An Open Letter From a Home Owner To Real Estate Agents Who Make Cold Calls

Writen by Sabrina Hinds

Even if I didn’t read the news I’d know exactly when the real estate market in my area is hot.

Why? The number of phone calls from agents looking for me to sell my condominium to their clients increases drastically. Usually I admit, my responses are curt, especially since these calls are usually unwelcome interruptions.

So many of those calls are unpleasant that I am taking the opportunity to tell you about the one different call that I received. This call not only resulted in my allowing the agent to visit with me, I now consider her my agent and plan to continue doing business with her and referring her to my friends.

Three Steps To Obtaining a Home Owner’s Interest When You Cold Call

1. Be friendly and let it come out in your voice. The only reason why I initially paid attention to the caller was that she really sounded pleasant. That was it she sounded like the type of person I couldn’t be rude to even if I wanted to be. Frankly she sounded like she expected a friendly interaction and that’s just what happened.

2. Don’t be intrusive. Make an approach like, “I’m a real estate agent and wondered whether I could speak with you a moment about whether you have short term plans for placing your home on the market.” Also, pay attention to background noise. If you hear a baby, or cutlery clicking take a hint! Don’t try to make conversation I’m probably busy.

3. Introduce yourself more fully once the purpose of your call has been established and you have permission to continue. While maintaining your pleasant demeanour, be businesslike and demonstrate that you know what you are doing. For example my agent was able to quickly prove her familiarity with condos similar to mine in the area. Her confidence made me want to maintain contact with her for possible future transactions even though I was not ready to place my home on the market.

I’m sure if you follow these steps, it’ll make the home owners you call on much less cranky, and generate more goodwill and more new business for you.

Sabrina Hinds is a home owner weary of dropping everything to rush to the phone only to be assaulted with unexpected questioning. She suggests that real estate agents try the tip offered at http://hop2url.com/GetReferrals to obtain lots of new business as an alternative to cold calling.

Best Remodeling Investments Kitchens Are HOT!

Writen by Teri Eckholm

Considering remodeling your current home but are concerned that the investment might outweigh the value added to your home? If you are considering a kitchen remodel, it could be an excellent investment.

I always tell my clients considering putting their homes on the market, that kitchens and bathrooms sell homes. A recent report from National Association of Realtors (NAR) agrees. In late December, the NAR released the 2005 Cost VS Value Report for home remodels. This study looked at cost data, resale value and percentage recouped for 18 different projects in 58 housing markets across the United States. With major, mid range kitchen remodel, a homeowner can expect to recoup almost all of their expenses with an average 92 percent return on investment. This is up from 66 percent in a similar study in 2002.

Before a considering remodeling your kitchen, you need to understand “Why” you are undertaking this project. Is it because you trip over yourselves in the kitchen in a home you love and plan to stay in forever? Or is it because you plan to move and the 1970’s orange counter and olive green appliances are too ugly to get the best price for the home. The approach to the perfect remodel will be different if you are planning to stay in the home for the long term.

Family Lifestyle Inventory

If you are designing the perfect kitchen for your family, take a lifestyle inventory. This is a process where you answer questions to understand what will be the most important needs specific to your family for the new space. It will help you and your designer to incorporate important details into your plan.

Consider cooking habits: One cook or two? Baker? Left handed? Do you do dishes as you cook? Lots of Gadgets? Buy in Bulk? One oven or two?

Consider eating habits: Family gatherings? Everyone for themselves? Eat outdoors? Need morning sunshine? Entertaining?

Other Considerations: TV in kitchen? Computer or home office needs? Homework? Laundry? Will the family grow? Older relatives? Handicap Accessibility requirements?

All of these are things to consider when making a decision on whether and how to remodel your kitchen. Work with a designer or use a remodeling design software that will take into account the important specific needs of your family.

Trends for Today’s Kitchens

For a remodel to add value at resale, you must consider current needs and trends. So what are the hot for trends for kitchens today?

Open to Family Room or Great Room

Maple cabinetry is a first choice. Cherry is a close second. Painted or enameled are also desirable. A variety of heights, lots of moldings, cabinetry looks and no soffits are the trends.

Modern Stainless Steel Appliances. Cook tops separate from ovens.

Breakfast Bar/Informal Eating Area and multi level counter tops.

Office/Communication area.

Access to Deck or Patio for Outdoor Entertaining.

