Refinancing Gets Even More Attractive

Homeowners who have resisted the urge to refinance their mortgages until now could be rewarded for their willpower. Mortgage rates have fallen to new lows—and banks are rolling out incentives to win business.

Economic uncertainty in Europe and slow growth in the U.S. are prompting investors to pile into ultrasafe U.S. Treasurys. That, in turn, is pushing down mortgage rates, which are tied toTreasurys.

The average interest rate on a 30-year mortgage fell to 4.05% for the week ended Dec. 23, the lowest in 60 years, according to HSH Associates, a mortgage-data firm. And rates on jumbo mortgages—private loans that in most parts of the country are larger than $417,000—also have hit new lows, averaging 4.61%.

“It’s hard to argue rates will get much lower than they are today,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles.

That’s good news for homeowners. A person who refinanced a $400,000 30-year mortgage in February would pay an interest rate of 5.04% on average, according to HSH Associates, and fork over $2,157 a month; at the current rate of 4.05%, he’d save $236 per month, or $2,830 per year.

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What’s more, demand for refinancing is declining, since many homeowners already took advantage of lower mortgage rates. Applications for refinancing are 17% below this year’s peak in September, according to the latest data from the Mortgage Bankers Association.

That and other factors have prompted some lenders to offer incentives to win new business—particularly regional and community banks, which are focusing more on jumbo mortgages, says Stu Feldstein, president at SMR Research, which tracks the mortgage market.

The discounts can be sizable. Regional bank Valley National Bank charges homeowners in New Jersey and eastern Pennsylvania a flat fee of $499 for closing costs on mortgages as large as $1 million. Since average closing costs on a refinance run about 2% of the total loan amount, a person with an $800,000 mortgage could save about $15,500.

[Click here to check home equity rates in your area.]

A spokesman for the bank says it is aggressively marketing the discount in part to bring in more customers.

While many lenders don’t refinance mortgages that are larger than about $2 million, Union Bank—which has branches in California, Oregon and Washington—refinances up to $4 million at no extra cost. (Many banks that refinance multimillion-dollar mortgages tack up to an extra quarter of a percentage point on the interest rate.)

Since November, Union Bank has also allowed borrowers to roll the costs of a refinance, like the appraisal fee and loan processing fee, into the mortgage. And borrowers whose original mortgage is from Union Bank don’t have to provide all of the income documentation that other customers do in order to refinance.

In part, the bank’s goal is to develop relationships with high-net-worth clients, says Stuart Bernstein, national production manager of residential lending at Union Bank.

Despite the incentives, many would-be applicants remain sidelined because they can’t meet the long list of qualifications.

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The home-equity requirement is one of the toughest hurdles, says Mr. Feldstein. Homeowners with at least 10% home equity make the cut, but people with less have a tougher time.

Borrowers with 10% to 19% equity in their home usually have to buy private mortgage insurance, whose cost varies based on many factors, including their credit score. A borrower with 15% equity and a FICO credit score above 720 could pay 0.44% of the total loan amount, says Keith Gumbinger, vice president at HSH Associates. On an $800,000 loan that would be $3,520 a year—eating into the potential savings of a refinance.

In December, the federal government rolled out a revamped version of the Home Affordable Refinance Program with relaxed home-equity requirements, to allow more borrowers to refinance. To qualify, the current mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and borrowers need to be mostly current on payments.

For regular refinancing, applicants need a FICO credit score of at least 740 to get the best rates, says Mr. Gumbinger. And they must provide copious documentation, including at least two years’ worth of tax returns and proof of income as well as recent statements for assets such as retirement and brokerage accounts.

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After clearing those hurdles, you might wait about 60 days for refinancing to be completed, says Mr. Gumbinger—longer than the typical 45 days. While some lenders are offering 60-day rate locks for free, others charge a quarter of a percentage point of the total loan amount for the service. On an $800,000 mortgage, that’s $2,000.

Or you could opt to take your chances with a free 45-day lock and hope rates don’t spike between day 46 and the date your loan closes. With the euro zone still in economic crisis and global investors rushing to the safety of U.S. Treasurys, housing-market analysts say it could be at least six months before rates rise significantly.

 

SOURCE

Secrets Lenders Don’t Want You to Know! Read This 11 Point Report Before You Sign Anything!

The right or wrong decision when signing your home mortgage can mean thousands of dollars difference in interest paid.

by Jay Robins

The right or wrong decision when signing your home mortgage can mean thousands of dollars difference in interest paid. There are very important considerations to evaluate before you commit to a 15 or 30 year note.

For many of us our mortgage payment is the most important financial decision we’ll ever make.

