Category Archives

Archive of posts published in the category: property
Jun
28

How To Be An Expired Listings Guru (Note: This Is 100% Legal)

The biggest mistake you can make in real estate sales is overlooking the ripest fruit.

Where is the ripest fruit in real estate sales?

Here is the list of the easiest targets for your quality, professional real estate brokerage services:

In order of COLD TO HOT prospects:

9. People hiding under random targets (cold calling, door knocking)

8. People you know (your “sphere”) (just slightly better than random)

7. People who have listed property with a competing real estate broker

6. People who promise someone they will list their property

5. People who promise you they will list their property soon

4. People who have listed, and are currently dissatisfied with their broker

3. People who, today, will drop their current broker and might look for a new one

2. People who promised to give you the listing

And the NUMBER ONE HOT PROSPECT is sort of almost a client already:

1. People who signed a listing agreement with you that is post-dated for the day their current listing agreement expires

I am sure this list could be fortified in many ways. In some of my writings on my website I let you know about some more prospects and how to get them. But for right now I want to let you in on a little-known secret.

This secret is information that most real estate salespeople would pay a lot of money to get, and I will give it to you free here.

The way to get this information is to log into the MLS system of your choice (Rappatoni, MLX, e.g.) and search the database for listings which expire within two weeks. NOT EXPIRING TODAY. That is too late.

Then, contact those sellers with a very plainly stated letter which says in BOLD CAPS: this is not a solicitation to list your property during the present time, but in the future, when NO OTHER LISTING MIGHT EXIST on your property.

Include a statement a listing agreement. Why? Because your sellers may be interested in selling their property still, if their current broker does not hold up.

Make sure you POSTDATE the listing agreement and put it in the envelope.

OK, the big question is….

…Is this ethical? Absolutely. Here is why.

From the REALTOR® Code of Ethics : Standard of Practice 16-4: REALTORS® shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing; i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing…. – Emphasis mine

This practice is known as the Postdated Listing. It is a real contract, but its …

Jun
26

Advantages of Using Rolled Steel Joist Beams in Commercial Construction

When it comes to commercial construction projects, rolled steel joist (RSJ) beams are known for their superior quality, versatile support, and strength. Since the late 20th century, steel beams of this kind have safely and effectively been used in both commercial and industrial construction, and it is easy to understand why.

In modern times, RSJ beams have increased in popularity within the residential construction realm and can be seen being used in the reinforcement of decks, patios, and floors. Contractors enjoy using steel beams because they are durable, versatile, lightweight, and sturdy. Fabricating steel is easier than what it sounds as the material can be bent and manipulated with ease.

Due to the construction industry becoming more aware of utilising environmentally safe practices and materials, steel is always a number one choice for projects as it is considered a “green” material and does not emit greenhouse gases. RSJ beams can also be recycled an unlimited amount of times, which results in less waste material filling up landfills.

In comparison with other building materials like wood and concrete, steel beams are a far more cost effective option and offer a massive amount of benefits for the contractor, fabricator, and building owner.

Strong

As research has revealed, steel has the highest strength-to-weight ratio of any building material in the construction industry. This means that steel is capable of bearing far more weight and stress without compromise than a beam that has the same mass but made from wood or concrete. Both residential and commercial builders opt to use RSJ beams versus other materials.

In fact, in areas where natural disasters are prevalent, buildings are often constructed with a steel framework because they are able to withstand Mother Nature at her worst when other materials cannot. What would you rather be living in during an earthquake or hurricane; a structure made from wood or one containing RSJ beams?

Flexible

You might not know it, but steel beams are insanely versatile. This material can be used and reused in a variety of ways and architectural designs. Due to steel being so flexible, beams can easily be bent, shaped, cut, and formed into many different lengths and dimensions. Because steel is so lightweight, framing a building is a much more basic process than using other materials.

In most cases, steel beams are of the highest quality material in the construction realm. However, a reputable company should be selected when choosing a contractor, as you want to be certain the beams have been put through a battery of tests to ensure their integrity.

Durable

Did you realize that in terms of durability, RSJ beams take the lead? Wood and concrete beam do not stand a chance when it comes to the tough composition of steel. Steel beams are fire retardant, cannot be damaged by termites, and require no chemical treatments. Additionally, when steel is galvanized, it will never succumb to rust.

Longevity

When it comes to withstanding the tests of time, steel is the answer. Many …

Jun
24

Investing In Real Estate For Beginners: Apartment Complexes

Here is some advice for investing in real estate for beginners who are thinking about investing in apartment complexes. Many commercial property advisors with an opinion say that apartment complexes with over 150 units are the properties to buy, it’s not necessarily true. Multifamily units are indeed a solid investment. However, what you really want to invest in is where you can earn the most rent per unit. Often that is in multifamily complexes with less than 100 units.

