Group sponsorship provides:
1) A reduced membership fee for individuals joining the premium membership. Right now $14.95 for Charter members. This goes to $19.95 on April 1 and to $30 when we reach a 1,000 paid members.
2) 10% of all membership fees collected under your Group sponsorship.
The process is simple.
1) Join as a free member if you haven’t already.
2) Watch this 2 minute video to learn how to complete the process. Just click the video icon.
3) Complete the process as described. We’ll review and approve when that is required and you will finish the last step.
Thanks for helping out!
While there are different views on this the Bawld Guy makes some very good points that I’ve learned the hard way. Read on for more:
Cash flow is sooooo sexy, isn’t it? Even the phrase itself flows through our minds generating rivers of soothing endorphins. All cash flow ain’t equal of course, as many real estate investors will readily attest. A client once told me, fire almost pouring like lava from her eyes, that she felt she was making half of minimum wage just to get the so-called ‘crazy good’ cash flow her properties were ‘generously’ disgorging every month. She always did have a way with words. Oh, how she resented those units. I made the mistake of laughing — just once though — as she finished one of her rants. Her husband told me later it was OK to laugh, as he too thought it was Grade A standup material.
San Diego income property owners are acutely aware of what I’m talkin’ about here. Many of ‘em aren’t laughin’. It’s past time most of them shift into forward gear and begin the process of moving their equities to better performing regions. The same could be said for areas like Palo Alto, CA.
Resent cash flow? Really? Are you thinkin’, ‘I’d love a chance to resent some ‘crazy good’ cash flow. Please, gimme the chance.’
I talk all the time with folks from all corners, who’re tired of relatively high equity, good to seductive cash flow income property. They come in all age groups too. Their complaints run the gamut, but almost always include at least two of the following.
The units are pretty old, sometimes Moses old. Tenants are chronically below average if not downright low quality. Functional obsolescence abounds — a big cause of frequent maintenance, not to mention already mentioned subpar tenants and lower rents. The neighborhood is rundown, maybe a tad seedy, little if any pride. They’re located just far enough away to make frequent trips irritating on an almost epic scale.
Take a step back. Look at any property you own that appears like it may fit this model. You may have allowed yourself to become seduced by the Benjamins, only to find out they’re not worth the trouble, they’re also driving your Plan into the ground. ‘Wait just a doggone minute, I know I complain, but hey, the cash flow, dude. And, um, the equity is pretty high too, over 50% I think. Not bad for a man not even middle-aged yet, right?’
Maybe, but probably not. Why? Let’s count the ways.
1. You probably paid a pretty impressively low price, which is why you have the cash flow you love to brag about so much. I get it. Been there, bragged that.
2. As the years passed, even though you sensed they were too old to get you to retirement, much less through it, you’ve ignored that little voice who’s been tellin’ you to make a change.
3. Demand by tenants to rent and investors to own in the neighborhood has been in a downward trend for quite awhile.
4. Rehabbing/remodeling simply isn’t worth the trouble. Lipstick on a pig, etc.
5. As fewer and fewer folks wanna live there, the quality of tenant descends into what you now have come to call, TenantHell.
What we have with this scenario much of the time, is a no-brainer alternative — a change must be made. The goal is to upgrade location, functionality, tenant quality, and age of property(s).
Here’s a recent real life case in a nutshell.
Real estate investor in his 30’s invests in local properties in the midwest. They’re from 35-100 years old, in neighborhoods where, according to him, most folks don’t have the credit needed to buy. Mild to moderate basement flooding is almost predictable in winter. Even with an approximate equity position overall of 50% or better, the cash flow, though nice in terms of dollars, isn’t what better located props would yield with less than half the equity position.
In fact, a quick check with ‘Old Reliable’, my 12C, shows that a tax deferred exchange (1031) would allow him to nearly double what he owns in property value, triple his annual tax shelter, while increasing both his before and after tax cash flow. That doesn’t address the most obvious result, which is the relative potential of appreciation provided by hugely superior location and property quality.
What this example clearly demonstrates, is that what I refer to as ‘rickety income’, is in fact a retirement-sabotaging time bomb, hiding in plain sight.
Cash flow from these kinds of properties/locations can be seductive to say the least. They have the insidious ability though, to suck the life out of your retirement Plan. As almost always true in life, it’s better to cure a small problem now rather than try to slay the fire-breathing dragon just before you’re set to retire.
