Simply Junior

Many states have been hard hit by the collapse of home prices nationwide and the sluggish economy. Many mortgage brokers expect a slow but steady come back in the real estate market. Still there remains a glut of foreclosures and unsold properties, and job growth remains stagnant.

A few years ago, a booming market was a seller’s market. Buyers were plentiful, the competition driving home prices upward. This led to speculators buying homes for the sole purpose of selling them six to twelve months later to make a tidy profit, further driving home prices upward. As long as the nation had a dynamic economy, it was still possible for homeowners to buy and prosper. It seemed like everyone was getting their share of the American dream.

As housing prices collapsed, followed by a deep recession, unemployment topped out at 12.5%. Housing depreciated by 40% to 50% as the rate of foreclosures soared. Residents who bought before the crash saw their equity disappear.

Now for the good news. Home sales are on the rise. Inventory is still high. Strong price corrections have already occurred. February 2010 sales were up 21% from February 2009. A large number of foreclosures and a glut of unsold condominiums in tourist areas continues to keep prices low. This is good news for buyers, bad news for sellers.

Lower prices mean residents can buy a higher quality home for a reasonable price with a low mortgage rate. Slow but steady growth should result in appreciation of home values allowing those of modest means to make economic progress. Although unemployment remains high, temp agencies are now adding jobs, usually a precursor to real job growth. Job losses have slowed, but until the unemployed get back to work, sales will remain weak. Prices will remain low.

New home building has rebounded ever so slightly as building costs have decreased. This trend is limited to areas near large cities where the jobs are. New home buyers are primarily first time buyers and retirees who are finding affordable again. Construction is proceeding slowly. Builders remain cautious. Major concerns are the weak job sector and the continued glut of foreclosures for sale.

Some investors are betting that the economy will improve and beach cottages and condominiums will be in increasing demand for seasonal rentals. Many investors are buying and leasing to foreclosed homeowners who can’t qualify for a home loan. There has been some return to lease options between investors and renters. There are many opportunities and pitfalls to be considered. The cyclical nature of economies and real estate has to be factored in to any buying decision. An investor buying today should plan to hold his investment several years until the market rebounds.

Expect mixed signals and uncertainty to continue through 2011. Although strong price corrections have already occurred, the real estate market may not yet have hit bottom. Home prices and mortgage rates are expected to remain low throughout 2011. A lot depends on the job sector. The unemployed don’t buy homes. Home owners who lose their jobs may lose their homes to foreclosure. Residents who fear job losses do not buy homes. For those who can and are ready to buy, low home prices are allowing more residents to purchase homes and low cost rentals are bringing seasonal visitors and tourists back to many areas of the country.

When planning to build any kind of online presence as a small business, it is important to start with a good foundation. A good online foundation contains the following four main components: a website, a Facebook page, a Twitter account, and a LinkedIn profile.

A website can and should begin with a simple informational site consisting of five main pages. People should be able to find the business on the web, learn about the company, contact someone for customer service, learn about the products available, services or capabilities, and find the business in the “real” world.

A Facebook page offers many of the same features as a basic website. Visitors should be able to find the company fan page, contact someone for assistance, interact with the business, and share the page with friends. Luckily, all of this is built into Facebook.

LinkedIn is commonly described as the primary social media place for business. A company should create a personal profile with information about the business. Each employee should reference the company in their personal profile and appear as an extension of the business.

Twitter has a wealth of information and is really very simple. Companies use Twitter to “tweet” small updates and to search for specific mentions of the business firm, competition, partners, and anything related to the company’s market.

Don’t let Facebook, LinkedIn, or Twitter become a full-time job. Set a specific time and look quickly through the Facebook and LinkedIn Profiles. Create a few searches and lists to review related Twitter activity. While looking at each of the services, respond to any serious inquiries, share a personal comment, and share something useful.

Ok, now here’s the secret — Connect all of these items together! Over time, start to write a blog on the website. When posting a blog entry, “push” it to the Facebook page. The Facebook page should then automatically “push” to the Twitter page. Connect Twitter and the blog to the LinkedIn account. With these “connections,” a single blog entry is easily “pushed” to the three social media profiles.

This might sound like a lot of work, but it really isn’t. The setup is not difficult and can be done in just a few hours (assuming the company information is available). After everything is completely setup, it doesn’t take much time at all to write a short (but high quality) blog entry, quickly check the social profiles, and build a solid online presence.

For cash buyers in today’s real estate market, the power to offer cash funding and a quick close can translate into a better purchase price. Motivated sellers can include banks that have many properties to sell, individuals who need to move and have been unsuccessful in selling for some time, and homeowners in financial distress. While it always feels great to know you got a good price for your home or investment, in today’s market the smart cash buyer will also have an exit strategy before tying up his cash.

Two common real estate investment strategies are: 1. Flip and 2. Buy and Hold.

“Flipping” a property refers to purchasing a property below market value, repairing and renovating it appropriately, and then selling as quickly as possible. An investor’s ability to flip a property depends on timing and keeping costs down, including original purchase price. Some people make good incomes flipping property. However, it is possible that one or more properties purchased to “flip” will not sell, or will not sell in a timely manner. The best way to minimize risk in this scenario is to purchase investment properties only when a realistic market rent will cover your costs, as well as cover a mortgage should you be forced into a long hold. This way, you can recover 60 – 90% of your cash by taking a mortgage on the property, and let rents will cover expenses until the market recovers and you can more easily sell.