When you are making a purchase bid for a large complex, you are often bidding against financial institutions with deep pockets. This creates two distinct disadvantages for you as a beginning investor.

First, most beginner commercial investors are forced to join a large consortium of other investors to get in on a multi-million dollar deal. This dilutes your ownership interest and the weight your opinion counts when issues arise such as when to sell.

Second, when you and your investors are bidding with the last dollars that you have to invest, the large institution can easily out bid you by several thousand more than you can raise. Going up against large institutional investors can be overwhelming.

There are many other reasons to invest in complexes with less than 125 units:

A. There is less upkeep and maintenance. You may be able to avoid the added expense of an on-site manager and full-time maintenance crew.

B. There are more medium-size complexes available at any given moment. That means less competition from other investors and more opportunity to find one with exceptional cash flow.

C. Cash on cash returns for medium complexes are frequently better than for large complexes as you are able to offer a wide variety of amenities and services.

D. You will not be dealing with a financial institution as the seller with a cumbersome sale policy. The seller will more likely be an individual or small partnership that can provide flexible sales terms if they choose.

E. They typically will require less equity to acquire. This means you can control the property as an individual or with a couple of partners. You thus own a higher percentage of the property and thus a bigger amount of the profits.

F. Often the less knowledgeable seller has avoided raising rents because they have become friendly with the tenants or they are afraid the vacancy rate will increase. By studying the local market rents and vacancy rates, you could find that you can immediately increase cash flow through rent increases.

There are some very good arguments to owning small apartment complexes in the 4 to 12 unit range. This can be a good start if you personally manage them and perform most of the maintenance. However, this size complex seldom generates enough income to leave a profit when a property management company is hired.

Investing for beginners can begin with small complexes and once the income is stabilized buy another. After a couple of years, you will have 3 or 4 small …

Jun
23

Real Estate Expired And For Sale By Owner Letters

One of the most difficult things for real estate agents to do would be to put a pen to paper and create a letter that they can mail to homeowners that have an expired listing, or perhaps are selling on their own. Expired listings and for sale by owner (FSBO) is an essential part of becoming a successful real estate agent. So exactly what do you say within your letter which will spark the interest with the homeowner. Would it be the old worn-out line saying you have buyers for their house.

With that being said, would there be some additional interesting information for them? If not your letter goes into that famous circular file. All of your hard work, crumpled up and gone. Not only that, it is a well-known fact that one letter on its own will not produce any results. Homeowners are certainly not running for their phone to call you pleading, that you should come over and list their property.

Here Are Some Topic Ideas Of What Can Be Sent

  • So your house didn’t sell, but here’s how I can help you
  • I specialize in getting homes that have failed to sell
  • You shouldn’t Give Up
  • Pinpoint the reasons your house didn’t sell
  • I can put MORE money in your pocket than you could Selling on your own
  • Have many real estate agents been calling you?

It generally requires a number of letters in sequential order so you can get yourself recognized. Which means that now it’s more than one letter that you have to compose, it becomes a number of letters. This also means a number of good ideas that have to come together becoming a well thought out marketing campaign. Writing one letter is without a doubt hard enough, writing a series of letters is a struggle.

Try sitting down with a blank sheet of paper and begin a letter. Do you find yourself just staring at that blank sheet searching your mind for an idea? Just one good idea! Not so easy is it? Just how much time and effort are you going to have to put into getting all those letters written? Another task is proof reading all those letters. Possibly the worst thing you can do is send out a letter that is full of spelling and grammar errors. This is best done by another person or perhaps by a computer program. Do you have the time for all of this.

As soon as you start the composing process you will quickly conclude that the amount of time spent can cost you more money than actually buying letters. Well there’s some good news, you can buy letters by a professional and ready to go. There is a big advantage to purchasing real estate letters, they can cost a dollar or less per letter. A tremendous bargain if I may say so.

When you finish your letters you will have to do the mailing. It is best that you send them out …

Jun
22

Why is Hazard Insurance Required by the Mortgage Company?

Buying a home can be an exciting time and it can also be a stressful time. After you found the home of your dreams you will now need to get approved for a mortgage and find hazard insurance. Mortgage companies require many things to protect their investment because after all it is their money on the line. If you are like most people buying a house today you will probably only put down approximately 3 to 5 percent of the total purchase price. This leaves the other 95 to 97 percent owned by the insurance company. The lender will require you to insure the property with what is commonly known as hazard insurance. I will explain why they require this insurance and answer common questions about hazard insurance.

