 25, 2022 by Mark Ferguson

I have flipped over 210 homes in the last 17 years and although it is not easy to flip houses, it is a lot of fun. You can make a lot of money flipping once you have developed a system and learned the business. I average about $30,000 in profit on each flip I do and I flip 20-30 houses a year. I love flipping houses, but fix and flipping is only part of my real estate business. I also have 186k sqft of long-term rentals, I own my own brokerage, and I created this blog. While you can make a lot of money flipping homes, it takes hard work, and help. The television shows can make flipping look easy, but they leave out many of the most important parts of the business.

How much can you make on one flip?

How much money you make on a fix and flip varies with each deal and how much the house is worth. I have lost $10,000 on a flip and have made up to $180,000 on a flip. My goal on each fix and flip is to make at least $25,000 in profit. I have hit some home runs and had some huge mishaps when flipping. There are many risks involved when you fix and flip a home. If I do not have at least $25,000 in profit potential, I usually will not make the deal. The more expensive a house is, the more money I hope to make because of the increased risk and cost.

I also base how much profit I need in regards to the work that is needed. On houses that need massive remodels I want to make more than $30,000 in profit because there is so much that can go wrong. On houses that only need paint and carpet, I am willing to accept a smaller margin because the work is simple and fast.

I had 19 flips going as of the writing of this article.

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Do you need to make more on expensive houses?

The more the houses cost, the more you should make on each fix and flip because all of the costs increase. The more expensive a house, the more interest you must pay, the more repairs you must make, the more holding costs you have, and the more commissions you pay. Because of the increased risk of a more expensive house, you need to be rewarded with a larger profit. It can also take longer to sell a more expensive house because there are fewer buyers. If prices are to decrease in the future, the more expensive homes are also more volatile with their prices.

It also takes more capital to buy and repair a more expensive house. I want to make at least $25,000 if I am flipping a $100,000 house. If I am flipping a $200,000 house, I will want to make at least $35,000 because I have more money tied up. Since I am buying a more expensive house at $200,000 and I am using more cash for down payments and repairs and I will not be able to buy as many properties. Since I am buying fewer properties, I want to make sure that the houses I am buying will make more money.

Here is a review I did on the Rehab Valuator, a great tool for figuring the costs and profits on flips.

How much have I made flipping houses?

In 2017 I made over $600,000 flipping houses. I sold 26 flips in 2017, 18 in 2016, 8 flips in 2015, 12 in 2014, and 10 in 2013. I will have a few flips that will profit from $20,000 to $30,000, and I will have a few that will profit around $50,000. Twice in the ten years, I have made close to $100,000 on a single flip. For me, the big money in fix and flipping is volume, not in one extremely profitable property.

How do you calculate the profits?

When I am talking about profit, I mean the money I make after paying for repairs, carrying costs, financing, and selling costs. The shows on HGTV do not include many of these costs, which can make the business look much more glamorous than it really is. Here are what the costs could look like on a flip I hold for 6 months:

  • Purchase price $100,000 with a private money loan
  • $5,000 in financing costs
  • $2,000 in closing costs
  • $2,000 for utilities and maintenance while owning the property
  • $2,000 for taxes and insurance while owning the property
  • $7,000 for selling costs (agent commissions, etc)

The costs to own and sell this flip are over $18,000 and we did not even consider the repairs yet. I also have a project manager who helps with my flips and other team members that help with my business. I do not count the money I pay them against the profits because they are also real estate agents, and help the business in other ways. I also do not take income taxes out as some suggest I should since everyone pays taxes and that is part of life!

The 70 percent rule is one way to calculate how much you should buy a flip for.

Can you average $30,000 on each flip?

Like much of the country our market is hot, which makes it difficult to find deals. However, I am still finding deals and I have 20 flips being repaired or for sale right now (middle of 2018). You can flip in any market if you know the numbers, and if you know how to find a great deal. I am a real estate agent, which gives me a huge advantage when it comes to finding deals. I also buy primarily off MLS, which means I save commissions and I am able to write offers quickly. Making $30,000 on a flip all comes down to the numbers. While it is not easy to find deals that make that much money, it is possible. I also buy flips through auctions, wholesalers, and direct marketing.

Is there money in just doing one?