Stainless steel sinks with instant hot water systems.

Pantry or Other Easy Access Storage.

Multiple types of Lighting (Bright for tasks, Indirect for mood).

Windows for Natural Light.

For natural wood flooring oak is the first choice for durability. Laminates are also very popular.

Granite or Quartz based granite clones for counters or islands (Zodiac, Cambria, Silstone). Too expensive to do the whole kitchen in granite? Consider just the island in granite and the bulk of the counter in a complimentary colored laminate.

Ceramic tile back splashes.

Stick to Your Budget

It is easy to get caught up in the remodeling process and go over budget. Take time from the start to reflect on your family’s needs and reasons for the remodel. Consider options that make the most sense for your family, budget and neighborhood. Make certain that the kitchen isn’t build way beyond the quality and value of the rest of the home. Remember remodeling for family use will cost more than a remodel for resale.

If remodeling specifically to put your home on the market, take into consideration the quality and condition of the home. A good Realtor who knows your market can assist you here. If you are in an upscale neighborhood where homebuyers will expect high end quality, don’t make discount store decisions. Likewise, if your home is in an area of modest or lower value homes, skip the cherry cupboards and granite counters. Understanding the market place you are in will help you to recoup the most from your investment.

Spending a little extra time in the planning stage can reduce the headaches and heartaches of a construction project that does not meet expectations. Taking your time will allow you to make the wise decisions that add value to your most important financial investment, your home.

Copyright 2006/Teri Eckholm

Teri Eckholm is a Minnesota Realtor with Keller Williams Premier Realty serving clients in the Twin Cities metro area for over five years. Selected as a 2004 and 2005 Super Agent by Mpls/St. Paul Magazine and Twin Cities Business Monthly, her extensive sales and marketing background has allowed her to assist hundreds of clients move from across town and across the U. S. Find additional information on Teri and the Twin Cities metro real estate market at http://www.terieckholm.com

Property: Greece The Cost Of Living In Greece

Writen by Claire May

The cost of living in Greece is considerable lower than in most other EU countries, but it offers a good standard of living and a wonderful quality of life. Studies indicate that the cost of living in Greece is about 30% lower than Cyprus’ and Cyprus’ is 30% lower than Spain’s and Portugal’s. Over and above the lower cost of living, those who purchase property in Greece will be amazed by how inexpensive houses are. In addition Greece has a very low crime rate, low pollution, and plenty of sunshine. All things considered purchaser of holiday homes in Greece have an extremely attractive package.

Annual Income

A couple living permently in Greece can expect to require an annual income of around

Land for Sale

Writen by Jake Truman

Think owning land would cost a fortune? Think again! While land prices on the extreme coasts motors upward, there are millions of parcels for sale throughout the USA that can fit into anyone’s budget. There is probably a land deal that could make you a profit happening right under your nose right now. Time to wake up and seize the day!

A quick stroll along the MLS system in any state will reveal a plethora of land for sale. These parcels will be priced from as little as a couple thousand dollars on up to millions of dollars. However, this system only reveals one side of the coin. Flip it over to peer at the underside and a whole new world is revealed. Land is being sold for as little as one hundred dollars out there. The trick is finding this land for sale.

First, let’s take a look at where you can find land to make a profit on.

Newspaper

Believe it or not, your average newspaper can be a super source for hunting down land bargains. The classifieds could hold your next big land score. Aside from straight land deals, you will find notices for auctions like Tax Lien sales here.

Websites

Finding a website with land for sale like MartinelliDevelopment.com is an easy task. You can find great land at super cash prices and generous financing options. A quick trip to your favorite search engine can yield a plethora of results. Here are some keywords to try:

1. Land
2. Land for Sale
3. Raw Land
4. Homesite
5. Home Site
6. Land Auction
7. Parcel of Land

As your search, you will come up with many more. You can buy great land at super prices without leaving your home.

Online Auctions

First, auctions that are offline can generally be found through your local paper. Online auction places like Ebay can be a good place to find deals. If you are not familiar with auctions, make sure you read over all the rules and commitments before bidding. You should have a set final price in mind and never go over it. The whole point of buying at an auction is to get a good deal.

What to look for.

So now that we have ways to find super deals on land and build our wealth, let’s look at some things you want to look for in a piece of land.