Doesn’t it make sense to know as much as possible about the financing of our home? Take the time to thoroughly investigate all of your options!

Unbelievably, many of us sign the first mortgage placed in front of us. Typically the excitement of the new home purchase reduces the mortgage to not much more than an afterthought. What you read here could save you hundreds or even thousands of dollars.

Your real estate professional has established relationships with the top lenders in your area. By aligning yourself with a professional agent you ensure that all the financial steps are taken care of properly and
economically.

1. Utilize a Lender With Established Ties to an Agent- Lenders are much more flexible with the real estate agents who have done business with them previously. This relationship then establishes them as a team. The lender and agent work effectively together, referring each other business. That’s why a good agent can make substantial difference in setting up the most economical financing. And the right financing can, literally, save you tens of thousands of dollars over the life of your loan!

2. Don’t Attempt Paperwork Alone- All the paperwork required to complete the purchase of a home can be quite intimidating and frustrating for a home buyer. Make sure you have your lenders help you with all the paperwork. Get help from your team, your lender and agent. Their expertise will help alleviate the stress and it will prove to be invaluable before you sign your mortgage.

3. Look at All Your Options- Make sure you see at least 5 loan programs for your mortgage.

Lenders have at least 10 programs and should work with you and your agent on deciding what is best for your circumstances. Evaluate all your options. After all it’s your money you’re spending – not theirs!

4. Demand Service- There is little difference between a bank, savings and loan, or a mortgage broker when it comes to the competitiveness of their loan rates. The difference is in the service they provide. It is their job to serve you! You want to get the loan approved and move into your new home as quickly as possible, but don’t overlook the fact that you are the one spending the money and they are the ones who should cater to your needs. Don’t let the process become so intimidating that you lose that understanding.
5. Stay in Complete Touch- You should receive a written report from your lender about every step. This will ensure that no details are overlooked and there will be no surprises.

6. Negotiate a Flexible Loan- Don’t just accept the terms they lay down in front of you. Lenders are in the business of loaning money and they want your business. Make sure you examine every option available to you. If you negotiate a variable rate loan, many lenders have the ability to move you into a fixed loan if rates start going up. Make sure that you understand whether or not that is an option in the package you are looking at.

7. Don’t Give Up on the First No- Initial decisions are not always final decisions. Going to a higher authority can sometimes get you the loan, but do so with the assistance and compliance of your lender and agent. Many times special circumstances when explained properly to the person in charge, will win you the loan.

8 Don’t Wait for the Bottom of the Market- The odds of you hitting the bottom of your market are about like the odds of you hitting your state lotto! You will almost never hit the bottom of a market. And trying to time it exactly right is often costly. It usually causes a person or family to miss out on the opportunity to purchase a very nice property. You’re better off simply negotiating the best rate and terms you can at the time you find a property. If interest rates go down, you can refinance. This is a much better approach because you won’t miss out on the property you’ve spent so much time locating.

9. Be Honest With Your Lender- Your lender wants to help you with your loan. The only time they get paid is when you get approved.

The more information (good or bad) you provide your lender, the easier it will be for them to get an approval. It helps them present the loan in the best light. This in turn helps the loan get the highest approval rating.

10. Become Completely Educated- Pick your lender’s brain. Lenders will teach you all about your various options, even if you haven’t found the right property yet. They will be very patient with you while you are looking, especially if you have aligned yourself with the right agent. They understand all the up-front work will pay off in future business. Your agent will then continue to refer people to the courteous and service-minded lender on down the line.
11. Get Prequalified- Lenders will provide you with a certificate of pre-qualification. By getting prequalified you know exactly what financial parameters to stay within. Your agent and lender will consult with you and help you get qualified for the loan that best fits your needs. Many times they are able to get you a larger loan than you may have thought possible.

Social Networking… for the Middle-Aged

So what gives me the credibility to write on social networking? Because our business at Entrust is completely dependent on social media for leads, referrals and education.

by Glen Mather 

I have a guilty secret that must be divulged before I launch into this discussion… I have never been on Facebook or Twitter, although my company is involved in each. The closest I have been to electronic social networking is to post some information on “Linked-in” as I was told it was a great way to meet and establish new business relationships.

So what gives me the credibility to write on social networking? Because our business at Entrust is completely dependent on social media for leads, referrals and education.

The phenomenon of Facebook, Twitter, MySpace and Linked in, and hundreds of lesser known relatives of these sites have been labeled “Social Networking”. The power of having millions of potential clients eager and ready to snap up your products and services – all at very little marketing cost to you is seductive and alluring. Especially if what you are offering is attractive to those that frequent the social networking sites.