I would love to make $100,000 on each flip, but that is not possible for me. I do not always know which homes will work out great as flips and which will not. I have had unforeseen circumstances that caused me to hold a property for a year before I could sell it. That killed my profits and was one of the homes I lost money on. I have accepted that some flips will be great and others will not. If I continue to purchase great deals, the averages will be in my favor. My strategy is to buy as many flips as I can that meet my criteria and continue to average about $30,000 in profit on each property. If you are looking for that one house that will make $100,000, you may be looking for a long time.

How to get financing

One of the most difficult aspects of flipping homes is being able to find the money to buy the properties. Most lenders do not like to lend on flips because the loan is short-term and the lender will not make much money on it. In most cases, in order to get a short-term loan, you must use hard money, a portfolio lender, or private money. Hard money is very expensive with rates from eight to sixteen percent and origination fees from two to five percent. Portfolio lenders will have much less expensive money, but you will have to have an established relationship with them (I use portfolio lenders for most of my flips). Private money is a great option if you have family, friends, or other people with extra money to invest.

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How to avoid losing money

Here are a few tips on how to avoid losing money on flips:

  • Be very careful at foreclosure auctions. I used to buy 90 percent of my properties at the foreclosure auction. You have to pay cash without a title policy and sometimes you cannot see the interior of the home. If you buy at the foreclosure sale, make sure you have a lot of money for repairs, title issues, and possible evictions.
  • Always estimate more for repairs then you think. Repairs always cost more and more repairs always show up when fixing a house. I always assume there will be 20 percent more in costs than I calculate on each deal.
  • Account for financing and selling costs. When you sell a fix and flip, you have to pay a real estate commission, title insurance, financing interest, insurance, taxes, utilities, and more.
  • Be conservative when you estimate value; price the home right!  Some of the biggest losses for fix and flippers are due to overpricing homes and then not lowering the price quickly to get them sold.

Conclusion

Fix and flipping is not easy. It takes patience to find properties, money to fix them up, and market knowledge to sell them. If you can master fix and flipping, it can create an awesome income and be a lot of fun as well. Becoming a successful fix and flipper does not happen overnight.

Build a Rental Property Empire

Categories Fix and Flips

Source: investfourmore.com

Apache is functioning normally

Last Updated on February 2, 2023 by Mark Ferguson

Turn-key rental properties can be a great option for investors looking to get cash flow without a lot of work. They are also a great option for investors who cannot find cash-flowing properties in their state and must invest in a different area. Turn-key rental properties are fully repaired, rented, and managed by a property manager. Buying a turn-key property allows a long-distance investor to buy a property that cash flows with minimal work. I own a lot of local to me real estate, and I have bought a turn-key rental as well out of my area. You must be very careful with the property you buy and the company you use. While turn-key rentals can help investors buy cash-flowing rentals in different markets, it can also be a risky investment.

What is a turn-key rental property?

Some consider a turnkey property to be a house that is remodeled and needs no repairs, but for this article, we are talking about rental properties that are set up to make money right away. I consider turn-key to mean the home needs no repairs and has a tenant and property management in place. Make sure you and whomever you are talking to about turnkey properties have the same definition of turn-key!

There are many companies that will sell turn-key rentals to real estate investors, but be very careful when using these companies. Some are great and some have caused investors huge losses. Make sure you vet whatever company you use.

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What are the advantages of turn-key rental properties?

One of the biggest problems for many investors is finding affordable properties that will make money. Turn-key rentals are often located in areas that have low prices and relatively high rents.

Here are a few advantages to buying turnkey rentals and why I bought a turn-key rental:

  1. Easy to find: You can buy a turn-key property very quickly from turnkey providers who have a stock of turn-key properties available to purchase. Turn-key companies can have a large inventory of turn-keys because the properties are providing cash flow and are making money while the company owns the properties. You do have to know the right turnkey companies to work with.
  2. Less work than a normal rental: Turn-key properties are already rented, managed, and repaired. You do not have to find contractors, property managers, or real estate agents.
  3. Provide cash flow from day one: The first day you buy a turn-key, it will have a tenant in place paying rent. You do not have to worry about how long the repairs will take or how long it will take to get a tenant.
  4. Provide a great return: Most turn-key rentals provide 10 to 15 percent returns. The return begins right away and takes little work to maintain because a property manager takes care of the house for you.
  5. Provide diversification: Buying turn-key rentals in different markets of the country gives you diversification.
  6. Can be bought for cash: Many foreign investors have trouble buying properties because they cannot get financing. Turn-key rentals can be as inexpensive as $30,000, making them easier to buy with cash.
  7. You can invest your retirement savings: You can invest a self-directed IRA or 401k into turn-key rentals.