Body of Water – In general, a piece of land by water is more valuable because water is a common link between us all. You would be hard pressed to find someone who does not want land with water on it or by it. Unless the water is a hazard site, try to find parcels near it.

Proximity – Land that is within a 2 hour drive of a major populous point can be valuable. This is a short drive for many and owning good relaxation land is a great idea. For example, if you had land by a lake and that lake was within 2 hours from a major city, it could be very valuable.

Utilities – Not all land in America has all the common utilities available to it. Lots of raw land needs to have these brought into the parcel. Factors in price would include if the utilities are to the parcel already, if they are available, how far away they are, and so forth.

Remember, when buying land, think ahead. Just because the area looks quiet today does not mean it will be that way forever. The land you are on right now was vacant at one time and now look at it! You don’t need to purchase land that is in Manhattan or the next hot spot to make lots of money. You could purchase parcels in the middle of nowhere and build wealth. For more on buying land, visit my website (JakeTruman.com).

Copyright 2005 JakeTruman.com

Jake Truman is a Real Estate & Stock investor and Credit informer. Website: Real Estate. He has published a book on Credit Help, which is available at his website JakeTruman.com.

Easing Your Way Into Homeownership: A Guide To Low Down Payment Mortgage Programs

Writen by W. Troy Swezey

There’s no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you’ll ever make.

Problem is, many would be homeowners remain renters simply because they mistakenly believe mortgage lenders require that buyers come up with 20 percent of the purchase price as a down payment. While it’s true lenders feel it’s less risky to work with buyers who are able to bring a substantial down payment to the table, the standard 20 percent requirement is fast becoming a relic of the past. In recent years, lenders have become more flexible in working with first time homebuyers by creating a variety of special programs that require only a small down payment. These programs, combined with the most favorable interest rates in two decades, have encouraged growing numbers of renters to consider the tremendous benefits of home ownership.

While the list of programs offered by individual lenders is too extensive to mention in detail, here are some common programs you are likely to come across as you work with your real estate agent to purchase your first home:

Federal Housing Administration (FHA): FHS mortgages allow homebuyers to purchase a home with as little as a 5 percent down payment, and to finance all non recurring closing costs. The current maximum loan amount in most urban markets is $151,725. In addition, borrowers are allowed to use up to 41 percent of their gross income toward paying mortgage debt – well above the ratio allowed under most private programs.

Department of Veterans Affairs (VA): VA mortgages allow veteran or active service personnel purchase home with no down payment, up to the current maximum price of $184.000. However, there is no purchase price limitation for buyers able to make a down payment. Like the FHA program, VA borrowers can put up to 41 percent of gross income toward their mortgage debt.

Mortgage Revenue Bonds and Mortgage Credit Certificates: Mortgages funded with these instruments typically require a minimum of 5 percent down and have interest rates that are 1.5 to 2 percentage points below conventional 30 year fixed rates. These types of loans, offered by state and local housing agencies, are available only to first time homebuyers. There generally are income and purchase price caps that vary, depending on where you plan to buy.

Private Mortgage Insurance: Most major lenders offer privately insured mortgages, which generally require a 10 percent down payment (although some lenders offer loans with a 5 percent down payment to buyers with exceptional credit). These loans typically are not limited by maximum loan amount or purchase price limitation.

Community Homebuyer Program: Through their networks of mortgage lenders, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) offer Community Homebuyer Program loans. These programs require a 5 percent down payment, 3 percent of which may be a gift. To further help buyers qualify, applicants may use 38 percent of their gross income. Currently, the maximum loan amount available through these programs is $203,150.

Clearly, there are a lot of options for first time homebuyers. While lenders will be more than happy to share information about their own programs, you can save yourself a good deal of time by first selecting a professional real estate agent who is experienced in working with first time buyers in the areas where you plan to buy.

An agent who focuses on first time buyers will know from experience which lenders in your area offer a low down payment program that will meet your unique needs.

Today, taking the first step toward owning your own home is easier than before. Your real estate agent is your best resource for finding innovative ways to help you come up with a down payment and qualify for financing. There’s certainly no need to wait until you’ve saved a 20 percent down payment!