Since we opened our Entrust office here in Florida more than seven years ago, our client base has grown through social networking – the old fashioned, “off-line” version. Our clients seem to prefer it that way. Educational events, membership in local real estate clubs, chambers of commerce, the Florida association of Realtors, the Florida Institute of CPAs, the Florida Bar Association and many other boards, memberships and associations throughout our territory provide a strong source of potential leads for Self-Directed IRAs.

In order to sharpen our marketing focus, we did some analysis of our existing customer base.

We discovered that our average client was 40-60 years old, still working, and had a considerable amount in an IRA or 401(k) plan. They were independent thinkers, very interested in real estate and fed up with the stock market. We did some further analysis on who uses the social media websites – and found that although many use Facebook – most did so only to follow friends and classmates.
So, naturally, in order to be more forward thinking and utilize all the relatively inexpensive marketing tools at our disposal, we have added Facebook to our arsenal. I was instructed that it would take a commitment of at least one hour per day in order to start to get the positive, continued results from the users – and that commitment had to be made by the CEO – me. Now achieving that level of time has been difficult, and quite frankly, I haven’t fully stepped up to the task.

But as I attended a recent social networking conference, feverishly scribbling notes on the psychographics of users, the language of the social media user, and the process of updating posts – it brought to mind the true importance of social networking which has nothing to do with the internet;

people need to be engaged before they buy.

Every event we do, every phone call I take, each expo where we engage the public and every e-mail we dash off – each is a critical step in building our prospect’s confidence in us and Entrust. Moment by moment, people are consciously or unconsciously measuring their desire to be associated with us and our company. Our preparation for the meeting or the event, or even the phone call is critical – and our knowledge of the potential customer, and more importantly, the customer’s needs are necessary if we want a long term-relationship to develop.
Many companies have elbowed their way to the front of the social networking technology line – with the latest tools, techniques and bandwidth-intensive marketing campaigns, while other have shuffled their way forward with an occasional “twitter” update from their marketing intern. We at Entrust have decided to refocus on our existing client base and as such have customized a new customer-centric processing platform for all of our clients who buy non-traditional assets in their IRAs.

After all, without an internal view on process and communication improvements with your existing clients – how can any type of social networking – either electronic or “old-school” have a positive result? The danger of having a poor outcome with an existing client – with the megaphone of the internet and social networking outlets, should cause everyone to revisit their core business and customer relationship systems.

The growth of the new social networking, especially with our middle-aged clients, has reminded us of our duty to continually improve the delivery of our service, then give our clients the ability to share their experience through testimonials, client mixers and other media. Whether our network of relationships are simply a click away, or a 30 minute car ride from our office, the same basic rules apply -

Recommendations come from relationships, and relationships come from the respect earned through superior service.

Turns out that the concept isn’t so new after all.

How to Explode your Wealth in Emerging Markets in the US

Emerging real estate markets are truly virginal opportunities for profit, provided you get in there early and make your mark.
Everyone who is involved in real estate knows that an emerging market is like a goldmine. It creates a pressure-cooker environment of development where all the normal conditions of the real estate market are compressed in a tight space of time.

Demand for real estate properties goes through the roof, prices are adjusted upwards to reflect an insufficient supply and profitable deals can be made fast.

If you are in real estate you want to make money as well as help the local and national economy and in an emerging market there is plenty of scope to do all of this. Money can be made fast because properties appreciate quickly and buyers are eager for the properties that are on the market. The local economy begins to boom as properties sold become cash cows as their owners update them, renovate them and furnish them, helping to revitalise, in this manner, the local economy.

Any local economy doing well has a positive contribution to make in the national economy and the country as a whole.

This is a lot of good you actually do all round not to mention the benefit you can reap for yourself.

It does beg the question however how exactly do you recognize an emerging market and how do you strike it rich when you do?

 

Well, if we take things in reverse order the secret to making money from an emerging market is to get in there at the beginning, capitalize on the upward pressures and sudden growth spurt and get out before it begins to run out of steam, get crowded with other investors and suffer from slimming profit margins. Over the past 3 years, I have closely been analyzing emerging markets around the US. During this period I have acquired over 5,000 units!
To locate an emerging market successfully, you need to be in the market before the masses are. Signing up for the local government newsletters, becoming aware of large industries moving into new areas and local regeneration schemes backed by hefty government subsidies and investments are always good signs of the beginning of an emerging market.

Where your skill will have to come in is exactly in the way you develop all these alerts and then work to analyse them so you can make an assessment ahead of everyone else. The good news is that these skills are easy to learn and easy to apply.

As a real estate investor discovering an emerging real estate market a few times in your career can give you enough of a cash boost to really push you well on your way to total financial independence.

