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Deferred Maintenance In Real Estate

ConveyancingDeferred Maintenance In Real Estate

A lot of people are having problems when it comes to, budgeting the expenses that they have in their property. There are a lot of people who are actually having a hard time to fix the things that should be fixed, since they are not aware of what deferred maintenance is. This article was written to help you understand what deferred maintenance is, and how it can help you save money and reduce costs in maintaining the perfect condition of your house. Read on to find out more about the things that you can do to keep your property in perfect shape.

Deferred maintenance refers to a process of trying to determine the things that should be repaired in order to prevent a bigger problem to happen. This process is applicable in almost anything that can be repaired, but a lot of people think that fixing small problems would cost them more money. In fact, there are even some people who would not even consider having something repaired, and only wait for it to be replaced. This may seem like a good idea for some, but the truth is that it will really cost you more money.

If you want to be able to reduce your costs, the first thing that you need to do is to make sure that you are going to create a list of all the problems that should be fixed. You don’t have to determine all of them at once, and getting professionals who can help you identify potential problems and give you a quote will be very beneficial. This will help you to allocate all your expenses and find time to budget your money for the repairs without even giving you a hard time to budget your money.

The reason why there are people who think that deferred maintenance is unnecessary is because they will be paying for the service fee two times. However, if you are going to think about the fact that you will be able to prevent bigger problems by repairing smaller problems, then we can say that it will really help you save more money in the long run. This is something that not everyone fully understands, and is the main reason why they are actually spending more than what they should. Repairing small problems repeatedly is better than repairing or even replacing something due to amplified problems and combination of small problems in the long run.

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How You Can Earn Infinite Returns In Real Estate

How You Can Earn Infinite Returns In Real Estate

ConveyancingEarning infinite returns on your investment is one of the most exciting accomplishments of a great real estate investment.  It doesn’t happen on every deal, but when it does, it’s awesome.  Infinite returns are achieved when you no longer have any of your money invested in a property, but you still own it and the property is still generating income.  You can earn infinite returns in real estate through two strategies.  One you’ve probably heard a lot about, the other isn’t quite as well known.  But both a extremely effective when you use them at the right time on the right opportunity.

Most real estate investors have heard of “no money down” real estate investment strategy.  In “no money down” investing, the investor finds a very motivated seller that is willing carry a loan for all of the purchase amount or at least the down payment amount.  This allows the investor to buy or take over the property without actually having to take any money out of his pocket.  So, by it’s definition, any returns you earn through no money down deals are infinite as you don’t have any money invested in the real estate in the first place.  It’s a great strategy to use if you can find a motivated seller that is willing to assist you.

There are two major problems with this strategy on most properties.  The first is that you have to find a motivated seller that is willing to participate.  Second, if they aren’t a very motivated seller, you usually have to overpay for the property to get the seller to agree.  In both situations, you have to have the sellers’ participation and that just isn’t an option in most competitive buying situations or highly desirable properties.  If you try to use this “no money down” investment strategy in a competitive buying situation, you don’t have a chance.  The seller is going to go with your competition’s offer that has “no-strings-attached.”

Let me suggest an alternative strategy for you to consider.  Let me suggest that you try a strategy that isn’t plagued by the major issues of the “no money down” investment strategy.  This strategy doesn’t require the seller’s participation or even that they have the knowledge that you are using it.  Yet, it still allows you to earn infinite returns on your investment.  You can even eventually end up with little to none of your own money in the property.  It’s called a cash-out refinance.

In a cash-out refinance the investment strategy is buy a property, increase its value (usually by at least 20-25%), and then refinance the property at a high enough amount to get your original investment out.

Top 5 Ways to Structure Your Property Purchase

Conveyancing SolutionsTop 5 Ways to Structure Your Property Purchase

When it comes to property purchases, there is no single perfect structure for any situation. Your choice of purchase structure should depend on your personal circumstances and financial goals, and advisers such as a financial adviser, accountant, or conveyancer can assist with providing useful advice on your purchase structure.

Why Structure Your Property Purchase?

A property purchase structure is to be differentiated from ownership structure. The latter usually refers to owning land as a sole tenant, tenants in common, or as joint tenants. The former is concerned with the actual purchase structure and using different legal entities to buy property.

Different property purchase structures can yield specific advantages to the buyer. For example, a company structure may offer asset protection while buying property as an individual reduces costs of compliance. Your accountant and conveyancing professional can assist with specific advice about the benefits of different structures.

1. Individual

Buying a property as a natural person or in your own name is probably the simplest way to set up your purchase.

