Real Estate Investors Association of Greater Cincinnati


How Small Investors are Making Deals in an Over-priced Market

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I was having a discussion this week with leaders of 12 real estate associations about why:

  1. “Small investor sentiment” is way down right now. Surveys are showing that nearly half of small rental owners and rehabbers think that this is a bad time to acquire properties, find deals, invest etc.

  2. But at the same time, REIAGC members are finding, buying, holding, and flipping deals that are PROFITABLE ones, even when viewed in the light of a possible downturn

When I’m hearing one thing but seeing another, I get curious. So I asked this mastermind of 30 or so very experienced, long-term investors what THEY thought the difference was. See if you agree.

Most small investors, like 99%+, have a single end-to-end strategy for ‘doing” real estate that looks like this:

  1. Find deals “On MLS”
  2. Finance them with conventional, DSCR, or Hard Money loans
  3. (a) Rent them at market OR

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Real Estate vs Other Passive Income - Diversify?

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Many investors like buying rental properties to make passive income. Passive income is money you earn without having to work for it every day. Owning rental homes or apartments means you can collect rent payments each month without doing much active work.

Take the story of Jim and Cindy, for example. A few years ago, Jim inherited a small two-family home from his grandparents. At first, they weren't sure what to do with it. But after fixing it up, they decided to rent out both units. To their surprise, the rent covered the mortgage payments with some left over. They had stumbled into passive income! 

Motivated by this experience, Jim and Cindy used their savings to purchase another rental property a year later. As the properties started building equity over time, they began exploring ways to diversify their investments and revenue streams.

If you already own a few rental properties like Jim and Cindy, you wonder - should I buy more properties or try making passive income in other ways too? There are several options to consider beyond just more real estate.

Buy
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How to Get 100% Financing Using Cross Collateralization

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What is Cross Collateralization?
Cross collateralization is the act of using multiple assets to secure one loan.

Who Qualifies for Cross Collateralization Deals?
Investment property owners with high equity in an investment property or own a piece of investment real estate free and clear (no debt).

Why Do Real Estate Investors Use Cross Collateral?
Cross-collateralization loans allow real estate investors to utilize equity in their real estate investment properties without having to refinance their long-term debt or take out long-term debt altogether.

How Do Real Estate Investors Use Cross Collateral?
Cross collateral is most commonly used in lieu of a down payment to give real estate investors 100% financing on new acquisitions (fix-and-flips or buy-and-holds). 

Does my property need to be owned free and clear to be used as cross collateral?
No! If you have high equity in your existing real estate property and there is a low balance first mortgage, you can use equity in that property as a form of down payment for a hard money loan. This allows you to significantly reduce your down payment or obtain 100% financin
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What is the correct amount of insurance for my investment property?

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We are asked the question quite often. Unfortunately, there is no ”correct” answer. There are many variables in determining what this value should be.

Let’s look at some of the factors in determining this value.  

A note: the reconstruction value is not a “guaranteed” value – it is a “not to exceed” value. There is no guarantee your will receive that full value, if the property can be repaired / rebuilt for less than that value.

First, the “value” (reconstruction value) needs to be defined. The reconstruction value does not include the value of the land. It is only the cost to rebuild the structure. There are several versions of the reconstruction value, including actual cash value (ACV), functional replacement value (FRV) and replacement value REP or RCV). Each of these may vary significantly – and still be correct. Each reconstruction estimator program has different variables and all can be correct. 

As a base value, a “correct” replacement cost value is one that is within 80% of the value calculated by a claim adjus
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Creating that Work-Life Balance So You Can Play Hard Too

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I got into the real estate investing business to have more free time for myself and my family and to have the financial freedom to do whatever I wanted, whenever I wanted. I wanted my life to be more worry-free. I have spent a great deal of time accomplishing that goal and I want to share some of my insights with you as a real estate entrepreneur.

When you decide to become a Real Estate Investor, make sure you structure your business in such a way that it doesn’t become overwhelming, even more so than a full-time job could be. It’s very easy to fall into that trap, especially if you work from home. You can also fall into the trap of trying to do everything yourself, and long-term, this just won’t work. Believe me when I tell you that most tasks in your business need to be delegated to others starting with your marketing.

In my case, I like to work from home and most of the functions of our business are handled offsite and by Independent Contractors.

Working from home has its advantages and challenges; the biggest challenge is that your work is always right there, calling you to finish one more thing, day, and night. But if you realize this in a
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3 Lifetime Rules for Winning at Real Estate

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“You can either work hard, or you can work smart.” These words have guided my actions for many years. After confronting nearly every obstacle, impasse, and dead-end imaginable, they ring as true today as ever before.