Ok, stop me if you have read this one before: the US is one of the world’s biggest developing countries. That’s right! I know we are considered to be a fully developed rather than a developing nation with a market that has, in many places, reached its peak and is now in a state of differentiation but that’s only the larger picture.

Within that there are a lot of micro-economically controlled areas where the picture is no different to an emerging market like we see in Eastern Europe.

As a real estate investor who has managed to get in first in an emerging real estate market in the US and make big money, fast, I know that the reason we are so blessed in terms of local economics is the size of our great nation.
By the same token, this very size creates specific pockets of real estate development which, to the savvy investor represent an opportunity that simply must not be allowed to pass by.

The reasons an emerging market is so important to a real estate investor are simple: money, money and more money.

 

Emerging real estate markets, as the name suggests, are free from the constraints of the more developed, rarefied, matured markets where the only way to make your mark is through the far more difficult method of service differentiation and market segmentation.
In an emerging real estate market it is possible to experience the heady feeling of being, again, a pioneer, moving forward into new territories and developing new markets ahead of the pack. I know, from direct experience, that there are certain signs that you can learn to be on the look out for which are a dead giveaway of an emerging market.

The best news, of course, is that almost anyone can learn how to do it, provided they are prepared to put in the time and effort.

Emerging real estate markets, for example, are almost always marked by a total employment boom and an expanding zone of out-of-towners looking to move in.

These demographics are readily available if you know where to look and, when analysed correctly, will give you the indicators you are looking for.
Emerging real estate markets are truly virginal opportunities for profit, provided you get in there early and make your mark. To the savvy real estate investor they represent areas of development which simply cannot be overlooked.

Wholesaling Do’s & Don’t's

 The biggest do’s and don’ts of the wholesaling business to keep you not only informed, but working at your highest potential.

Keeping yourself out of trouble, avoiding mistakes and making great profits is the name of the game in the investing niche called wholesaling. If you’ve been following my recent series, you’ll get the impression that I just love to wholesale property…and you’re right!

Wholesaling is a great way to bring in cash while you’re working on other projects that take a while to bring in their expected income.

Having been investing and wholesaling for over 15 years, I’ve learned plenty…either by mistakes (the best lessons overall), by sheer coincidence, or from experience. Based on this, I thought it best to share the biggest do’s and don’ts of the wholesaling business to keep you not only informed, but working at your highest potential. Let’s start with the don’ts.

DON’T

• *Overpay for the property

• *Over-price the property

• *Lie to your seller about your plans

• *Be afraid to wholesale listed property

• *Give out the address prior to obtaining the seller’s signature

Allow me to explain the reasons behind these “don’ts.” When you overpay for a property, it’s tougher to sell because you will price it too high to earn your profit. When you over-price a property, you will end up taking much less than you would have earned if you would have priced it correctly because you will wait until your time is up and become a desperate seller so to speak. If you price the property correctly from the beginning of your marketing process, you will sell it faster and earn more.

When you lie to your seller about wholesaling the property, you start off on the wrong foot immediately. You have to continue to lie about who’s looking at the home and so on. Sooner or later, the seller begins to distrust you and the deal begins to go downhill from there. Most investors, especially newer investors, don’t believe sellers will allow certain things because the investor wouldn’t allow it himself (so he thinks because he’s not in his seller’s shoes). When you doubt another person would agree with you, you have a tendency to tell them something they would agree to and that’s when the lies begin.

An honest, smart investor will tell the sellers the truth even if the truth is ugly. When the seller agrees, you are already starting out great. If the seller doesn’t agree, simply say NEXT!

If a property you are purchasing to wholesale is listed, then you would be “that” buyer. The listing agent will be paid their commission on the deal with you. Your assignment to another buyer does not involve that agent. When you go to closing with your assignee, the commission to the listing agent is on the closing statement and so is your assignment fee. If another agent brings you an assignee-buyer and you agree to compensate that agent from your assignment fee proceeds, then you can do that too. Be sure that the listing agent marks the property “contingent” or “pending” in the MLS so that other potential assignees don’t try to cut you out by calling the agent directly.
Lastly, do not begin to market the property before you get the fully signed contract between you and the seller in your hands. This is a sure way to lose the deal. Why? Often, folks are too eager or too greedy to get the deal themselves before they lose out on it. They can purposely or innocently ruin your deal by speaking with your seller about the price you gave them for the property and if the seller hasn’t signed your deal yet, he or she could sign a new deal with your assignee, cutting you out completely.

As you can probably imagine, there are plenty of do’s in this business, but these are a few good ones to start with.