Hazard insurance is a term used by most mortgage lenders and is no different than homeowners insurance. When your mortgage lender tells you that they need proof of hazard insurance they are really looking for a home insurance policy that will protect against major hazards like fire or wind. If something like a tornado hits your home the mortgage company wants to make sure their investment is covered. Until you pay off your mortgage in full the lender will require you to carry hazard insurance.

Here are some standard insurance requirements your lender will ask for:

Dwelling Coverage

The physical structure is commonly referred to as the dwelling. This coverage encompasses the entire house but can exclude separate items like a shed. Dwelling coverage is calculated by various factors including livable square feet, construction materials used and year build. These variables help the insurance company determine how much it will cost if the entire structure needs to be rebuild.

Most mortgage companies want to see that your dwelling coverage meets or exceeds the loan amount. This is just another way for the lender to make sure the full investment is covered. Don’t confuse the market value of your home with the dwelling coverage as they can be vastly different since the dwelling coverage does not account for the value of the land. When shopping for hazard insurance be sure to ask the agent what they recommend for dwelling coverage because you don’t want to be under insured when a claim is needed.

Deductible

Similar to your auto insurance there is a deductible on your home insurance policy. If you file a claim this is your out of pocket expense. Some mortgage companies will only accept a deductible that is less than $2500. They will require a lower deductible so you can afford to file the claim and repair the home. If your deductible was $5000 you may not replace the roof after a bad hail storm which could cause further damage to the home. Most insurance companies will offer deductibles ranging from $500 to $1500 but other amounts are available. Be sure you understand what your deductible is and if you have a fixed dollar or percentage deductible.

Fixed dollar deductibles will …

Jun
21

New Jersey Penalties and Consequences For Failure to Comply With Apartment Registration Requirements

In today’s article, we will discuss the importance of two separate documents required for landlords of residential real estate.

Certificates of Occupancy

The first document is the Certificate of Occupancy. The vast majority of municipalities in the State of New Jersey require that the landlord obtain a new Certificate of Occupancy each time a new tenant moves in. Inspections that accompany the application for a certificate of occupancy vary by municipality. All towns will check the smoke detectors, and if there is gas heating, there will also be a check of the carbon monoxide detector. Some towns will also conduct much more thorough examinations in an attempt to increase the quality of housing throughout the town. It should be noted that it is no longer permissible for a municipality to require a new certificate of occupancy inspection when a family expands by natural means (e.g.; the birth of a new child).

While most landlords are vaguely familiar with the fines which the municipality may impose upon them for failing to obtain a certificate of occupancy, few are familiar with the far more severe consequences which can result from such failure. Where certificates of occupancy are required, a home rented without a certificate of occupancy constitutes an illegal contract. Hence, in the matter of Khoudary v. Salem Board of Social Services, 260 N.J.S. 79 (App. Div. 1992), the Court determined that a landlord who rents without a certificate of occupancy is without authority to file a suit for rents.

In essence, what the Khoudary Court said was that it would not help the landlord enforce an illegal contract. In the event that the tenant vacates the premises owing rents, either for prior months or months that may become due under the unexpired lease, the landlord may not file an action to collect the rents, and furthermore, may not apply any of the tenant’s security deposit toward these rents. The landlord can still bring an action or withhold security for tort damages, such as destruction of the apartment. It remains uncertain whether a Court should allow a tenant to file an action for return of all rents previously paid under the illegal contract; however, most Courts will rule that the tenant should pay for the quantum meruit benefit of the use of the apartment.

For nearly a decade, Courts interpreted the ruling in Khoudary to mean that failure to obtain a Certificate of Occupancy was a bar to eviction. However, this issue has been since clarified. In the matter of McQueen v. Brown and Cook, 342 NJS 120 (App. Div. 2001), the Court ruled that while failure to obtain a certificate of occupancy rendered the contract illegal, the landlord still maintained the right to evict the tenant. Essentially, the Court’s decision holds that a tenant should not be able to benefit from the illegal contract, and furthermore, it is clear that leaving the tenant in the illegal rental would be contrary to public policy.

Landlord Registration Statement

While failure to obtain a …

Jun
20

10 Most Expensive Tax Mistakes That Cost Real Estate Agents Thousands

Are you satisfied with the amount of taxes you pay? Are you confident that you’re taking advantage of every available tax break? But most of all, is your tax preparer giving you proactive advice to save on your taxes?