What are the disadvantages of turn-key properties?

While there are many advantages to buying a turn-key rental property there are disadvantages as well:

  1. Turn-key rentals are usually priced at retail value or even above retail value. I like to get a great deal on my rentals and that is why I have not bought more turn-key rentals.
  2. It can be tough to know where to buy a long-distance rental or keep track of it. You must have a great property manager to make sure the home is maintained and managed right.
  3. Not all turn-key companies are reputable and many take advantage of long-distance buyers because they do not see the property.
  4. There may not be as much cash flow with a turn-key property than if you buy it yourself.

How can you find turn-key rental properties?

There are many turn-key rental property providers throughout the United States. Some companies are specific to local markets such as Memphis, Ohio, Missouri, Florida, Texas, Chicago, and Wisconsin while other companies have properties all over the country. The properties vary in price, rent, financing options, and returns, but a good turn-key property will cash flow. Even with cash flow, I would advise investors to spend time researching the property manager and the area they want to invest in before buying any turnkey property.

A Google search for turnkey rentals will get many results for property managers and houses for sale that are not rented. I have spent a lot of time researching turnkey companies and have met with turnkey companies in person. I have met a lot of turnkey company operators and only met a couple that I trust! Fill out the form below and I will refer a company to you I trust. Your information will not be given to anyone or used for anything except a turn-key rental property company to talk to you about turn-key rentals.

The company I used for my turn-key rental is not one I would recommend and is not selling turn-keys anymore. This is a different company and I have talked to many investors who used them with success.

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Do I invest in long-distance turn-key rental properties?

I had always bought my rental properties in Colorado until 2015. That was when prices became too expensive here to get good rentals. I bought one turn-key property in Ohio that has done okay for me. I have no plans to buy any more turn-key properties because I prefer to find deals on my own in my local market. If I can find the deals I can get a discount which is a huge advantage with real estate. I may buy in other states but I would buy with a real estate agent who is able to search for more houses, but just what the turn-key company owns. A good agent can also find property managers and even contractors. I have a few agents like this across the country in areas with good rent-to-value ratios.

How much do turn-key rental properties cost?

Every turn-key property is different and every location for turn-key properties is different. I have seen turn-key rentals that are repaired, rented, and managed that range from $35,000 to $150,000. I have not seen turn-key properties in higher price ranges because it is much harder to cash flow on a higher-priced rental property than on a lower-priced one. The lower-priced turn-key rental properties usually provide better cash flow and may be a good option for foreign investors who have a hard time getting a loan on properties in the United States.

Can you make money with a turn-key rental property?

I normally do not buy rental properties that are turn-key ready, because they usually cost more. I rarely buy homes that are fixed up, because they usually are not a great deal. Rental property number nine, which I just got under contract, is the closest thing to a fully repaired property that I have purchased (or that I will have purchased). It needed a bit of paint, but that was about it. In a perfect world, I would love for all the rentals I buy to be repaired and rented before I buy them, which is one advantage of turn-key properties.

When I buy my rentals, they usually need work and I get a discount for the money and time I have to put into repairing them. In fact, it is less helpful to buy a home that needs repairs than purchasing a home fixed up, unless you can get a great deal. It is harder to have built-in equity on a turnkey rental, but you do not have to spend time repairing the home, renting it out, or finding a property manager.

When would investing in a long-distance turn-key property be a good idea?

I have had many people reach out to me about investing in rental properties, but they do not know how to start because their market is too expensive. When starter homes are $300,000 or more in an area, it is almost impossible to cash flow on rental property unless you pay cash for it. When you pay cash, your returns are not nearly as good as if you can get a loan (as long as the property cash flows). Rents are almost never high enough on a $300,000 home to cash flow, no matter where you live.