DO

• *Use the best Assignment of Contract form

• *Place your deposit in escrow immediately

• *Use small initial deposits

• *Pre-qualify your potential buyers

• *Clean out the yard & house

Now, let’s review your do’s. Using the best of any form is vital to your success in this business. There are special clauses that will save you money, protect your money and give you the control you need to get your deals closed smoothly and without hassle. The Assignment of Contract form is no exception. If you do not have a form that you’ve purchased specifically for assigning deals, then ask your real estate investor-friendly attorney to prepare one for you that you can use repeatedly.

When a contract is fully executed, the buyer must place his/her deposit in escrow immediately. It only takes $1.00 to make a deal legal and I teach my students to use $10.00. Please don’t lose a deal because you failed to put up your escrow money, especially when it’s so little. We often just keep $100 or so in escrow with our closing agent so when we write any new deal, we already have the deposit part taken care of.

We use small deposits to protect ourselves. Here’s why…if we decide not to continue with the deal based on our inspection period or any other contingency during our appropriate contingency timeline, we don’t want to have a headache getting our deposit back. Regardless of who is “right” in a contract and regardless of how clear that contract is, no escrow agent can release any deposit money without the signature of both buyer and seller. Often, the seller may be upset if you cancel the deal, even though they know you have that legal right. If they don’t sign the release of deposit, the money will sit in escrow until you take legal action or offer the seller some of the money to sign the release. Because of this, I teach my students to use small deposits.

In other words, place something in escrow that you are willing to walk away from if the seller refuses to sign the release for any reason.

If the seller just won’t do your deal because they want a stronger deposit, then make that stronger deposit following the expiration of your contingency period. For example, put up an initial $10 upon signing and then $990 when the contingency period is over and you are sure you are moving forward with the deal. You get the idea.
Just because you are dealing with investors, don’t think that they all have cash or even know about hard money. If you are taking calls from potential buyers, be sure to qualify them as to how much work the property needs and if they are capable of getting that work done, and that they have the cash or equity lender who can close the deal in your timeframe. If they lack either, then don’t waste your time. This is especially important if the sellers still live in the home. You don’t want to send any more folks through that home than necessary.

Lastly, if the property is vacant and you know you have a great deal on your hands, get permission from the sellers to clean up or clean out the property and yard. Obviously, this would only apply if there is debris everywhere. Emptying the property also helps to take bad odors away. One time, a partner of mine, Herb, and myself, had a contract on a property for $50,000. The home smelled real bad and had miscellaneous items inside and out, as well as an extremely overgrown lawn. We were getting offers of $70,000 on the property and it was Herb’s insistence on cleaning up the whole place and mowing the lawn that persuaded me. We spent $800 and our next offer was $80,000! An extra $10,000 thanks to Herb – I’d love to take credit for that but I just couldn’t believe that “investors” paid that much attention to looks and smell versus the condition of the physical structure and the visualization of what it would look like after they completed their work.

That’s the beauty of this business. When we work together, whether novice or seasoned, we can all benefit from each other’s experiences and ideas.

I hope that this article helps you immensely.

Buying Class C Properties

Has the ongoing recession and the subsequent lack of development capital left you waiting on the sidelines to begin your next project? With over 124 bank failures this year alone (as of the date of this article) and more expected to come throughout the balance of 2010, many developers have been scratching their heads and contemplating their next move. The self storage builders in my area are literally begging for projects and practically doing them at cost just to keep afloat and to avoid anymore layoffs.

Well one strategy that some developers and investors are beginning to consider is investing in Class C Properties.

Class C Self Storage Facilities are generally defined as older properties in need of repair or updating, often first generation, single-level sites that may be unfenced, and they typically lack in security features and amenities commonly found in Class B or Class A Properties.
They may also possess a less desirable unit max and orientation with regard to door operation, upper levels, and lack of temperature control. They may also suffer from having poor access and limited visibility and subsequently, rental rates are lower than Class A or Class B Properties.

This may not sound so appealing to the masses, but don’t discount the potential for the savvy investor who is willing to put forth the effort in turning these Cinderella facilities into the belle of the ball. Some investors and small companies have made a small fortune focusing only on investing in Class C Facilities and improving them to a solid Class B contender. And it’s not as tough as you may think.

Though the leap from a Class B property to a Class A property is difficult, you’ll find that the jump from a Class C property to a Class B property is quite simple, and with a very small amount of work and capital investment.
Which leads us to the question of how to go about finding these diamonds in the rough? Uncovering these gems is no more difficult than finding a good piece of development property, and in most cases, it’s even easier. First, there are a number of these facilities listed with Commercial real estate brokers, business brokers, on commercial and self storage websites. You can also get a comprehensive listing of all facilities in a given market by purchasing directly from the numerous list brokers who have the names and addresses of all the facilities in a geographic area.

