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Mar 31

banks TAKE AIM at YOUR EQUITY

By Carole Ellis | News

Your bank wants you to owe more. That might sound a bit like a conspiracy theory, but it’s the cold, hard truth. Now that the housing market appears to be stabilizing, at least for the time being, your lender would like you to take a bit more money out of your home in the form of a home-equity line of credit (HELOC), and they’re spending big advertising dollars to make that happen. Banks are “placing a bet [that] home equity will play a bigger part of our business,” explained Mike Kinane, a senior vice president of home-equity lending at TD Bank.

TD Bank is actually going whole hog in the HELOC promotional effort. TD has sponsored a series of bus tours that travel to hardware stores and invite consumers at those stores to step into the bus, grab an iPad, and fill out a HELOC application on the spot. Other banks are also getting in on the action; JP Morgan Chase & Co. has started calling customers to make sure they’re aware of the benefits of HELOCs and pointing out that the money withdrawn doesn’t have to be spent on the home.

Lesson Learned:

When banks start promoting debt, that means they’re willing to bet on that debt being collectable and profitable either via interest or via collateral. That’s good news for the housing market, but be aware that lenders never encourage loans for fun; they always have a game plan.

Point to Ponder:

Since last year, lenders have extended nearly $160 billion HELOCs, the highest amount since 2007. In 2015, the average line of credit extended was a staggering $119,790, pretty astounding since the median national home value is about $210,000 at time of publication. Do you think this is a problem?

Thank you for reading the News & Networking Section at REI.Today!

Your comments and questions are welcomed below.

Mar 31

the EASY GREEN UPGRADE worth a PREMIUM

By Carole Ellis | News

Want to add a quick $14,329 to your sales price when you sell your home? Consider putting some solar panels on your roof! According to The Appraise Journal, homeowners cite solar panels as one of the top things they’re willing to pay top dollar for these days, and that price bump represents 3.74 percent more than the average national sales price.

Banks are getting in on the sun-loving, too, because those additional dollars at sale time represent a good investment for the company holding your mortgage. According to SolarCity, in 2014 Bank of America funded an estimated $400 million in solar power projects that helped homeowners install solar panels without paying up front cots. Other companies actually allow homeowners to lease their solar panels rather than paying the potential $35,000 installation investment up front.

So is it always worth it to take advantage of the power of the sun? Maybe not. In some states, solar policy is not particularly friendly. For example, in Nevada, where you might expect there to be plenty of sunshine in this arena, the state Public Utility Commission is actually charging customers with solar panels higher rates on their electricity to compensate for what the commission believes are unfair advantages in sustaining the electric grid due to lower electricity bills. The result: solar panels don’t really save homeowners much, if any money there, although you certainly can pat yourself on the back for being environmentally friendly. Also, if you install in an area where solar panels are not common, you may not benefit because there will be a dearth of comps on those panels when it comes time to sell. In the face of non-market-value transactions, homeowners may not get that nearly-four-percent price bump they’re seeking.

Lesson Learned:

Evaluate the market for solar panels before you install, then pick the move that is right for your investment and your buying market.

Point to Ponder:

Can you believe the Nevada Public Utility Commission? Is this fair in your opinion?

Thank you for reading the News & Networking Section at REI.Today!

Your comments and questions are welcomed below.

Mar 30

DANGER ZONE for buyers in THIS POPULAR MARKET

By Carole Ellis | News

Would you buy in a hot market even if you thought you (and your investment) might literally be underwater in a few years? More people than you might think are willing to risk it, and nowhere is this more evident than in southern Florida. Now, before you start thinking that this is some fluffy piece of global warming propaganda, let’s look at the facts. Global warming has been largely disproved and it’s done a terrible disservice to actual environmental issues that many of us now largely ignore because global warming has turned into such a farce. One such issue is rising sea levels.

Now, rising sea levels can be documented independently of global warming, although global warming advocates don’t like to do so. In areas of the country like Fort Lauderdale, however, where a network of canals already helps keep the entire city dry, flooding is an ongoing issue due, in large part, to development and other manmade causes. Particularly during “King Tide” events, where tides temporarily raise sea levels as much as 18 inches above normal high tide, streets, yards, and even homes can end up partially or wholly underwater. Given that the city is also built on limestone bedrock, which is very porous, events like these can destabilize foundations as well.