About The Author

W. Troy Swezey is the author of “EASING YOUR WAY INTO HOMEOWNERSHIP: A GUIDE TO LOW DOWN PAYMENT MORTGAGE PROGRAMS.” As a Realtor at Century 21 Paul & Associates, he has helped many individuals with their real estate needs. Visit his web site to download his free e book, “REAL ESTATE SECRETS EXPOSED.” http://www.TroyIsMyRealtor.com or mail to: TroyC21@usa.net

Investment Real Estate A New Twist: Be the Bank, Not the Landlord, and Get Rich Without the Work!

Writen by Mark Barnes

I was a landlord for a decade, and I believe I probably lost a year of life for each year I tried to maintain 26 properties. I learned the hard way that the most efficient way to make money in investment real estate is to create a mortgage note and be the bank – not the landlord.

In other words, you become a private bank, financing the entire sale or part of the sale for the buyer. When you finance a sale of property, be sure to get a high rate of interest – generally 9% to 15%, depending on all of the other terms. For this article, let’s assume you sell to someone who can’t come up with all of a $20,000 down payment, so you finance $15,000 of the loan. The note should be due in five to 10 years, meaning the buyer will likely sell or refinance his mortgage within that period, and you’ll be paid in full.

Here’s how financing a portion of a mortgage can be extremely profitable and far less work than being a landlord, who is responsible for property maintenance. Let’s assume you charge 11% on your $15,000 loan, amortized over 30 years (this makes for an easier payment and a more attractive deal for the buyer, even though you’re receiving a very high rate of interest on the loan). The payment is $142.85, which includes principal and interest. Now, you could make it even more attractive for you by writing the note with monthly payments of interest only at 11%.

This saves the buyer even more, as his payment becomes $137.50, but this does not amortize, or reduce, the $15,000 he owes you. Let’s assume the note is due in 60 months. You get $8,250 during this five year period, and in the 61st month, you get the entire $15,000 that you originally loaned. As you can see, this is a very powerful investment, as you loaned $15,000 but you received a total of $23,250.

One final point. Maybe you are three years into receiving your $137.50 (meaning you’ve collected $4,950 in payments). Now, you decide you need a large sum of money for something – say, a vacation, home improvement, college tuition, or some other investment. You are still owed two years worth of payments at $137.50, or $3,300, and the balloon payment of $15,000. You have several great options, because you have the power of controlling a lot of money.

You can actually sell your entire note at a discount to a note investor. That’s right, there are people and companies all over the world that purchase mortgage notes (the actual payments that are due on a real estate transaction). The note you have, even though there are only two years left, would be highly attractive to an investor, because the payments are interest only and because there is a $15,000 balloon payment due in 24 months.

Now, remember, note investors are out to make money, so they won’t offer you full price. They will either buy your remaining payments, probably for a discount of 10% to 20%, or they might purchase just the balloon payment, at the same discount, leaving you the remaining payments, or they might buy both the payments and the balloon.

So, assume you need $11,000. If you could get an investor to purchase your remaining payments and your $15,000 balloon for $12,500, I would think you’d be extremely satisfied. Remember, you’ve already made nearly $5,000 on your loan, so you’d wind up making nearly $17,000, and you don’t have to worry about collecting the payments any longer. Plus, you will get the “hot” cash that you require immediately. As you can see, financing part of the sale of a piece of property is an extremely solid investment.

These examples are just a few of the many ways to own mortgages, not property, and get rich without the headache of being a landlord. If investing in real estate notes is something you would like to try, you might want to consider starting small, like with a mobile home note. These can be very inexpensive to buy but are extremely profitable.

Mark Barnes is the author of the new novel, The League, the first work of fiction, based on fantasy football. He is also an investment real estate and home loan finance expert. Learn more about his suspense thriller at http://www.sportsnovels.com Get his free mortgage finance course at http://www.winningthemortgagegame.com

Protective Covenants Buying A Home

Writen by Raynor James

In addition to zoning, some properties have covenants recorded at the courthouse that “run with the land.” These “protective covenants” can put a serious pinch in your plans for a piece of property.

Protective Covenants

A protective covenant remains in effect as the property is sold from owner to owner. The covenants are designed to maintain a certain aspect of the area in question. The covenants may require a particular architectural style or use for the land to mention only a few areas of restriction.

Land in a scenic area may have a protective covenant that prevents certain types of development for the land or properties on it. Importantly, these restrictions may not show up in the zoning laws, so make sure you research the issues before buying. Let’s consider an example of a great buy gone wrong because of a protective covenant.