You may begin the process by creating a relationship with the brokers to assist in finding properties that meet your buying criteria while simultaneously contacting the owners directly with a mailing campaign, or just by cold calling the facilities in person or by phone after “Googling” all the facilities in your targeted market(s) for acquisition.

“Sounds appealing – but in today’s lending environment, where do I find capital and funding to purchase these Class C properties” you ask. Well contrary to popular belief, banks are still making loans on Self Storage Facilities.

Historically, Self Storage has the lowest loan default rate of all commercial real estate when compared to apartments, office buildings, and retail strip centers. And banks are taking notice.
Especially the Community Banks, Credit Unions, and Savings & Loans banks that are located in the communities where these facilities are located. Banks are in the business of making loans and due to the strong performance in the Self Storage sector, many investors are being welcomed with open arms when presenting a loan request for their Self Storage projects and at favorable rates and terms. Banks have increasingly moved away from making “speculative” loans on development projects in favor of making loans on income producing assets with a historical track record of measurable performance. And with a solid business plan and thorough due diligence to back it up, you may be pleasantly surprised how easy it is to acquire funding for this asset class from the local lenders where these facilities are found.

When thinking of ways to upgrade Class C Facilities to a Class B facility, remember that the changes that you put in don’t necessarily have to be major.

The First place to start is on Curb appeal. What are the colors compared to the newer facilities in the area? Are all of the buildings weathered to the point where the roof, walls, and doors have all faded to 1 shade of “gray” or “tan”? A color change by one of the many painting contractors specializing in Steel buildings and doors can do wonders for the appearance of your new acquisition. Similarly, the addition of a new sign, or replacement of the existing one along with color coded flags, banners, and “bandit” signs will draw attention to your paint job and raise awareness of the changes you have made.

The next point to consider which has the most impact on forcing the appreciation and value of the facility has to do with the land. The smart investor will immediately assess the highest and best use of any vacant land at the site or any adjacent land that may be available for purchase. Hopefully, once you’ve improved the look of the facility and made some management improvements, you will be rewarded with higher occupancy and the possibility of constructing additional buildings/units at the site. Don’t forget to look at the existing boat/RV lot as the return on constructing additional buildings on that land generally outweighs the ROI of leasing out parking spaces. And if you’re out of room, contact the neighbors to assess whether there may be an opportunity to purchase additional land/buildings for expansion.

This is probably the greatest way to increase the value of your facility while simultaneously “scratching your development itch”.
Now it’s time to turn our attention to the multiple profit centers that can be added to your facility. Adding a small retail center to your site is probably the simplest and least costly way to improve the bottom line. Next, you may want to consider if it’s feasible to offer truck rental services through a 3rd party provider or by purchasing or leasing your own truck and offering it to your clients for free or at a reduced rate. Can you add a pack & Ship Center, Bill Boards, Vending Machines, a Business Center, perhaps temperature control units, propane cylinder exchange, Records Storage or any combination of the 40+ Ancillary income streams that can be added to your facility? Class C Facilities will vary by site and by market, so there is some research into the feasibility of adding each, but the increase in income and the return on investment may be surprisingly rewarding.

And last but certainly not least, is to develop a detailed marketing plan and thorough operations manual for leasing up and managing your facility. Attention to these 2 critical areas will determine your success in both improving cash flow while simultaneously increasing the value and forcing the appreciation of the asset. Furthermore, it never ceases to amaze me that when occupancy is low, and traffic is down, some operators decide to actually decrease their marketing efforts; the very thing that brings customers in the door! The most successful operators I have encountered use their marketing plan to guide their daily activities. It has specific daily tasks that all center around the daily, weekly, and monthly goals laid out by the organization. Results are usually measured on a monthly basis and then compared to the prior month’s activity to gauge the success of the most recent campaign. And of course none of this can be attained without the efforts of a well trained and motivated facility manager.

The laws for success in the self storage industry are always changing and buying Class C Facilities has quickly become a very viable addition to a successful investing strategy – especially in this time where development has slowed to a crawl.
The merits of this strategy have proven to be very profitable to many operators who have chosen this path rather than focusing solely on development. And being one of those investors myself, this author couldn’t agree more.

7 Crucial Tax Tips for the Beginning RE Investor

STARTING OFF WITH A POSITIVE “ENTREPRENEURIAL MIND-SET”!

Treat your Professional endeavors as a BUSINESS and not just a part- time activity. An important part of this is structuring your business so you have total control over its finances, including legally paying the least amount of taxes possible. As you progress, you will invest in more property.