All of this is well and good as long as developers and homeowners allow for these issues, but the real estate market is fueling a development boom in the area that has some local analysts and scientists concerned. Builders can build in flood risk and flood plain areas, but many researchers are worried that building codes are out of date; in fact, some areas do not require any type of disclosure about the risks in the area and buildings only have to be erected one foot above the flood plain. While Fort Lauderdale is working to protect its municipality in other ways, such as using one-way valves to stop seawater from spreading onto roads, some scientists and urban planners warn that a major water-related environmental disaster, such as a hurricane or storm surge, could not only destroy a lot of valuable property but could also kill a large portion of the population and tank the real estate market as well.

Lesson Learned:

Do your own research and make sure you know if you’re buying in an environmentally risky area. Know what the local government is doing to protect you and your property.

Point to Ponder:

Do you think Fort Lauderdale is in danger? Would you invest there?

Thank you for reading the News and Networking Section at REI.Today!

Your comments and questions are welcomed below.

Mar 29

BLAME GOOGLE: crew LEVELS WRONG HOUSE

By Carole Ellis | News

When Lindsay Diaz left her duplex, which had recently sustained damage from a tornado, last week, she expected to come home from work to find the duplex in improved condition or possibly with repairs underway. Instead, when she pulled up that evening, it was gone. A local demolition crew had leveled the building by accident, mistaking it for another property one block over. “How do you make a mistake like this?” Diaz asked, adding, “This is just the worst.”

The crew responded to her query in several surprising ways. First off, they blamed Google Maps, which they said pointed them to Diaz’ duplex instead of the correct building. The company did have a permit to tear down another duplex one block away. Interestingly, the CEO of the company said that in his opinion, the error was “not a big deal” – maybe because Diaz’ building was tornado damaged. Diaz had been waiting on insurance and a FEMA estimate in order to determine what they would do with the home.

City manager Brian Funderburk responded to the assertion that the mistake was not a big deal on no uncertain terms. “I think this is a huge deal,” he said, noting that the company is registered and has liability insurance. Company employees texted a local news station images from Google Maps with a large arrow pointing directly to the incorrect duplex. The duplex was leveled down to the foundation and, as yet, Diaz has not received an apology, she said.

Lesson Learned:

Check the address! Don’t ever assume that your GPS has led you to the correct home without verifying the street number at the home itself.

Point to Ponder:

What should the demolition company do? Why do you think they haven’t even apologized?

Thank you for reading the News & Networking Section at REI Today!

Your comments and questions are welcomed below.

Mar 28

how to get GOOD PROPERTY DRAMA

By Carole Ellis | News

Usually when you hear the word “drama,” unless you’re an actor it’s not a good thing for you. When you’re an investor, drama is almost always the last thing you want. Of course, that rule goes out the window if the drama helps you sell properties at top dollar, which is where a Los Angeles real estate agent is cornering his market. The agent, named Ben Bacal, is making drama-full headlines for his soap-operaesque videos that he uses to market his properties online.

“I worked in the film industry before selling real estate,” Bacal told the Hollywood Reporter in a recent interview. He added that his videos are designed to “entertain people with storytelling while showing a house,” which draws “more eyeballs…to that property.” His property videos have been generating a large amount of buzz online among buyers as well as within the industry, making Bacal a big fan of drama.

The agent doesn’t just snag buyers, either. His videos are garnering him clients selling their homes as well. The most recent video was actually written by the couple selling the home and they star in the production. Although they’re not splitting up in real life, the storyline for the property features a man coming home and walking slowly through his house before approaching his wife and telling her he wants a divorce. Then, the wife also traverses all of the rooms of the $4.5-million mansion.

That particular film cost about $20,000 to produce, but the potential benefits of such a large sale make the production costs reasonable. Bacal has also used his “property drama” approach to sell a $48.5-million Bel Air home, and another film, tentatively titled “The House Nazi,” about a difficult seller, is currently in production.

Lesson Learned:

Evaluate your cost-benefit ratio and don’t be afraid to get creative. Not everyone can produce 10-minute “property dramas,” but every investor has unique talents that can benefit their business.

Point to Ponder:

What unique insights and talents could you leverage for your real estate investing business? Tell us about them!

Thank you for reading the News & Networking Section at REI Today!

Your comments and questions are welcomed below.

Mar 25

$100M to CLEAN UP LEAD PAINT?

By Carole Ellis | News

If you have ever purchased a property built before 1978, then you probably are familiar with the lead-paint disclosure that often comes with such properties. In most cases, this little document is little more than a formality, but if you have small children, it can be a problem. Lead-based paints were commonly used before 1978 and, if children ingest the paint chips, it can lead to a large number of physical and mental health problems. For older children and adults who are less likely to eat paint chips off the walls or floor, the threat is far less serious.