A protective covenant may restrict the number of parcels into which the property can be subdivided. Thus, you could find yourself in a situation in which you buy a one hundred acre parcel with an eye toward subdividing it. Upon researching the issues, you discover the zoning laws allow the parcel to be cut into quarter acre lots. Visions of profit swirl before your eyes. Your development dreams, however, could turn to nightmares if there is a protective covenant.

Assume you go ahead and purchase the parcel. While showing it to a friend, a neighbor from down the road walks up and introduces himself. You excitedly explain you plans for subdividing only to be shocked when he tells you there is a protective covenant that prevents the creation of any lots under ten acres. What if the covenant restricts ANY subdividing of the parcels? That great deal you got on the parcel may not look so hot when the protective covenant is factored in.

So, how should you deal with protective covenants? First, you should ask the seller whether any exists for the property. Second, make sure you buy title insurance as the title company will certainly look for any protective covenants before issuing a policy.

Raynor James is with http://www.fsboamerica.org providing FSBO homes for sale by owner. Visit our “sell my home” page at http://www.fsboamerica.org/seller.cfm to list and sell your home for free for one month. Visit http://www.fsboamerica.org/buyer.cfm to see homes for sale by owner.

Real Estate Problem Solver

Writen by Willard Michlin

Introduction

There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth, I spent a lot of time in the school of hard knocks. The school of hard knocks is a very interesting but painful school to attend. It is also the most expensive way to learn something, but when you graduate you have a PHD in what to do and not do with your time and money. The schools I attended were: Investing in businesses as a silent partner, owning my own businesses, working for another family member in my case my father, buying publicly traded stocks and securities, penny mining stocks, commodity trading, investing in gold and silver, real estate private lending, real estate development, real estate remodeling, buying foreclosure properties. I also worked as a real estate problem solver/matchmaker, bringing business owners together with business buyers, and matching up real estate owners with real estate buyers.

Writing about all of these activities would take an encyclopedia, so we will limit this essay to the kinds of situations you can run across in the real estate school of hard knocks. I will present my solution with the given situation. There are more than one possible solution and I invite you to come up with other possible solutions as you read. If you get some value from my experiences that will hopefully lower your tuition to the real estate school of hard knocks. Feel free to e mail me your comments, alternate solution or stories. Do, please, let me know that it is all right for me to publish them.

My Real Estate Philosophy

As a way of introducing myself, I thought you might find what lessons I have learned, after all these years of real estate, interesting. Buy real estate instead of stocks, bonds, mutual funds, or commodities. When you pick a winner in one of these non real estate areas you can make 5 10 times your money. When you are wrong, in one of these non real estate areas, you can actually loose up to 90% of your money. In real estate, if you are not greedy not trying to get rich quick in one year, you can make 100 times your money, on the upside. The downside risk is only based on how well you looked at all the possibilities ahead of time. If you did, the downside risk is reduced to only the holding time to fix a mistake. If you rush in and do not explore all the possibilities of a business venture, you can actually loose 100% of your money. In my mind an upside of 100 times profit is better than 10 times profit.

My philosophy on real estate ownership has changed in the last 15 years. I used to think that selling at the top of the market was the smart move and buying in the crash. Now I feel that buying when prices are down is still a smart move but never selling is the way to go. In order to hold on to a property in a down market you require proper planning to survive the crash. This I call a back door or emergency plan. This is have a plan and knowing what you will do if everything goes wrong with you original plan. When you have a backup plan, you rarely need it. This is the basis of my philosophy. With this understanding, you might more clearly see why I did what I did in these situations.

The Stories and article:

The area of real estate investing is one of the most complex because it is a combination of law and real estate. It is one of the most interesting because fortunes are made and lost in this area, and the numbers are so enormous. Lastly it is an area where crooks can make a lot of money and many times get away with it. Following are some stories (case histories) I have dealt with and some articles I have written on the subject of fraud in real estate. Finally, I have included an article on the basics of foreclosures and real estate in general, for your interest. I hope you enjoy them.

The Stories:

Story #1:
It was early March 2000 and I received a call from Kevin. He said that he had heard about me from some mutual friends. He wanted to speculate in buying HUD houses (Properties that the Government had foreclosed on). He wanted to buy them, fix them up and then sell them at a profit. He had heard that I had bought many foreclosures in the 1970’s and 80’s and he was hoping I could advise him. We met for lunch and he told me his life story. The important part of this conversation is that he had bought a boarded up 14 unit apartment building in downtown San Bernardino, across the street, from one of the roughest high schools in California.