Any taxes saved can be reinvested in your properties and help you attain wealth. The primary reason Real Estate Investors (new and veterans) pay too much in taxes is the failure to do Tax Planning, from the very beginning.

Because there will be Start-Up expenses as well as other special aspects, the need for Tax Planning is even more imperative for the beginning investors.

“START-UP AND INVESTIGATION” EXPENSES – a portion of these costs can be Expensed in the current year instead of being Amortized over 5 years.

SELECT THE RIGHT FORM OF OWNERSHIP – there are 2 Main Factors (Legal & Tax) – you have to look at the total picture and look at both sides (with generally more emphasis on the Tax side). This two-sided approach is fundamentally important to understand Entity Selection & Structuring.

DEMONSTRATE “INTENT FOR PROFIT” – maintain Real Estate as a Business; keep good separate business records and use a separate business checking account, which should not be used for personal expenditures.

KEEP YOUR MONEY AND DO NOT OVERPAY ESTIMATED TAXES – the more cash you have is the more properties you can buy.

MAKE PRUDENT USE OF “FIRST-YEAR-EXPENSING” – Sec 179 of the IRC (Internal Revenue Code) allows this great opportunity.

TAKE FULL ADVANTAGE OF THE HUNDREDS OF TAX SAVING IDEAS AVAILABLE TO YOU – make sure you have a more than competent Tax Advisor who understands Real Estate.

REDUCE YOUR CHANCES OF AN IRS AUDIT – be Proactive and not Reactive; Tax Planning starts long before the time to File Taxes.

USE A COMPETENT TAX SPECIALIST, NOT A “SOFTWARE INPUTTER” – contact us for a Special Report on “How to determine the Competence or Incompetence of a Tax Advisor, including your Own.”

NOTE: You can also refer to IRS Publication 583, “Taxpayers Starting a Business”. Although it is limited it has some useful ideas, plus it’s free. Call IRS at             1-800-829-3676       (FORM).

Only call the IRS for Forms, and NOT advice!

Branding: The Subtle Secret to Explosive Marketing

The name, the look, and the quality of service are all part of their brand. And consistency is the key!

When I hear the word software I think of Microsoft. The mention of soft drink means Coke or Pepsi to me. Mention search engine and Google pops into my mind. So how do you make your name pop into people’s minds when they hear the mention of Real Estate?

It’s Called Branding
Branding is the immediate association of a business name with its product type. In Canandaigua, New York Cathy McWilliams means a successful Real Estate Experience. In Springfield, Illinois Kyle Killebrew brings successful Real Estate to mind. In Lahabra Heights, California it is Jan Fiore. These Agent brands are worth hundreds of thousands of dollars, maybe more. Can you establish a brand in your market in the same way? Yes, you can.

Consistency is the key; consistency of your graphics and consistency of the experience of you.
It’s More Than a Name
To Xerox something means to make a copy of it. You also believe that you can depend on a Xerox machine. A Kleenex means a facial tissue. You expect Kleenex to be decent quality. When you Google (which is now a commonly used verb) you are confident that you will find what you want. These brands are both recognizable by their name, their logo, and they are associated with dependable quality and service. All of that, the name, the look, and the quality of service are all part of their brand. A Real Estate Agent’s goal is to have the people in their market (which in most cases is simply their Spheres of Influence and farm areas) associate the mention of the Agent’s name, or seeing the Agent’s “brand” with a positive and successful Real Estate experience.

It takes more than a name, a slogan, or a logo. A successful brand is also the promise of something verifiable by the consumer as they work with the Agent. And to distinguish the Agent, the promise must be above the minimum expectation of quality. For a Real Estate Agent, that means more than a basic level of service, attentiveness, and expertise. So, how do you both create a recognizable brand and raise your quality of service above the basic levels?

Brand Graphics
Creating a successful look or visual brand is called Brand Graphics. It is not as intimidating as it sounds. Think of a Coke or Pepsi logo. It is a combination of a design, font, and colors. And the Brand Graphic does not change for years or even decades. A Real Estate Agent’s Brand Graphics are also a simple combination of design, consistent font, colors, and use of their picture. (View Agent branding samples.)

Brand Experience
Creating a successful Brand Experience is also easier than it sounds. Many Agents have already done this and don’t realize it. Think of your favorite store, restaurant, hair stylist, website, etc. The way they greet you, speak to you, interact with you or in the case of a website, the navigation; there is consistency that you recognize and depend on.