Now, the Department of Housing and Urban Development (HUD) has decided that lead-based paint issues must stop, and they’ve earmarked a staggering $100 million for that purpose. If you have a qualifying low income and live in a home built before 1978, then you may qualify for a portion of this money. It is possible, albeit improbable, that some investors who own rentals meeting certain qualifications might be able to utilize some of these funds as well in some circumstances, since states and local communities will be responsible for the distribution of the funds in the form of grants.

A HUD spokesman expressed the hope that “these grants will help prevent illness and injuries, reduce associated health care and social services costs, reduce absentee rates for children in school and adults at work, and reduce stress, all of which help to improve the quality of life.” If that sounds like a bit of a panacea to you, that’s okay. It did to us too.

Lesson Learned:

Remember our government grants training? It’s not currently playing (although you can review case studies and success stories on the host site), this is a good example of how knowing what the program is intended to do (see the last paragraph) might help you access some of that money to make a lower-income property more attractive. Get more information on how to apply for (and effectively get) government grants for your real estate business HERE.

Point to Ponder:

Do you think that this lead-based paint program is worth $100 million of government money? Do you think it will help people?

Thank you for reading the News and Networking Section at REI.Today!

Your comments and questions are welcomed below.

Mar 23

why THIS BUZZWORD is a BAD WORD for your listings

By Carole Ellis | News

“Going green” has been a popular concept for years as more and more homeowners place higher and higher value on energy efficiency and environmental friendliness. However, these days, describing your home as “green” could actually be costing you views, bids, and cold, hard cash because consumers no longer view the word as indicative of value. Instead, according to the National Association of Home Builders (NAHB), consumers prefer the word “eco-friendly” two-to-one and are more likely to pay more for a home that is “eco-friendly” versus “green,” even when the words are used to indicate the exact same amenities and benefits.

“The industry throws around a lot of words consumers don’t understand,” noted marketing and communications expert Suzanne Shelton. She noted that along with “green,” builders will often note that their homes are “net zero,” indicating that a property uses no energy or very little, and that buyers actually assume that this is a negative thing. While green is certainly ubiquitous enough to be understood, eco-friendly appears to convey more value, perhaps because it is associated with lower energy emissions and, by extension, lower utility bills.

Interestingly, another problem adjective was “low-flow,” which builders and agents use often to note that they have installed energy-efficient faucets and showerheads in their homes. While the assumption is that homebuyers will be happy to see this term because they’ll likely enjoy lower water bills, in reality, consumers see this term as negative and prefer “water saving.” Or, maybe they just want better water pressure.

Lesson Learned: Words Matter!

When listing a property, make sure that you have done a little research to determine how positively your listing will be viewed and how attractive to potential buyers your description actually is. You may be describing a dream home, but if you don’t use the right words, your buyers may never find it.

Point to Ponder:

Do you like eco-friendly homes and fixtures? Why or why not? Is it worth it to install them in homes you are selling or in which you are investing?

Thank you for reading REI Today’s News and Networking Section!

Your comments and questions are welcomed below.

Mar 21

HOT RENTAL MARKET projections for 2016

By Carole Ellis | News

As rental prices continue to rise across the country and an increasing number of new households opt to rent instead of buy, more and more investors are finding the attraction of cash-flowing rental properties hard to resist. According to a recent report from an investment firm called Home Union, there are 44 single-family rental markets in major metro areas that are likely to see significant growth in 2016, making these “hot markets” for this year. This does not mean that there are not many other viable and even superior options for investing in rental properties in areas without the same growth, but if you like to be involved in the “hot” areas of the country, you will certainly want to keep these top five of the 44 on your list. Of course, as with any “hot” market projection, you must remember that while numbers don’t lie, they can mislead. Always do your own research to make sure that the properties in which you invest will allow you to exit the deal in a number of ways without loss to your bottom line.

Here are the top five projected hot rental markets for 2016:

  1. San Jose, California
    San Jose has a projected rental rate growth of 7.3 percent, leading to a projected average monthly rent in the area of $3,459.
  2. Orlando, Florida
    Orlando boasts a projected 6.1 percent spike in rental rates along with average monthly rents of $1,348.
  3. Seattle, Washington
    Seattle comes in just under six percent rental rate growth at 5.9 perc ent with an average monthly rent of $4,191.
  4. San Francisco, California
    San Francisco is projected to see growth in single-family rental rates of 5.4 percent and projected average monthly rent of $4,451!
  5. San Diego, California
    San Diego also has a projected rental rate increase for 2016 of 5.4 percent, but rents are relatively “low” for the state in this city. Projected average monthly rent: $2,307.