I’ve attached the text of a blog from the Trump University for the details. From an investor’s perspective this is a great move for all. Prospective buyers opportunities are narrowed causing long term demand and growth in the market to increase substantially.
Your comment has been submitted, and will appear once it is approved by the blog moderator.
Effective December 12, 2009, Fannie Mae begins implementing new, tightened lending standards.
Among the new guidelines, borrowers who are putting at least 20% down will need to have a minimum credit score of 620 (the current score is 580). The new cutoff for total debt cannot exceed 45% of borrower’s monthly income.
Why the tightened standards? On average, loans to borrowers with less than a 620 credit score are approximately nine times more likely to go into default.
In the past, it has not been common practice to give a buyer’s credit score on a lender’s pre-approval letter. In light of these new guidelines, it may be a good idea to request the score (from a tri-merged credit report) be stated on the letter.
The IRREIA is adding an investment club for members – The Real Deal Investment Club. This is a premium service, and we believe a huge value for our members. The club is moving online with the help of Tammy Phelps.
We will be adding a new section of pages, calendars, description of club activities, services, and supp0rt. Additionally, based on strict qualifications, we are interested in establishing local affiliates around the globe. The process for starting a club will be provided over the next few weeks.
You can sign up for the ONLINE Real Deal Investment Club later this week.
The Real Estate Investor
- Market rents fell 2% to 4% U.S. wide due to growing unemployment in the multifamily market place during 2009.
- Occupancies fell 2% to 3% nationally but rose in many markets during the 3rd and 4th quarters after reaching lows.
- Some markets have large oversupplies of single family homes.
- Relatively, losses were muted in multifamily in general and in older B & C stock in particular because demand was bolstered by households seeking lower cost living.
- Economies with large healthcare, federal government, and education presence have fared better.
- Many properties acquired debt at 80% Loan to Value (LTV). The market won’t support these values creating technical defaults. The added pressure of weaker occupancy and downward rent pressure is forcing many toward or into foreclosure. Because of this there is a growing volume of Real Estate Owned (REO) properties, distressed properties, and note sales available.
- Some note sales are moving at as little as 33 cents on the dollar. 40% to 45% is more common.
- Debt from all but the Agencies (Fannie Mae, Freddie Mac, and FHA) is very difficult to acquire from banking sources.
Private lending rates begin at 12% for most deals. Private lenders are looking for limited leverage.
CB Richard Ellis, Cassidy Turley, Century 21 Commercial, Coldwell Banker Commercial, Colliers International, Cushman & Wakefield, Grubb & Ellis, Jones Lang LaSalle, Lincoln Property Company, Marcus & Millichap, NAI Global, ProLogis, RE/MAX, and Sperry Van Ness
Feasibility can be a function of many assumptions. A tool to quickly model results can save you hours and perhaps days considering whether a project will work. Also, a quick estimation can help the investor be more objective about their considerations. Projects requiring wild assumptions should be avoided.
The following slides show the estimator before you provide your prospects initial assumptions. The areas in white are automatically calculated. The areas in yellow are input by the user.
Blank estimation tool:
Page 2 of the blank estimator:
The following shows the tool based on an example subject:
The final page of the estimator:
As you can see, the tool provides a robust yet brief means to very quickly analyze the likely performance of a property based on income potential. We believe this tool with practice can save tremendous time and improve investment results.
As a European consultant in Real Estate I was attracted by your website. The website is very attractive and invites to join as a member. When I looked more in detail I found out that the focus is strongly on the US based residential markets and regulations. As an international player I would ask you what’s in it for me when I join your network?
Good question. Since my experience is U.S. based the initial information is from a U.S. perspective. However, when it comes to cash flow based investment analysis, market analysis, accounting requirements, systems for improving sales, the techniques, skills, and support systems have universal application. This believe is apparently received as accurate as almost 25% of our new members and our traffic is coming from outside the United States. I expect few websites established by U.S. members attract so much attention.
Nevertheless, your concern is important to us. For this reason, we intend to build local chapters around the world. And, we expect to establish country experts to provide additional products, tools, and information appropriate to specific jurisdictions. Because we just established the Association on February 2 (Day 1, 0 members), achieving some of these ends will take time.
Regarding local chapters, we are currently developing qualifying requirements. Obviously, we need in country leadership with the experience and network to make a difference.
Please send any ideas or thoughts you feel we should keep in mind and thanks for the question.
Also, keep an eye on our products and services this week. We expect to add training for accounting (quickbooks), a due diligence check list, and more.
The Real Estate Investor