By the end of the meeting, I had figured out that he had overpaid about $75,000 for the building, he had already wasted $200,000 trying to remodel it, and it was still $100,000 away from being finished. He had bought it 1.5 years ago and a large part of his costs was the interest on all his loans, related to this project. He was now broke, and in deep trouble, but in his mind, the badly needed money was coming.

It is interesting to note where he got the money to invest in this project. 4 years earlier he was given money to buy an apartment building by his father. He was given enough money that he only needed a very small $150,000 real estate loan to purchase a building in Pasadena that cost him a total of $525,000. In order to buy the San Bernardino rehab project, he first refinanced the first trust deed on the Pasadena building and jumped the loan balance to $385,000. When that money was gone he borrowed $74,000 as a second Trust Deed on both the Pasadena and San Bernardino properties. By the way, that loan cost him 15% interest and $15,000 in up front fees to get the money. Before we parted, I told him that he made a very expense mistake in buying San Bernardino. I explained that from the day he bought the building it was a sure bet that the project would fail. I then had to tell him that I would not lend him any money on San Bernardino, to save his butt.

Over the next 2 months I received periodic phone calls, telling me the progress of the fund raising. One of those updates I was told that the existing 2nd Trust Deed lender was saying that he might give Kevin the added $100,000 he needed to finish the project. At the same time, Kevin also believed he had found a bank that might refinance all the loans of San Bernardino. The difficulty with the bank loan was that the appraisal fee was $3,000, and it had to be paid in advance, even to just apply for the loan. Again Kevin asked me for money. Again I refused to put more good money down his black hole.

Then one morning I got a call from Kevin, “If I don’t make the $2,000 payment to the 2nd trust deed holder, he will start foreclosure in 2 days. Kevin also told me “The 2nd trust deed lender said that he would buy the Pasadena apartment building for what I had paid for it, 4 years ago, $525,000.” The offer had a stipulation to it. Kevin had to bring the loan current first. In my mind, if Kevin could bring the loan current, why would he even bother to sell the property for a wholesale price? I couldn’t believe what I was hearing.

After hearing all of this I decide that it is time I stop saying no and help. What Kevin thought he wanted was a real estate loan for a lot of money. The truth is, that money was not the solution to his problem. The problem had to be different than what Kevin believed, which is why the problem persisted. The real situation was not more borrowing. More borrowing meant more money down the drain.

Experience has taught me, “If the problem was what Kevin thought it was, it wouldn’t be a problem.” What does this phrase mean? A businessman has a financial set back. He thinks that with some short term funding he can recover from the set back and return to the top. After looking around, our businessman will usually find the money, but strangely enough the problem doesn’t resolve. If the problem did correct itself, then the businessman was right about what the problem was, and the problem would be gone. Usually the money doesn’t help, but the businessman doesn’t understand that. He doesn’t realize that the problem wasn’t money in the first place. If it were, the problem would now be gone. Lets continue the explanation. The last money borrowed is now gone and the problem persists, so our businessman goes out to find more money to solve the problem that didn’t solve with the money he borrowed, the first time. What happens the second time? The same thing. The money is used up and still the problem continues.

Our businessman is working on the wrong problem. The problem is not money, or the problem would have been gone. Kevin thought the problem was money. It wasn’t. He had already poured $300,000 into the San Bernardino building, on top of the $209,000 1st Trust Deed loan that came about when he bought the building. Before he was finished, he spent over $500,000 in a building that needs $100,000 to finish, but was only worth $475,000, after it was finished.

What could I do? Use what the good lord gave me. 30 years of experience, on the subject of getting out of problems that I created when I was young and inexperienced. Here was the war strategy. I got Kevin to agree to turn over total management of the two properties to me. Knowing that I was managing the property and working on what I believed was the correct problem, I felt comfortable about loaning money on this deal. If I can’t trust myself to solve this problem, whom can I trust? I started by loaning Kevin $25,000 to make needed repairs to the Pasadena building, pay the property taxes and to bring the first and second loans current on the Pasadena property only. Nothing was to be spent at this time, on the San Bernardino building.