The down payment on a $300,000 property is going to be at least $60,000 unless you use a technique to buy with less money down. Then you have to add closing costs, reserves, repairs, and other costs associated with buying a rental property. I can buy two or three cash-flowing rental properties in my market, where someone in a more expensive area would only be able to buy one that may not cash flow at all. I never invest for appreciation, which is what many people are forced to do in these areas.

If you are in an area with very expensive homes or very low rents compared to home prices, you may want to consider long-distance investing and possibly long-distance, turn-key investing.

Diversification with turn-key rental properties

Many people like to spread out their risk when investing and rental properties are no different. If all of your properties are in one place, it could be riskier if something were to happen to that area. I have all of my rental properties in one place; one reason I like the idea of an out-of-state property is that it would provide diversification.

What is the difference between long-distance investing and long-distance turn-key investing?

Long-distance investing is simply investing in real estate outside of your local market area. You are still in control of the purchase, the renovation, and finding a property manager. This can be a great way to invest if you have a great team that can handle all of these aspects for you or if you are able to travel to handle them yourself. However, it takes a lot of time and work to buy a rental property in another state; you have to control the entire process of finding the property, repairing it, renting it, and finding a property manager.

Why do you need to do due diligence on a turn-key rental property?

Turn-key rental properties are typical houses that have been purchased by a turn-key company, renovated, rented, and have a property manager put in place. An investor still has to perform due diligence when buying a turn-key to ensure the properties are as advertised. The turn-key companies know their clients are out-of-state and they may try to fudge their numbers a bit to make more money on a deal. It does not hurt to have an inspection done on any property you buy even if the turn-key company says the home is completely repaired.

How can an out-of-state investor determine the value of a home

I wrote an article here about how to determine value. Even if a property cash flows great, an investor still does not want to pay much more than market value for a home. It is not easy to determine market value from a long distance, but it is possible. The best way to find out what a home is worth is to get an opinion from a local real estate agent.  You can also use websites like Zillow or Trulia, but I would not count on them to be very accurate.

How can you find a real estate agent to provide a price opinion?

I wrote an article about how to find a great agent here, but many agents will be wary of providing values to an out-of-state investor. My advice is to be perfectly honest with the agent and tell them you are trying to verify if a price on a home is market value. Tell them your situation and see what they say. You should be able to find an agent or two who will give you ballpark values. You may even find an agent who knows of more turn-key properties in the area.

If you want a detailed value you can even order a BPO (broker price opinion) from a real estate agent. Most REO agents perform BPOs for banks on distressed properties. For $75 to $100 you should be able to find an agent who can complete a BPO report. Try looking on usreop.com, nrba.com or reonetwork.com for experienced REO agents. The agent should have their own BPO form they can use that provides three sales, three active comparables and they should know exactly what a BPO is.  If not, find another agent.

How can an out-of-state investor determine fair market rents?

Not only does an investor need to know that they aren’t overpaying for a turn-key property, but they also need to know that the rents are accurate. It is possible a property manager or turn-key company rented a home for more than market rents by charging a premium to an unqualified tenant. You don’t want to buy a turn-key, have the tenant stop paying and then find out the home was rented for more than it should have been.

The best way to determine rents is to call a few property managers in the area. Tell them you are an investor, are buying some homes, and need a property manager. This serves a few purposes; it gives you an idea of market rents, the property manager can let you know if a property will be difficult to rent, and you can interview property management companies in case you need a new one.

You can also check Zillow for rental rates, but again they may not be accurate. You can also look at Craigslist, the classifieds, or check out this article for more tips on determining rental rates.

How to determine if your property management company is good on a turn-key property

The most important piece of a long-distance rental property is the property manager. A bad property manager can cause thousands of dollars in losses through lost rent or damaged property. This article on how to find a great property manager can help you determine if the property manager the turn-key uses or referred you to is any good. Make sure you ask the property management company what kind of screening process they use to check tenants; background checks, credit checks, references, income, and job verification. It is best to let the company tell you what they do and not suggest these screening processes to them.

In some cases, it may be difficult to contact the property management companies. A lot of turn-key companies sell hundreds of properties a year and the property managers do not have time to talk to hundreds or even thousands of prospective buyers.

What can you do if the rents, values, or property management is off on a turn-key?