Lesson Learned: Don’t Forget to Do the Math

Of course, seeing those monthly rents could have you seeing mountains of cash in your mind’s eye, but it’s important to remember that your monthly loan payment on a single-family rental in San Jose could eat into that nearly-$3,500 quickly. In San Jose, homeowners dedicate nearly twice as much of their monthly income to housing as homeowners in the rest of the country. In fact, the average mortgage payment in that city is more than $3,000, so you’ll need to make sure that you get a good deal if you want to cash-flow a property in that area and possibly get some equity in your deal as well.

Point to Ponder:

Are hot markets worth the risk and expense? San Jose is predicted to experience roughly 11 percent appreciation in 2016. That makes it a really attractive market for investors. If the numbers are wrong, though, or if you can’t keep tenants in your property, you could be looking at a rental ownership nightmare. Would you rather own rentals in a hot market or a consistent one?

Thank you for reading the Real Estate Investing Today News & Networking Section!

Your comments and questions are welcomed below.

Mar 19

Special Event – Episode Preview: Top 4 Things You MUST DO to Flip HUGE COMMERCIAL BUILDINGS and SURVIVE THE NEXT CRASH in style | Episode 21

By Carole Ellis | News , REI Today Podcast

Sign Up for Training NOW

How would you feel if I could distill the entire process involved in flipping commercial real estate on a MASSIVE SCALE into just four simple steps AND throw in there the key to surviving the NEXT REAL ESTATE CRASH IN STYLE? You’d be HUGELY excited! Good news. I’m Carole Ellis, and my guest, Sue Nelson, who has purchased thousands of apartments in her decade of commercial real estate investing, will break the entire process down for you today in Episode 21.

So let’s get right down to the four green flags you’re looking for when you’re thinking about investing in an apartment building. Now, for the sake of clarity, let’s take just a minute to define “apartment building.” If you listened to episode 20 (and if you haven’t, I HIGHLY recommend you do so immediately after you finish this one because my expert has a VERY UNIQUE way of looking at real estate deals that will truly revolutionize the process for you should you choose also to adopt it), then you know that Sue is not a big fan of the “small potatoes” apartment complex, say duplexes, triplexes, and quadplexes. So during this podcast, when we say “apartments” or “multifamily buildings” or “units,” just bear in mind, we’re talking BIG. And don’t let that intimidate you, because Sue is a true expert on the process of buying these things without using your own money and on flipping these things for fast, massive profits.

Now that we’ve got that out of the way, let’s get into the four things that Sue says you must do in order to know that an apartment deal is worth investing your time. If you’re just tuning in, our expert, Sue, is a long-time commercial real estate investing expert who has done it all and done it big for many years. She started out, however, as an art teacher, and only started flipping mega-properties when her daughter was born with some health issues. Sue tackled a 104-unit building as a “starter project” and literally made five times her teaching salary with one deal and never looked back. And speaking of not being intimidated, I can’t tell you how many times Sue said during the course of our exclusive interview with her, “If I can do it, anyone can!” And with these four “green flags” as a guideline, you’ll find it easy to believe her!

So, I asked Sue directly, “What are the things that you must check off on the list that would let you – or anyone doing this type of real estate – that they had a great deal.” Well, she’s a very methodical lady, and it turns out she has just such a checklist! And she agreed to share it here.

So, first of all, Sue checks cash flow. If the building doesn’t cash flow, then there is too much risk, she explained. That’s the first and biggest checkmark in the box.

Next, Sue evaluates the occupancy of the building. Occupancy is, as you might have guessed, the number of occupants in the building or, more specifically, the number of units that are occupied. “I usually only buy if the property is 85 percent or more occupied,” Sue told me, adding that in her opinion, numbers lower than 85 percent add too much risk to a deal and make it less attractive to investors and buyers.