Advantages

There are minimal compliance costs when you buy property in your own name, and there is effectively no set up cost when compared with other structures. Tax benefits include the ability to use any negative gearing losses to offset salary or investment or business income of each individual taxpayer/s.

Potential Limitations

The major potential limitation relates to capital gains tax. When the property is sold, realised capital gains will be taxed, unless the property is inherited directly. Where other capital gains tax concessions are available to the seller, this can be used to offset some of the capital gains tax payable.

2. Company

Investors can also choose to buy property through a company structure. The company structure comes with its own tax advantages, though a company is not able to claim capital gains discounts.

Advantages

While there may be asset protection advantages associated with buying through a company, the main advantage comes from the ability to fix income tax at 30 per cent. It’s also relatively easy to set up and register a company and to purchase property through a company.

Potential Limitations

While income can be fixed at 30 per cent, there are no negative gearing benefits for individual shareholders unlike in some other structures. Additionally, when the property is sold, the capital gains discount rate of 50 per cent can’t be claimed.

3. Partnership

The partnership structure can be a great option for investors seeking to climb the property ladder more quickly. Buying under partnership structure usually involves a joint tenancy or tenancy in common, and many choose to do it with a friend, family member, or their partner.

Advantages

With more partners, there may be a shorter saving time for deposit. You may also be able to choose from a wider pool of properties as you have a larger budget. Partnerships are easy and inexpensive to set up, and the negative gearing benefits are the same as individual purchases.

Potential Limitations

Entering into a partnership may come with its own risk as buying property is usually a long time commitment. The potential for disagreement or conflict can arise if the partners disagree or if one partner can’t make mortgage repayments.

4. Trust

Trusts are another effective way to structure property purchases.

Advantages

The capital gains discount applies if the property is held for more than 12 months before it’s sold. Set up correctly, trusts can provide good asset protection to investors.

Potential Limitations

Whether a unit trust or discretionary trust, negative gearing losses are usually not able to be passed on to individual investors. Additionally, trusts are relatively more complicated to set up and maintain.

5. Self-Managed Superannuation Fund

Probably one of the most exciting options for investors is buying their property through a self-management superannuation fund (‘SMSF’).

Advantages

Rental income is taxed at only 15 per cent. When investors reach the pension age, the amounts they receive from the fund will be tax free. The SMSF offers excellent asset protection features.

Potential Limitations

An SMSF can be relatively more expensive and complicated to set up and maintain. Additionally, only 15 per cent of negative gearing losses are allows to be claimed.

6 Tips For Investing In Real Estate

Conveyancing6 Tips for Investing in Real Estate

If you’re fed up with the paltry returns you get on bonds, the insulting interest rates paid by banks, and the frenetic fits of the stock market, you might consider turning to rental real estate to supplement your retirement income. But it’s not for everyone. Walk through these six tips to see if real estate can help you construct a sound retirement portfolio. If the idea still seems solid, the next step is to do your homework.

1. Assess your goals – The days of buying real estate and flipping it for a quick profit are long gone. Rental real estate can provide a steady, long-term income, but it takes work. Are you prepared to do lots of research to secure a property in a good location that will be attractive to people in the rental market? Are you ready to crunch the numbers to figure out if a property will work out financially? Are you able to manage your own property, which may include fixing the plumbing, cleaning the carpets, and applying a fresh coat of paint for new tenants? If not, you will need to hire someone else to do it for you.

2. Know the neighborhood – Surely, you’ve heard the old maxim about the three important factors of real estate: location, location, and location. If you’re buying real estate you need to know what you’re getting into. Is there something special about the property, such as a view or proximity to waterfront or public transportation? What are the zoning laws? Is there a new highway on the drawing boards? You can never cover all the unknowns, but you can find out if the rental market is viable. Check with real-estate agents, go online to Zillow and Craigslist, and talk to people in town. You can’t accurately predict what the property will be worth in five years, but you should know if you can rent it next month, and at what price.

3. Buy local – There’s no neighborhood you’re more familiar with than your own. I know one couple who live in a lake community in Pennsylvania. They bought the house next door to them. They break even renting it out for the summer. They make their profit on what comes in during the shoulder season. And when it’s empty they don’t have to worry, because they can look out their window and make sure everything’s okay. The farther away you are from your rental property, the harder it is to do your job as a landlord. If it’s too far, you can’t do it at all. You will have to hire a property manager who will do the job but eat up your profit in the bargain.