Now that I controlled the Pasadena apartment building, I discovered what repairs the building needed. The list was so long it took one man three months, full time, to fully handle it. I then did a very detailed market study and determined what the market would pay in rents. I asked the tenants for a list of everything they wanted done in their apartments to be happy. I then did everything the tenants requested and I then raised their rents 30%. After the building was full, I raised the rents another 15%. The value of the building went up and I received an offer for $725,000. This was $200,000 more than its value 6 months earlier. I put it into escrow, and then I realized that I could raise the rents some more. I raised the rents again in escrow and forced the buyer to pay another $25,000 for the building. Bringing the price to $750,000. That $225,000 profit was needed to help cover the money being lost in San Bernardino.

Author’s Note: The escrow fell through and the building was kept until this update, December 5, 2004. The building is now in escrow for $1,583,000

What did I do about San Bernardino? I contacted the seller/lender and asked him if he would like me to pull the security guard out of the building and let him have it back in foreclosure. He didn’t want it back, even though he pretended that he was willing to do that. He offered me $25,000 in incentives to get me to personally lend the money necessary for the completion of the building, so he wouldn’t have to take it back. For 3 months he tried to get me to put money into the building, with the idea that once I put my money in I wouldn’t walk away from it. The real story was that I wouldn’t put a dime into that black hole until I figured out how to make it recover at least $100,000 of Kevin’s lost money. I asked for a $70,000 discount on the note, and offered to pay him off. We negotiated for two months. Just when I was ready to finish the deal, the seller sold his note to someone else for only a $30,000 discount. I was not able to make the money I wanted because now the new note holder wanted 100% of interest and principal due. This threw a monkey wrench into my negotiating. All this time, I had a buyer standing in the wings to buy the building from Kevin while I was negotiating. I was then forced to sell the property to this buyer and Kevin recovered only a little bit of his investment. The lender and I were both playing a high stakes poker game. I lost this round. If I could have gotten the payoff reduced, Kevin would received a large hunk of money from an “as is” sale. This is what I call playing “Craps” on a very big Monopoly board.

Author’s Note: The buyer, thinking he was going to put $125,000 to finish the remodeling, notified me, after one year, that he had spent $300,000 to finish the building. The apartment building values were increasing rapidly during this time period, so Kevin’s project was increasing in value at the same time the buyer was going deeper and deeper into construction costs. The buyer made out all right in the end. If the market had died, he would have lost $200,000 on this building after Kevin had already lost a fortune. It’s all about timing, isn’t it?

Kevin learned that money alone was not the answer to his problems; he needed a Genie, to turn his turkey into a swan.

Story #2
Janet is the daughter of one of my oldest and wealthiest friends and clients. We have been doing real estate deals together since 1975. Janet and her husband started buying distressed real estate in Phoenix Arizona in 1994, which was 8 years ago when it was the thing to do. It was now Dec 2000. The market appears to be slowing down and did after September 11, 2001. Janet had been continually borrowing money from her father, whenever things got too difficult. She later sold everything in Phoenix and bought property in Northern California. Then in 1999, one year before I was brought in, she started buying real estate in Kansas City. One day Janet’s father called me and asked for my help. He had loaned his daughter $200,000 and felt that everything she owned was upside down. (Loans more than the market value.). This was further complicated by the fact that if she sold her properties, to pay off her father, the capital gains taxes would eat up any cash, from the sale. On top of all this, Janet kept asking for more money to keep up the payments on the properties that had a negative cash flow and didn’t have enough rental income.

He hired me to help his daughter and agreed to pay my fee. I would work with this 40 years old kid, to get her to return her fathers $200,000 and make herself totally debt free. Janet and I met. She was brilliant. She did know what she was doing, as far as picking good real estate deals. She owned, at the time of our meeting, 10 properties located in 2 different states, and there was $500,000 in equity. If we could get it out, before her father had a stroke things would be great. Janet agreed to the arrangement, happily, if I would be her adviser, not his. Her father agreed to fund whatever money was requested as long as I approved it. Also I had to be the one to ask Janet’s father for the money, since the upset between the farther and daughter was getting unbearable.