Thirdly, Sue said, she evaluates the rehab costs on a building. Now, Sue gets a LOT of her properties from banks which is, much like the rest of commercial real estate, kind of an intimidating concept for a lot of people. However, Sue has certain MAGIC WORDS that she says to bankers that basically cause them to sit up, pay attention, and open up those REO (that’s real estate owned) books and start selling at a discount. If you want those words, by the way, as well as the ENTIRE, firsthand explanation from Sue about how to leverage these four green flags, head over to www.rei.today/IMPORTANT right now and register for Sue’s limited-time training. Returning to rehab, though, Sue looks for relatively low rehab costs so that she can add value to the property quickly not by fixing it up, but by, as she puts it, increasing income or decreasing expenses. And she’s not unclear: “I am not looking for large rehab deals,” she said on no uncertain terms.

Finally, Sue buys in what she calls “decent neighborhoods.” It is very, very difficult to fix a neighborhood, she warned me, adding that some areas – and you know what she’s talking about! – have a culture of non-repair that can really bog your projects down. “As much as you are dying to fix the world and help dilapidated areas, it’s very difficult to do that,” she said, pointing out it’s also very difficult to get other investors to invest in or buy those projects outright.

So there you have them, ladies and gentlemen. Four simple, straightforward green flags for buying BIG and doing BIG DEALS that should SELL FAST in commercial real estate, where six- and seven-digit deals are not at all uncommon. “When I have broken those rules, that’s when I’ve gotten in trouble,” Sue told me, and added that in her opinion, “If you follow those rules, you make it very, very possible that you are going to stay out of trouble regardless if we experience another 2008 market crash.” Given that she invested profitably and productively THROUGHOUT the crash, I’d listen to her on that one!

Now if you like what you’re hearing – and I know you do – in terms of clear, concise instructions for making big, BIG deals that probably seemed unimaginable for you before you started listening to this exclusive interview series with Sue happen in YOUR REAL ESTATE INVESTING BUSINESS, then you need to head over RIGHT NOW to www.rei.today/IMPORTANT to sign up for Sue’s extended, limited-time, FREE TRAINING. That’s www.rei.today/IMPORTANT. When you do that, you’ll be able to not only get Sue’s personal, extended teachings on just how to make this stuff work, but you’ll also be able to view real-life case studies about how she did it. So RUN, don’t walk over to www.rei.today/IMPORTANT and get on that class roster before we run out of room.

And once you’ve registered for the class, take a minute to review our other materials from Sue on the website at www.rei.today. You’ll see other podcasts, news and reporting on the topic, and far, far more insightful stuff that will make your real estate investing business safer, faster, and more profitable.

When you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country in addition to having the chance to interact directly with Sue herself.

REI Nation, thanks for listening in. Now, more than ever, please remember this:

Your best investment is ALWAYS your own education.

Mar 15

MUST-HAVE DESIGN ELEMENT for 2016

By Carole Ellis | News

If you’re not showcasing your properties’ outdoor living options, then you’re voluntarily giving up eyeballs on your listings. According to the American Society of Landscape Architects (ASLA), outdoor living areas are fast replacing the indoor living versions of themselves as the biggest draws for buyers. Outdoor fire pits and fireplaces in particular appeal to buyers, perhaps, speculated one outdoor living product company, because “Once upon a time, the living room fireplace was the favored gathering spot for family and guests and roasting marshmallows over a campground fire was part of the annual family vacation.”

Now, with spring in the air, more and more buyers are saying that they simply cannot live without a viable fireplace or fire-pit around which to enjoy the weather and good company of family and friends. The Hearth, Patio, and Barbeque Association, ever-ready to oblige these demands, recently reported that “linear” (read: rectangular) fireplaces and smokeless fire pits are increasingly popular these days. The association also noted, “electric-powered models that offer multicolored flames [for a] sophisticated, contemporary style” also command attention and are subject to increasing demand.

If you want to be sure to highlight your outdoor living options – fireplace/fire pit, or not – then treat the outdoor areas around your properties as carefully as you would indoor living areas. Stage with nice, relevant furniture and make the fire pit, if there is one, a focal point of the pictures. If you do not currently have fire pits in your investment properties and you plan to sell to owner-occupants, then you might consider making the investment. Fire pits can get pricey, but a basic installation is, on average, just under $600.

Lesson Learned:

Outdoor living is more important to buyers than ever, so make the most of the outdoor space in your properties. Even if you are marketing rentals, you can charge higher rents and be “pickier” about your tenants if your rentals are in demand because of their nice patio areas or other trendy outdoor living amenities.

Point to Ponder:

Is a fire pit worth the cost of installation? How long do you think this will be the “it factor” for American homebuyers?

Thank you for reading REI Today’s News & Networking Section!

Your comments and questions are welcomed below.