4. Best bet – a one bedroom condo. Outside of vacation properties, the sweet spot in the rental market is for single people: young singles, divorced middle-agers, and retired widows. Most of these people do not need, and will not pay for, a larger unit. The one bedroom condo is the Honda Civic of the rental market. There’s nothing sexy about it, but for most people it offers the best value, and is the easiest property to manage.

5. Buy at a good price – An old rule-of-thumb says if you can buy a property for 12 times the amount of its annual rent, then you’re getting a good deal. These days you can do better than that—maybe nine or 10 times the annual rent. Of course, there are always variations, depending on the type of property, location, and the prospects for appreciation. But, remember, there’s no pressure for you to buy. You don’t pay up because you “fall in love” with a place. If you’ve done your homework, you have a pretty good idea what your monthly rental income will be. Don’t pay more than what your monthly cost is going to be. That amount is your limit for what you should pay

6. Make sure you have some reserve cash – If you already own your own home, you know that at some point you’ll inevitably face an unexpected expense—the dishwasher breaks, the roof leaks, or the condo association hits you with an assessment. You need to keep a cash reserve to take care of any surprises, including the possibility that your unit might be unoccupied for a (hopefully short) period of time. You also need to build these irregular expenses into your financial equation to help you decide, in the final analysis, if the whole project is worth it.

Real Estate Marketing Basics

ConveyancingReal estate marketing is pretty competitive today with the housing market the way that it is. If you aren’t good at getting people interested in what you have to sell you are pretty much out of luck. These marketing tips will help get you off on the right foot and hopefully give you an edge over competitors.

Craigslist is the favorite market place for many real estate agents. There are a huge number of local people who frequent the pages of Craigslist on a daily basis. If you are having a hard time getting much interest on Craigslist try implementing moveable images. With moveable images you can show more of your properties in an interesting way. They not only convey more information, but they will catch the eye of visitors and your conversion rate will go up.

In order to make an animated picture you need to get a series of your pictures and turn them into gif images. Then you go to an online gif animator and turn them into one animated picture. Then it is as simple as loading your image to Craigslist for people to see it and buy your houses.

Email marketing is an excellent method for selling houses if you have a decent sized email list of prospective buyers. To get your email list you should put a small opt-in box on your website and offer a perk for opting in. You could offer a discount, or free closing, or anything else that buyers might be interested in. When they opt in you get their email and add it to your list.

After you have a nice long list of names you simply find houses you think they will like and send them to them in a well formatted email. Since you know they are buyers they will be interested in what you have to show them and if you have a big enough list you should be able to sell homes easily.

That massive user base that Facebook has makes it an excellent way to sell houses. Simply put up a fan page and show high quality images for your latest listings. The added exposure that you get to your houses should help draw in customers. You can get added exposure by making posts for some of your best houses once and awhile.

Pinterest is a brand new site but it is already exploding with people. Since it is graphical simply pin high quality images from your site to Pinterest. It will bring in traffic to your site and it only takes a few minutes.

With this set of tips you can improve your real estate marketing and sell more houses with less effort. Not only are most of them easy to implement but they really work and should be used by any real estate agent who wants to make more money.

Buying Bank-Owned REOs

Bank Owned REOsBuying Bank-Owned REOs: 5 Tips for Getting the Deal

Buying bank-owned real estate, or REOs, is a great way to grow your real estate portfolio and get terrific deals.  Across the nation, there have never been more properties that have been foreclosed on by banks, ready to be purchased.  Often times, they can even be purchased at a significant discount.  Finding the deal, however, is only part of the challenge.  Because foreclosed properties can often times be purchased at a big discount, they attract a lot of potential investors and bidding on them can be a very competitive process.

In a competitive buying opportunity, you must set yourself apart from the competition.  There are definitely some tricks to winning the bid when dealing with bank-owned REOs.   By making a few key adjustments to your offers you can significantly increase the odds of being the “chosen” buyer and making a ton of money.

5 Tips for Buying Bank-Owned REO Properties:

Consider bigger deposits – Banks love big earnest money deposits.  They take them as a sign of the seriousness of the buyer and the likelihood of them being able to close the deal (whether that is accurate or not).  Consider putting higher deposits into your offers.

Put down “Hard” money – Banks prefer to see your earnest money deposits go “hard” as soon as possible.  This means that they become non-refundable and again show them that you are a very serious buyer.  I don’t recommend putting down “hard” money until you’ve done the due diligence or are near 100% certain that you are going to close the deal.  Remember, it’s money you risk losing if you don’t purchase the property.  I have personally seen investors lose a deal and up to $100,000 in deposits because their closing fell through.  Don’t let this be you.