Over the years, I’ve learned that, while valuable, sheer determination and sweat alone are not enough to overcome problems. Nor are they enough to increase the odds of profiting from an investment. Somewhere along the line, I decided to work smart. Once I made that decision, I dedicated myself to finding those solutions that required the least expenditure of energy and, at the same time, provided the greatest return. I set out to discover how to maximize the odds of success and have developed a set of rules.

RULE #1 – PLAY THE GAME WHEN THE ODDS ARE IN YOUR FAVOR TO WIN OR DON’T PLAY.

You must sharpen your skills and learn to be as selective as possible in all your real estate deals. Selectively participate only in those investments that offer odds in your favor. The more you learn to realistically analyze a deal, the more likely you will win.

Speculation on market direction is a s
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What’s the difference between a CPA, bookkeeper, or CFP®?

Community of Real Estate Entrepreneurs

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Are you feeling lost when it comes to seeking financial assistance? You're not alone! Many people are struggling to determine who to turn to for help with their finances. Let's clear up the confusion by examining the roles of three key players: the Certified Public Accountant (CPA), the bookkeeper, and the CFP® (CERTIFIED FINANCIAL PLANNER™). Understanding their areas of expertise will empower you to make the right choice for your financial needs. Let's dive in and shed some light on who can best assist you in navigating your financial journey.

A Certified Public Accountant (CPA) is your financial superhero when it comes to your taxes. They're experts at handling taxes, making sure your financial statements are correct, and following compliance. So, basically they’re the ones who need help you in understanding taxes, making sure your money reports are accurate, and making sure you stay on the right side of the Internal Revenue Service.

Think of a Bookkeeper as your financial organizer. They handle your financial records by recording
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Can’t Get Anywhere in Your Business? You may be suffering from Entrepreneurial ADD

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The coffee shop is quiet for a change. The normal morning bustle has yielded to a lull, giving the baristas a chance to enjoy a break and catch up on some cleaning before the lunch rush.

I’m only partially aware of what’s going on around me because, I’m busy obsessing about my investment account. I’m WILLING the number to go up just a few more cents. The problem is it’s been going in the wrong direction for months.

My obsessing is interrupted by my phone. It’s a call from a tenant living in one of my rentals who has a toilet that won’t stop running. She’s already told me twice, and I keep forgetting about it.

With promises to stop by before the day is over, I barely hang up when I get another call, this time from an investor with a mobile home park deal that I’ve been putting off for weeks, because I haven’t made time to look at the numbers and see if it’s a deal worth doing. 

Meanwhile, my email pings to remind me of a deal I’ve been working on, and the seller is wondering when we’re going to close.

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What is “Wholesaling Lease Options”?

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Let me first tell you a little bit about my background. A few years ago, I was buying as many homes as I could with traditional financing. But when the banks started telling me that I couldn’t buy any more homes, I started buying homes creatively – thru “subject-to” and “sandwich lease options” methods. In the course of 18 months, I bought over 16 homes!

Yes, I owned 16 homes!!! I thought I had it made. I was making $100 - $200 net cash flow on each house. My passive income was growing, and I was steadily getting out of the rat race. I was a “Successful Real Estate Investor” now – or so I thought!

But guess what? I quickly discovered that while I might have been Equity Rich… I was seriously Cash Poor. I had lots of equity, but no cash to pay the bills!

(How many of you know - you can’t eat “equities”?)

But let’s look at my situation a little deeper… All that equity I thought I had in those 16 homes… was a HYPOTHETICAL MYTH<
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What is “Wholesaling Lease Options”?

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Comments

Let me first tell you a little bit about my background. A few years ago, I was buying as many homes as I could with traditional financing. But when the banks started telling me that I couldn’t buy any more homes, I started buying homes creatively – thru “subject-to” and “sandwich lease options” methods. In the course of 18 months, I bought over 16 homes!

Yes, I owned 16 homes!!! I thought I had it made. I was making $100 - $200 net cash flow on each house. My passive income was growing, and I was steadily getting out of the rat race. I was a “Successful Real Estate Investor” now – or so I thought!

But guess what? I quickly discovered that while I might have been Equity Rich… I was seriously Cash Poor. I had lots of equity, but no cash to pay the bills!

(How many of you know - you can’t eat “equities”?)

But let’s look at my situation a little deeper… All that equity I thought I had in those 16 homes… was a HYPOTHETICAL MYTH<
Read More...