The first thing you want to do is make sure you discover any issues before you buy a turn-key property! It will be difficult to get any recourse after the fact, although some turn-keys offer rent guarantees and buyback programs.

If you discover a problem before you buy a property, talk to the turn-key. Tell them what the issues are and see what they offer. The more facts and information you can back up your numbers with the better. You may be able to negotiate a better price or have them help you find a new property manager.

This is a great time to see how customer service-oriented the turn-key company is as well. Will they work with you and try to come up with a solution or become defensive? If they won’t try to help at all, then you have a great idea of how good they will be to work with after you buy a property and there is a problem.

Are turn-key rental properties a good option for foreign investors?

Foreign investors can buy homes in the United States, but it is hard for many of them to get financing. Traveling to the U.S., researching markets, finding real estate agents, closing on properties, and then repairing and renting properties is very difficult when you live in another country. Turn-key rental properties make it much easier for foreign or any long-distance investor to invest in rental properties. If you buy a turnkey rental property, you might not make as much money as if you did all the work yourself, but the time and money saved may be worth the cost.

Are turn-key rental properties a good option for self-directed IRAs?

You can invest money from a self-directed IRA into real estate. When you use an IRA to buy real estate, the IRA is buying the property and all income and expenses must go through the IRA. Some turn-key rental properties specialize in self-directed IRA investing and can help investors invest from their IRA into rental properties.

Can you buy turn-key rental properties with less than 20 percent down?

Some turn-key rental property providers offer seller financing that can be used to buy turnkey proprieties for less than 20 percent down. The trade-off with putting less money down is a higher interest rate and loan costs. Rates may be as high as 9 or 10 percent on seller-financed turn-key properties.

Conclusion

Turn-key rental properties are a great way to invest for cash flow when cash flow is hard to find in your market. Turn-key rental properties are also a way to invest in rental properties without having to repair or rent out the house or having to find a property manager. However, it is hard to get a great deal on turnkey rentals because turn-key providers want compensation for all the work they do.

How can you get more detailed information on specific turn-key properties?

If you would like a custom report on turn-key rental properties and more information on turn-key rental property companies, please fill out the form below. Your contact information will not be given to anyone, except a turn-key rental property company.

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Categories Rental Properties

Source: investfourmore.com

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Last Updated on August 22, 2019 by Mark Ferguson

If you want to start flipping houses, it can provide a great income, but it almost always takes money to make money. You may hear stories of investors flipping houses without any of their own money, but these investors are usually very experienced at flipping or they are giving up much of their profits. Hard money lenders can allow investors to complete a flip with less money, but hard money lenders are very expensive. Using a partner or private money can also reduce the amount of money an investor needs to flip, but you may have to give up a percentage of the profits or be very well established to use these techniques.

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How much money does an investor need to flip using hard money?

There are many hard money lenders and they each have different terms and conditions on their loans. Some hard money lenders claim they will allow an investor to buy, renovate and sell a flip without any of their own money. However, most hard money lenders will only give these terms to an experienced fix and flipper with a proven record of success. The hard money-lender will require some money from the investor if they are just getting started or a share of the profits. The hard money-lender will also want to make sure the flip will be profitable and keep a very close eye on the project for any new investor.

If you are using a hard money-lender, I would count on needing at least 20 percent of the purchase price of a flip for repairs and down payment. Some hard money lenders may require more or less depending on the deal and the investor’s experience. You may be able to get the hard money-lender to fund most of the deal if you share 50 percent of the profits. Remember a hard money-lender is very expensive; rates can vary from 8% to 16% and 1 to 5 points.

Here is a video I did that shows the exact costs that various loan options cost me.

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How much money will you need to start flipping houses with a partner?

I know many flippers who use partners to help with the funding of deals. I used to work with my father on our flips; he would fund the deals and I would do most of the work. I see many investors who will find deals, repair the homes and sell them but need a partner to help pay for the fix and flip. A 50/50 split is very common in these deals when one partner puts up the money and another does all the work. This may seem like an unfair split considering one person is doing all the work, but without the money, the deal could not be done.

This is one way to get started flipping, but giving up 50 percent of the profit is a big deal. I explain why saving and using more of your own money to flip will make you more money here. I think the goal of a flipper is to save enough of their own money to start paying for down payments and repairs on houses. When you give up 50 percent of the profit, it is hard to save enough money to start funding your own deals.