Close quickly – One of the biggest fears of a bank when picking a buyer is that you’re not going to be able to close.  Once they’ve made the decision to sell, they want it done quickly.  By putting quick closing time frames into your offers you can set yourself apart from offers with more conservative closing timelines.  You can sometimes even win a deal with a lower offer price if you close quicker than your competition.

Ability to close – Again, banks want to make sure they select a buyer who can close.  They don’t want to have to remarket the property once they’ve taken it off the market, costing them time and money.  Anything you can do to demonstrate your ability to close the transaction is a major plus in their eyes.  A few ways to do this is by showing “proof of funds” to close, showing them your experience, and providing references.

Work directly with the bank or listing broker – This isn’t always a possibility, but when you can it’s always better to work directly with the bank and buy the property before it even goes onto the market.  To do this you must establish great relationships with the banks that have the opportunities and become their go to person.  If you don’t have a relationship with the bank, the next best thing is to work directly with the listing broker.  By doing this, you will have an inside track on the investment and they won’t have to split their commission with another broker.  In my experience, if you have anywhere close to the same offer as another buyer, but are the only one working directly with the listing broker, you’ll get the deal (amazing how that tends to work out).

Buying bank-owned REO investment properties can be a great way to grow your portfolio.  You can often you can get deep discounts that turn into huge profits.  However, there are some keys to being the chosen buyer in a competitive buying situation.  Putting down bigger deposits, making the deposits go “hard” faster, demonstrating your ability to close and close quickly, and working directly with the seller or the seller’s broker can put you in the driver’s seat.

Fixing Property Problems

Fixing Property Problem1Fixing Property Problems – 5 Ways to Turn a Property Investment Around

1. Change the Property Management Company

Every property investment turn around starts with a solid commitment from the ownership and property management. Often times when you take over a tired property, it got that way by ownership taking all the money out of the property and not reinvesting in it properly. It also happens when you have poor property management on site. When fixing property problems and committing to turn around a property investment, you must review and analyze current management to see if they have what it takes for this type of project. Many times we change property management because the current management can only see the property for what it was, not what it can be. You need to make sure you improve the physical property, but it’s just as important to improve the attitudes of those managing and living in it. Often times a new Property Management Company will bring fresh perspective and a new attitude.

2. Clean-up the property, take care of eye-soars, and fix deferred maintenance.

Immediately upon taking over the new property, current tenants need to see that something has changed besides who they give their rent checks to. When taking over a troubled property, take care of very visual eye-sores and deferred maintenance immediately. Paint, replace broken windows or doors, and clean up trash or debris as soon as possible. Once residents see you care about the property, they will start to as well.

3. Impose strict rules, regulations, and follow through with them.

Most physically troubled assets are also troubled financially. Often times they have poor quality tenants that have learned bad habits, stopped paying rent all together, or pay rent very late. Make sure the tenants know your rules right away and stick with them without exception. Now is the time to train the tenants for how you are going to operate the property. Be prepared as you will have tenants leave, but that is a good thing. When you impose strict rules the good tenants will respect them and stay and you will weed out bad tenants faster. The quicker you get rid of problems, the faster you’ll turn around the property.

4. Partner with local government and/or police department.

Whenever we consider taking on a troubled property, we always talk to the local police department and local government about the property first. We want to find out what has been happening on the property and what type of problems we’re going to walk into. Find the officers that are in charge of the area in which your property is located and set up a meeting with them. Let them know you are going to take over the property and that you plan on cleaning it up and want to improve the city and need their help. Most police departments and local governments are thrilled that a new owner is coming in that is going to be responsive. They can be your biggest partner in getting rid of bad tenants, tenant problems, and even fill it once you’ve made the improvements.

5. Change the name and re-brand the property.

Last but not least, sometimes the property’s brand and reputation is too much to overcome. No matter what you do, when people hear that name, they think of what might have happened there in the past. One of the best ways you can combat this is by changing the name, signage, appearance, and rebranding the property. By changing the name and brand of the property, it can help you overcome the past reputation much faster. We change the name of the property on almost every reposition opportunity. It is fun and can be extremely effective in combating a past bad reputation. Fixing property problems and turning a property investment around can be very rewarding and profitable. However, it is not for the beginner or the faint of heart. You must be prepared, have a plan to execute, experienced management, and the money it is going to take to do it successfully. If done correctly, it is a great way to improve your community, improve your tenant’s lives.