When you call the Real Estate Agent, Thomas Howe in Lawrence, Kansas, you’ll hear some variation of “And a grand good day to you?” or “Hello and a glorious good morning.” The way an Agent answers the phone, conducts their listing or Buyer presentation; the speed and frequency of communication, giving of gifts, how they report progress, use video or social media, all contribute to the experience of the Agent. Consistency of that experience establishes their Brand Experience.

Be careful. An Agent wants to choose the most positive experiences to construct their Brand Experience. The way to discover which experiences to make consistent is to ask. Call your Clients from the past year or two and ask the following questions.

In addition to learning the best experiences to build your brand around; you are making a strong professional impression and you will likely generate some referrals.

• Ask, what they had heard about the way you do business?

• What do they remember most?

• What did they like and appreciate?

• If they were to refer you, what would they say are the best things about the way you do business?

• Why did they choose to work with you?

• What do they think would be important for you to keep on doing, do more of, do differently, or stop doing?

Consistency is the Key
There is an important principle in marketing that says, ‘the time when you are getting bored with your brand is about the time when it is just beginning to work.’ Remember how long Coke, Pepsi, Kodak, Godiva, Google, and other extremely successful brands maintain their Brand Graphics and Brand Experience. It is measured in decades. Choose your brand characteristics and, unless there is a very compelling reason to change; keep your brand characteristics for at least two more years after you are feeling bored with them.

You Don’t Have to…
Finally, whenever I teach or coach marketing I ask Agents to write this down. “You don’t have to get it perfect. Just get it going. And keep improving it.” The way you do that is to choose deadlines. By when will you have your web design chosen? By when will you have your postcard designed? By when will you choose the photo you will use? Then, stick to those deadlines and move on to the next decision. Keep it moving and you will realize that getting it going and then improving it, is a key to success in your marketing.

Wholesale Psychology

Market conditions must be taken into account and alterations to every investing niche must be made in order to remain successful.

As the market continues to decline in value in most areas of the country, wholesalers are finding it tougher to unload their deals. As markets change, no strategy will operate exactly the same. Market conditions must be taken into account and alterations to every investing niche must be made in order to remain successful.

Wholesaling is no exception and is defined as selling a product below retail price. Real estate wholesalers earn a living profiting from Assignment Fees. An Assignment Fee is earned when a buyer in a contract assigns his right in the contract to another buyer. That end buyer is an investor in our case and that investor is being offered 10 deals a day right now from real estate agents and other investors. So, why would this investor choose your deal over all of the others?

When everything seems to be for sale, it’s easier for anyone, investor or owner-occupant, to negotiate a great deal. As my husband says a lot these days, “America is on sale.” Because of this, investors are finding themselves actually competing with other sellers, even if those sellers aren’t investors.

In order to eliminate their competition, wholesalers must buy at even lower prices so that the price they market at includes their assignment fee but is still below all other prices offered in that area.
That means a wholesaler must be making many offers daily at very low prices – perhaps 30% of conservative retail so that when their offer is accepted, they have enough room to wholesale it at 40% to 45% of retail, which should still appeal to another investor.

One of the most important factors in wholesaling is understanding the mindset of your buyer.
In our case, we will always wholesale to another cash investor. That investor will either rent the property or remodel it and sell it retail. Therefore, our buyer must have enough room in the numbers to profit from a retail sale exit strategy OR if it doesn’t sell in a specific timeframe, be able to cash flow at the price he’s into it for.

Additionally, when our buyer researches the property details and the comparable sales, he’ll notice any current or prior listing information on it. If the property is currently listed, even though it may be listed as “pending,” he’ll see the current price. If you are trying to market it for more than the list price, most buyers will pass on the deal unless it’s really a steal. For them, there’s just something psychologically wrong with paying more for a property than it’s currently listed at. They will pay that price or less, but have a problem paying more. In other words, you’ve got a listed property under contract for $50,000 even though in the MLS, it’s listed as “pending” with a list price of $55,000. When you market the property to your assignee-buyers for $65,000, they will have hard time paying that after seeing a lower price in the MLS. It may sound crazy, but it’s just the way it works sometimes.

In buyers markets, buyers can be choosy. That means wholesalers must be choosy also.
They must buy the best sized homes with the most popular bedroom and bathroom counts, amenities and neighborhoods. Now is the time most buyers will be picky and get great prices too. To successfully wholesale, you must be able to offer that cream of the crop inventory at the lowest prices.

In summary, wholesalers must steal, steal, steal and offer the best inventory to their assignee-buyers at a steal also. That’s how wholesalers will stay in business and earn profit during this market cycle. Some of the deals will be so great that wholesalers may even decide to keep a few themselves, which is a great idea in my book.

Here’s to your success wholesalers – until next month, keep ‘reiping’ your rewards.