Historically, the California market has lofty peaks and deep valleys with an approximately 12 -18 year cycle from one peak to the next. The peak in 1989 was followed by a low around 1994. The next upward climb started gaining momentum around 1998 – 2000, but did not peak until 2006, 18 years from the previous. If the peak was in 2006 and we are close to the bottom in real estate now, there is a long, slow climb ahead before prices heat up once more.

To “Buy and Hold” may be the most common real estate investment strategy. Values go up over time, sometimes with a dip in between peaks. A common error many real estate buyers made during the early 2000′s was buying for appreciation instead of cash flow. When a market is appreciating quickly, it is hard to match the cash on cash return for doing nothing but holding title on a property. However, without an ability to rent that property for at least break even cash flow, the buyer has made a bet on appreciation with a huge risk of carrying heavy costs if the market or events do not go as planned.

Whether in 2011 we are at the bottom of the real estate price fall for this cycle or close to it, real estate purchases made well in the next 2 – 5 years will set investors up for exciting returns over the following decade. If you buy for cash flow when the market is down and people are eager to sell, your investments will serve you well.

Several real estate investing strategies exist, but not all generate profits, nor are they suited for every investor. To succeed in this market, investors should engage in thorough research to understand the pros and cons of each available strategy.

The most popular real estate investing strategies include residential homes, commercial real estate, and probate properties. Each type of property can be used in various ways. How investors generate a return on investment will depend on how much time they want to spend maintaining the property.

Residential homes can be used as vacation rentals, long term rentals, or combined with owner will carry financing. Vacation properties require more hands-on care than residential rentals. Investors will need to fully furnish vacation homes, maintain utilities, and thoroughly clean after each use.

Long term rentals don’t require as much maintenance, but property owners can incur expensive legal fees if tenants default on their lease or cause property damage. Nearly every landlord has experienced bad tenants and endured the time-consuming and costly process of eviction. On the other hand, conducting proper due diligence can minimize risks. At minimum, investors should obtain a current credit report, background check, and list of referrals.

One investment niche that is beginning to explode is that of offering seller-financing. Thousands of people have lost their home to foreclosure and cannot qualify for bank financing. Those who can qualify for a mortgage loan aren’t willing to pay full market value because the market is saturated with discount-priced foreclosure and bank owned homes.

Offering seller-financing can be beneficial to all parties involved. Sellers can obtain fair market value for their home by selling under a lease purchase option agreement or seller carry back trust deed. During the contract period, buyers tend to better care of the property because they are working towards purchasing it.

Owner will carry contracts usually extend for 1 to 3 years while buyers restore credit ratings. When the contract expires, buyers obtain a bank loan to purchase the property. If buyers cannot qualify for financing, sellers can extend contract terms or lease the home to other tenants. When buyers default on owner-financed contracts, sellers retain all funds contributed toward the purchase.

Several real estate investing strategies exist with commercial properties. This type of real estate is generally more expensive to buy and maintain than residential homes. Investors usually partner with other investors to offset costs and maintenance duties.

Some of the more popular commercial investments include apartment and condominium buildings, retail shops, and office buildings. Investors will need to carefully calculate the true cost of commercial real estate. Most require a dedicated staff to maintain the premises, collect rent, and attract new tenants.

Investors who do not want to manage commercial properties may want to consider investing in real estate investment trusts. Commercial REIT stock offers the potential for long-term capital gains and can be a good tool for portfolio diversification.

Lesser known, but potentially profitable real estate investing strategies are those involving probate properties. This type of real estate is held in probated estates. When estates are incapable of paying decedents’ outstanding debts or mortgage payments secured by the property, the real estate can be sold to eliminate financial burdens.

This investment niche requires investors to have a good understanding of state probate laws and the ability to scout out potential properties by searching public records. One of the easiest ways to learn how to buy probate homes is to network with other investors who specialize in this niche.

Although the real estate market is still downturned, there are plenty of opportunities for investors to generate profits. Calculating the pros and cons of each type of investment can help investors decide which real estate investing strategies to incorporate into their long-term plan.

With the New Year approaching many real estate investors are wondering where to turn to start over and build a stream of income to support their life style! With the state of this economy many techniques and old tools of the trade no longer work and are far from proven today. As much as we don’t like it as people we have to change our routine to get better results sometimes.

These changes may be minor changes and sometime major and could throw a wrench in our entire operational plan and daily routine! In today’s market your business plan must reflect whats being use and is most prevalent. We had to make major changes but these minor changes made huge improvements and bought major results.

One of the first things we did as our business began to slow we turned to people who were taking off in their business because of strategic thinking and taking advantage of the new ways to market and bring exposure to their business! To make huge profits in this business the leads of hungry buyers and sellers have to be on autopilot.

The first step we took was to find a mentor to guide us through and brain storm different ways and techniques to increase our business! I reached out to a few reputable people in the business we’ve done business with and knew how to invest in a fair weather economy as well as a boom! Every investor should have a business plan and model that is effective regardless of the economy and situation.

The second thing we did with the advice of our mentor was to change our marketing techniques! Marketing made a huge change and the internet and social media. We continue to use our old technique such as flyers, bandit sign, and direct mail. We found out that this marketing niche increased out business leads by twenty percent and in turn increased our profits.

The third thing and most important thing we did was take action. With all of the different techniques and ideas one can obtain and retain in this business the most important is to take action! Decide what is more important at this time and pull the trigger! Your business should be priority and should be treated as so. Take the time to evaluate your business and determine where you need to improve and capitalize on it! Make a day to day outline of what needs to done and initiate the plan.