With a partner, it is possible that you could complete a flip without any of your own money, but you will make much less. Instead of making a $30,000 profit on a house, you would only make a $15,000 profit.

How much money will you need to flip with a bank?

It is not easy, but it is possible to flip using bank financing. I use a portfolio lender to fund my flips and they are awesome. They give me 75 percent of the purchase price and charge me 1.5 points on my short-term fix and flip financing. Instead of the 15 percent, a hard money lender would charge, my lender charges 5.25 percent interest.

My lender does not fund any of the repairs, but some portfolio lenders will. Every portfolio lender has different terms and guidelines on how much money they will lend and at what rates. I have to put down 25 percent of the purchase price and pay for repairs on each flip. That can add up to $45,000 to $60,000 on a $100,000 purchase, depending on how many repairs are needed. That seems like a lot of money, but by using my money I save thousands on the interest rate and points a hard money lender would charge. I also get to keep all the profits since I have no partner. I don’t use all my money to pay for these expenses, because I use private money as well.

How much money do you need to flip a house with private money?

Private money is an investor’s best friend if you can find the right person with the right terms. Most private money comes from someone you know; a family member, a friend or a business acquaintance. Many people are looking for a way to invest their money and get great returns without much risk. Investing money into a flip business can achieve high returns without much risk, depending on the situation. A brand new flipper is going to be riskier than an investor who has completed 50 fix and flips. Real estate can also be used as collateral for private money to give the lender more assurance the money will be paid back.

Because there are different levels of risk involved with every deal and each lender expects a different level of return, terms vary greatly with private money. I am able to pay 8 percent interest on my private money because I am a very seasoned investor and I offer great collateral to my lender. Other private lenders may expect 10 percent or even 15 percent interest on their money based on the risk. The hardest part of getting private money is finding someone to lend you money. You can’t be afraid to ask around to see if anyone you know would be interested in lending you money and getting higher returns on their money in the process.

With private money, it is possible to get started flipping with no money out of your own pocket. It may be hard to find a lender that will fund your entire deal, but it is the best route for fix and flipping with as little of your own money as possible and still keep the profits you make.

Conclusion

In order to fix and flip a home, you are almost always going to have to use some of your own money or split a large chunk of the profits with a partner. In order to make the most money flipping, I think a combination of bank financing, private money, and your own money is the best route to take. It is hard work saving and building up enough money, but well worth it in the end. Buying a house, fixing it up, and selling it takes a lot of time and risk. I want to be rewarded with the most money I can for taking on that risk.

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Categories Fix and Flips

Source: investfourmore.com

Apache is functioning normally

If you’ve been looking for a new home in Utah’s current market, you know pickings are slim. Most buyers know what a few gallons of paint can do. But if you’re willing to take on a couple of additional projects, you can turn that ugly duckling house into an affordable dream. Here’s a few ugly features that aren’t too tough to take on. 

Something underfoot. Floors. Buyers and sellers frequently have different tastes in what’s under their feet. If the seller replaces the carpet before the home is listed, expect a portion of the cost to be factored into the price (listings that say “all new carpet” are going to cost you more). You’re also unlikely to get top-of-the-line carpet if the seller replaces it simply to list. If you’re not scared of living temporarily with threadbare, stained carpet, request a drop in price in the form of a flooring allowance when you make your initial offer. You may also give the entire room a lift by replacing skinny baseboards with the clean lines of the more modern 5” style. Baseboards are easy to replace and cost around $1.50-$3.00 per foot at home improvement stores.

Fireplace blues. A fireplace is a focal point. But an old-school fireplace with brass trim, mauve tile, ugly rock, or beige brick is an eyesore to just about everyone. Few sellers update the fireplace before putting the home on the market. If they do, they’ve probably updated the entire house as well and are asking a justifiably premium price. But a fireplace eyesore can be easily fixed after move-in with paint (1 gallon: $35), new mantle ($150 and up), or even new tile (DIY for ~ $100, depending on the tile chosen and how much you’re replacing). Be sure to determine if your choice of materials is rated for high heat before starting.