The bad news is that you probably do pay too much tax and you’re probably not taking advantage of every tax break. And most preparers do a poor job of actually saving their clients money.

The good news is that you don’t have to feel that way. You just need a better plan. This article reveals some of the biggest tax mistakes that business owners make. Then, it gives brief solutions to actually solve these problems. Please note that this article is designed to be an informational tool only. Before you implement any of these strategies, you should consult a tax professional for more specific guidelines and requirements.

#1: FAILING TO PLAN

The first mistake is the biggest mistake of all. It is failing to plan. It doesn’t matter how good your tax preparer is with your stack of receipts on April 15. If you didn’t know that you could write off your kid’s braces as a business expense, it’s too late to do anything when your taxes are prepared the following year.

Tax coaching is about giving you a plan for minimizing your taxes. What should you do? When should you do it? How should you do it?

And tax coaching offers two more powerful advantages. First, it’s the key to your financial defenses. As a real estate agent, you have two ways to put more cash in your pocket. Financial offense is increasing your income. Financial defense is reducing your expenses. For most agents, taxes are their biggest expense. So it makes sense to focus your financial defense where you spend the most.

And second, tax coaching guarantees results. You can spend all sorts of time, effort and money promoting your business. But that can’t guarantee results. Or you can set up a medical expense reimbursement plan, deduct your daughter’s braces, and guarantee tax savings.

#2: MISUNDERSTANDING AUDIT ODDS

The second big mistake is nearly as important as the first, and that’s fearing, rather than respecting the IRS.

What does the kind of tax planning we’re talking about do to your odds of being audited? The truth is, most experts say it pays to be aggressive. That’s because overall audit odds are so low that most legitimate deductions aren’t likely to wave “red flags.”

Audit rates are actually as low as they’ve ever been for 2008 – the overall audit rate was just one in every 99 returns. Roughly half of those audits targeted the Earned Income Tax Credit for low-income working families. The IRS primarily targets small businesses, especially sole proprietorships, and cash industries like pizza parlors and coin-operated laundromats with opportunities to hide income and skim profits.

#3: TOO MUCH SELF-EMPLOYMENT TAX

If you’re like most business owners, you pay as much in self-employment tax as you …

Jun
17

Will a Real Estate Agent Sell My House For Top Dollar?

Some of the benefits of selling your property to a real estate agent are that they can tell you how much your property is worth (retail value) and sell it close to that price. Unfortunately for most sellers, their houses are typically worth a lot less today than they would like. Neither an investor nor a real estate agent will be able to be help much with this aspect of home selling because a seller’s house is worth what the market is willing to pay. To find out what the market is willing to pay for your house a real estate agent uses comparable sales. “Comparable sales” is a real estate term for nearby, similar houses that have sold recently. Anyone can now check the value of their house based on comparable sales with websites such as CyberHomes.com and Eppraisal.com. You can find the value of your property through an agent but now through the internet, you can also figure out the value yourself.

Can a real estate agent sell your house close to your house’s actual value or greater? In my local area most houses are selling for about 90% of their value. Subtract the 6% real estate fee and most home sellers are getting 84% of the value for their house. On RealEstate.AOL.com you can check the average house value and average house sale prices for your local market – right now you will find a discrepancy with the sale price being a lot lower than the value.

However, the higher the price your house sells for, the more money your agent will make, so therefore an agent has more motivation to sell your house quickly, right? Consider this, the average home sale price (in my local market) is about $180,000. Your agent will make 6% of the sell price or $10,800. This commission is shared between the listing agent and the selling agent. So now, your agent will get $5,400 for your house. However, the real estate agent needs an agency since it is illegal for a real estate agent to represent buyers or sellers in a real estate transaction without first signing with a broker’s agency. Each agency requires different commission splits from a 50/50 split with a novice agent to an 80/20 split with an experienced agent. So now the agent has $2,700. The agent is taxed on their income rate plus 15.3% in “self-employment income.” That may be 30% + 15.3% taxes on the $2,700. $2,700 – 45.3% is about $1,500 leftover. So for your $180,000 house a real estate agent will make probably a little more than $1,500. Let’s say that he or she works very hard to market your property and gets you an extra $5,000. The agent will only earn $41 ($5,000 x.06 – 50% (list agent and buyers agent) – 50%+ (agency) – 45.3% (taxes)). How likely is it than an agent will do the work required to bring you $5,000 and then get paid $41 for their efforts? The …

Jun
16

What Makes Your Property Unmortgageable

Within this guide we cover all the pitfalls that can result in your property becoming unmortgageable. Sellers make innocent mistakes without the knowledge that their house will become unmortgageable.