Chained in. A fenced-in backyard is a huge plus even when the fence is not quite your style. Chain link is and looks cheap, but it’s also easily covered. Plants, just as fast-growing bamboo,  grape vines, or Virginia Creeper look great year-round. If you need complete cover ASAP, look at privacy netting in decorative patterns (around $2.50 per linear foot). You may also find someone who’s looking to unload scrap fencing or barn wood at a very low price—both make great, rustic fencing options that can be strapped to an existing chain link fence for an all-new look.

Old-school appliances. Regardless of what the listing states, retro doesn’t apply to avocado green appliances or cream-colored dishwashers with fake wood grain trim. But here’s the deal: if those appliances are still in the home you buy, you can bet they’re workhorses, just not pretty. If a seller spends the cash to update the appliances just to sell the house, you probably won’t get top of the line or even the appliances that you may want—and you’ll pay a premium. There are numerous ways to solve unattractive-but-working appliances, however. Search yard sale sites (like KSL Classifieds or local Facebook groups) for people who are remodeling. When people purchase brand new homes they often opt not to keep the builder-selected appliances. Keep your eyes peeled for individuals selling all new appliances—or even entire kitchens!

Dismal driveway. No one ever bought a home because of the driveway… but a cracked one in desperate need of repair drastically reduces curb appeal and brings the listing price of the home down. As a buyer, you’ll benefit from the lower price and you don’t even need to do the driveway repair work yourself. A professional will break up and haul away the old driveway and pour a new driveway all for a couple grand (depending on square footage).

Remember, those nice-looking renovated homes will not only cost you more, but chances are you’d choose different appliances, carpet or flooring for yourself. Buy the house that’s located where you want to live and that has the views and schools you want, then take the time to make the needed updates and repairs as you can afford them.

Source: homie.com

Apache is functioning normally

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If you want to buy term life insurance, you’ve got a few options. You could work with an agent in your area if you’d prefer a face-to-face interaction, or you can buy online if you prefer the convenience of an electronic process.

However, not all online life insurance agencies are created equal. If you’re shopping around for term life quotes, it’s important to understand what to look for to help you get the best value.

What to expect when you’re applying for coverage

Anyone who has gone through a life insurance application in the past could tell you that life insurance carriers are some of the most thorough and careful companies in the world. This is because life insurance policies are priced based on the applicant’s risk of death.

However, the process of applying has come a long way, and it’s actually gotten pretty simple – especially online. Nowadays, most of the heavy lifting is done behind the scenes.

If you add a good agency into the mix, applying for life insurance is practically painless, since it will handle almost everything that doesn’t require your signature or further clarification from you.

Generally, buying a life insurance policy will take between two and six weeks, and the process tends to follow a consistent format.

Step 1: Submit an application

When you find a price you like, you can choose a carrier to submit a formal application with. Choosing a carrier to apply with isn’t a binding decision, and you’re always free to back out of an application to go a different direction.

Step 2: Take a medical exam

Life insurance carriers will require you to take a medical exam see how healthy you are. This is free for you and the examiner will even come to your home or office to make things convenient.

Step 3: Wait for your medical records

The carrier will order a copy of your medical records from your doctor, which could take anywhere between hours and weeks, depending on how well-organized your doctor keeps their records.

Step 4: Tie up loose ends

After the exam is completed, medical records have been received, and any other questions the carrier needs answered are out of the way, your application will be reviewed. Once you get the final OK from the carrier, your policy will be approved, and you’ll be on your way to getting coverage!

Let’s look at each of these steps in a little more detail.

Submitting your application

Starting your life insurance journey will often begin with getting a quote, which will show you prospective prices based on a few key factors, like the amount of coverage you’d need, how long you want it to last, and a few health and lifestyle questions.

Interested? Check out a few prices. Quotacy has an online quoting tool you can use – no commitment required.

Taking the medical exam

After applying for coverage, the life insurance carrier will require you to take a quick medical exam in order to be approved for coverage. Because life insurance pricing is based on your mortality risk, the carrier needs to verify your current medical situation.

The medical exam is a free mini-physical performed by an examiner and scheduled by the carrier. It can happen anywhere, even in your home or office, whenever you can spare half an hour.

  • Typical exams consist of:
  • A few questions about your medical history
  • A list of any medications you’re taking
  • Height and weight measurements
  • Pulse and blood pressure check
  • A urine sample
  • A blood sample

Preparing for your exam

The measurements that are taken during the exam are extremely important, and being prepared is your best bet to ensure a good outcome. In the time before your exam, you should remember to:

  • Fast for 6-8 hours – this will reduce your blood sugar. Scheduling your exam in the morning can make this easy if you skip breakfast.
  • Don’t smoke for at least one hour prior – smoking temporarily raises your blood pressure.
  • Don’t drink coffee for at least one hour prior – caffeine can increase your blood pressure and raise your pulse.
  • Avoid alcohol for 8 hours prior – it’s high in calories, and can raise your blood sugar and blood pressure.
  • Avoid overly salty and sugary foods for one day beforehand – both salt and sugar raise your blood pressure.
  • Drink lots of water – this hydrates you to help make the blood draw a lot easier and less painful.
  • No strenuous exercise the night before or the day of your exam – as your body repairs from exercise, your blood pressure and pulse rise slightly.
  • No sexual activity for one day beforehand (for men, at least) – gettin’ freaky lowers the PSA levels in your blood, which is one of the ways that carriers evaluate your prostate health.
  • Get a good night’s sleep – being well-rested lowers blood pressure. As an added bonus, if you’re afraid of needles, having a full eight hours can help your body negate the physical effects of your phobia.

Waiting for your medical records

Before your life insurance application is approved, insurance carriers order copies of your medical and driving records to help them get a better idea of any insurability risks you might have. Just like with the medical exam, the carrier orders these records behind the scenes on their own dime.

Because the laws protecting a patient’s medical records are extremely strict, you will need to sign a form authorizing your doctor to release your records to the insurance company and agency you’re working with.

At this point, all you’ll need to do is sit and wait for the records to arrive. Depending on how efficient your doctor is at sending them along, waiting for this step to be completed can either happen overnight or take a few weeks.

Answering additional questions

In addition to everything else that happens during your application, the carrier will sometimes have follow-up questions for you which will help them get to know you a bit better. These questions can be about anything from medical conditions to your hobbies to your travel plans.

A lot of the time, the questions a carrier asks can be pretty scary to someone trying to protect their family. Many clients see a questionnaire about their sleep apnea, or their diabetes, or their battle with cancer, and assume that the carrier will decline them on the spot.

It’s important to keep in mind that even though there are many factors that can affect your rate during this time, you’ll likely be able to get coverage. The whole reason that insurance carriers have flexible prices is because they want to offer coverage to as many people as possible, regardless of the circumstances.

Here’s a quick list of example questions you could see during an application, depending on your circumstances.

If you have a medical condition:

  • How severe is it?
  • How is it being treated?
  • Is the treatment effective?

If you have a risky hobby, like hang gliding or rock climbing:

  • What level of experience or certification do you have?
  • How often do you participate in your hobby?
  • How much time have you dedicated to your hobby?

This isn’t a comprehensive list, by any means, but hopefully it will give you an idea of what the carrier is looking for.

Waiting for approval

Once the carrier has everything they need, your application will enter the approval process. This is when the carrier’s underwriters will review everything they’ve collected as a whole, and evaluate where the final price of your insurance policy should be set.

If you’re approved for coverage, you’ll be sent a packet containing your policy itself as well as a few documents that you’ll need to sign and return so the carrier can finalize your coverage. This step is also when the carrier will collect your payment information so that they can set up your billing on their end.

Depending on the carrier you apply with, you will either be sent digital forms or a physical policy booklet. Regardless of the format, you should store your policy securely and have a plan in place to help your family find it in the event of your death, so they can claim your death benefit.

After a bit more processing by the carrier to wrap up any loose ends, you’ll receive a notification that your policy is inforce. That means that everything’s in place on the carrier’s end of things, and your coverage has been activated! All that’s left for you to do is make your premium payments according to your payment plan, and your family will be covered.

Eric Lindholm is a writer for Quotacy, and he’s personally guided hundreds of people through their own life insurance journeys since joining in 2016. Eric lives in the Twin Cities, Minnesota, where he’s busy paying off his student loans and making the most of his time as a 20-something. You can connect with him and see what he’s up to at EricLindholm.biz.

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