So, What makes a property unmortgageable?

  • Properties that have been neglected for years, as they may not be suitable for human habitation. People can find themselves in this situation when buying a property to refurbish. Running out of funds or change in circumstances can affect your project.
  • That don’t have kitchens and bathrooms or ones that are very dated are deemed unusable.
  • Believe it or not, a property with two kitchens. Why? Lenders assume that you could sub-let part of the property having bought it using a residential mortgage.
  • That are valued below £50,000, you will require a reliable cash buyer.
  • Apartments or Houses with leases less than 70 years. The freeholder has the right to take possession of the property after the lease expires.
  • Properties with structural issues, evident from cracks in ceilings and walls. These properties will require underpinning and remedial work carried out. Such properties remain unmortgageable and uninsured for five years or more following all work.
  • Subsidence occurs due to the soil surrounding the foundations shrinking or swelling. This causes the foundation, which supports the walls to move. Evidence of subsidence can be uneven floors, cracks within external walls and cracking above window openings. Even when fixed subsidence and structural issues are a stigma on a property. You will be required to disclose any of these issues to a buyer.
  • Properties that are close to mining works, areas of landfill or history of flooding are unmortgageable.
  • Properties with sitting tenants or regulated tenancies are unmortgageable. If tenants moved in before 15th January 1989, you have sitting tenants.
  • Properties with a defective lease are unmortgageable. An example of a defective lease is a block of flats and maintenance of a shared roof are unclear.
  • Properties with damp, dry or wet rot, wall ties or damaged floor joists are unmortgageable.
  • Properties with boundary disputes
  • Buildings in severe disrepair or dangerous
  • Illegal extensions without permission from the local councils planning and building control departments
  • Properties with non-standard construction, such as per-fabricated concrete
  • Properties that are next to commercial premises or apartments above food takeaways or shops
  • Properties within a close proximity to Japanese Knot-weed.
  • Properties with flying freehold
  • Fire damaged properties
  • Derelict agriculture buildings

This is not an exhaustive list. If any of the above points apply to you or you know your property is unmortgageable, there are many real estate companies that can buy your property at best costs.

Jun
15

Operations Manual for Your Real Estate Business

In our last Atlanta Mastermind meeting, our main topic centered on creating an operations manual for our real estate business like the one described in the book “The E-Myth” by Michael Gerber. I know the first question you may be asking is “How in the heck can an Operations Manual help me in Real Estate”?

An operations manual is a method of writing down everything you do in your business in order to outline how your business operates. This is helpful in that eventually you can delegate tasks to other business associates and they have a manual to go by. The goal of the manual is to streamline your real estate business methods and delegate to others so that you can move on to work on larger issues (think of a business model like McDonald’s hamburgers and Domino’s Pizza). This method will help you to free up tasks that you are not good at (or do not want to do) and increase profitability as you go out to look for new real estate deals. No matter how busy you are, this is one task that will dramatically improve your business production.

Here are the general steps we talked about in our mastermind meeting, to set up an operations manual for our businesses.

Step 1: Write down all the things you do in your real estate business.

1. Answer phone calls from prospective tenants

2. Coordinate repairs

3. Look for future real estate deals

4. Collect rent checks

5. Coordinate evictions

6. Pay bills

7. Drive around and check on properties

8. Place classified ads on http://www.craigslist.com/ and other publications

9. Show apartments to potential tenants.

Step 2: Break the list down into different categories.

1. Marketing

2. Property Management

3. Repairs

4. Accounting

5. Legal-Evictions

6. Find Deals

Step 3: Each of those categories gets its own page, and your job is to copy all of the activities from Step 1 under the appropriate category headings.

1. Marketing: order and put our “For Rent” signs, input listing into Craigslist.com, answer phone calls to potential renters and provide info, show apartments.

2. Property management: inspect apartments, check on recent repairs, etc.

3. Repeat

Step 4: Put the pages into a three ring binder with tabs for each category and a table of contents. This will be your new Operations Manual.

Step 5: Next go to the first tab and for each item under it create a new page with that “Action” as a heading.

1. Marketing

2. Property Management

3. Repairs

4. Accounting

5. Legal-Evictions

6. Find Deals

Step 6: Now, take each “action” page and detail exactly how you want each item done.

1. Marketing: order and put our “For Rent” signs, input listing into Craigslist.com, answer phone calls to potential renters and provide info, show apartments.

2. Repeat

Step 7: Add any forms, details, phone dialogues, or checklist that you may have to complete each action item.

The Operations Manual is one of the core building blocks for a …