This is what we did. A list of needed repairs was created for each of the 11 properties. Bids were received and the work ordered to be done within 30 days. This was not to take months. It had to be done immediately so we could go to step two. Step 2 was to put on the market all of the expensive Northern California property. To my disbelief, Janet wanted to move her family, to a new city, in the middle of all this and her father agreed to let her do it. She had found an old run down house that she felt was undervalued. That meant that her old residence was put into the group of properties to sell. Sell is what we planned to do. Everything was to be put on the market, and sold at the best price to be gotten, but sold regardless. The property in Kansas was to be repaired and fully rented. The properties that could be sold at what we thought was full retail, were also put on the market. The plan was that when everything was sold, the father would get paid off; the loans on the remaining properties would be paid off and the balance of the cash would be put into the bank. Since all of the Kansas deals appear to be a good investment, Janet could now continue to buy more Kansas property, (she had only been spending $25,000 on each deal) but for all cash. The rents coming in would generate enough income for her family to live on without having to ask for money from dad or touching her investment nest egg. That was the plan.

I forgot one last thing. Because many of the properties had been bought years ago on a 1031 exchanges (tax free exchange), the capital gain tax was going to eat up the cash proceeds. That was one of the traps Janet fell into. She felt she couldn’t sell without buying a replacement. Of course by not liquidating before starting anew, she would never get out of debt with her real estate lenders or her father. The solution, for this problem was simpler than one would think.

First, the father did a 1031 exchange with Janet for one of the big profit houses. The father sold Janet his personal residences for no money down. Now Janet rented her father the house he lives in. So much for capital gains tax on the $150,000 profit in that one big sale. The second big profit was in the house Janet currently lived in. That was tax free under the current laws. Since the other houses sold had smaller profits, it was decided that the business decision to get out of debt was more important than avoiding paying any taxes.

Author’s Note: That was the plan. So what happened? Janet decided she didn’t want to sell the junk in Kansas and fired me. She refused to pay her father back and as of December 2004 he had not seen a dime. Father has deducted what she owes him from her inheritance, which will be put into a trust administered by her brother for the benefit of the grandchildren. Real estate in California skyrocketed after 9/11/01 terrorist attack and her properties all doubled in value.

Summary: Everyone thinks that his or her problem is not confrontable and therefore unsolvable. I have found that someone other than myself can solve my un confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot when coming up with easy solutions, quickly. It is really that we all are willing to confront someone else’s problems much easier than our own. When we are willing to confront our own problem head on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease.

Lessons to learn: First, do not think you are smarter than the people who passed this way before you; you’re not. Second, markets never go up forever, have not performed as if they will. Third, if you are not prepared for the worst, it will kill you. If you are prepared, it will only hurt a little. You will survive and come away much richer in the end.

Willard Michlin is an Investor, Business Broker, California Real Estate Broker, Accountant, Financial Distress Consultant, Well known Public speaker and Administrative/Business Consultant. He can be contacted at his Ventura, California office by calling 805 529 9854 or by e mail at broker@kismetbusinessbrokers.com

See other article by Willard at http://www.kismetgroup.com

Total Destruction

Writen by Luigi Frascati

Although most real estate transactions complete without a glitch, there are at times extreme circumstances that render finalization of a contract problematic, to say the least. One such instance is the frustration of a contract.

In generalities, frustration is a legal doctrine which provides that where the existence of a specific thing is necessary for the performance of a contract the duty to perform is discharged if the thing, for reasons beyond anyone’s control, is no longer in existence at the time of performance. After a contract has been made, but before it has been performed, it will be frustrated if events outside the control of the parties destroy the subject matter or change it in such a way that it becomes fundamentally different from that originally contemplated. For example, in Real Estate frustration would occur where a house was destroyed by fire or lightning after a contract of purchase and sale was entered into and prior to its completion. Unless the contract provides otherwise, such event will relieve the parties of their future obligations.

In practicality, the determinant factors of frustration are on the one hand the terms and construction of the contract read in the context of the then existing circumstances, and on the other hand the events which have occurred. In fact, to be more specific, special importance is necessarily attached to the occurrence of any unexpected event that, as it were, changes the face of things. Frustration is not called into play merely by hardship, inconvenience or material loss. There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a different thing altogether from that contracted for. Obviously, frustration cannot be self induced and the disruption must be permanent, not temporary or transient. The change must totally affect the nature, meaning, purpose, effect and consequences of the contract so far as it concerns either or both parties. Finally, the act or event that brought about such radical change must not have been foreseeable.

Typically, real estate contracts for the purchase and sale of residential interests in land provide that the risk of loss or damage to the subject property, or to the fixtures, equipment and personal property included in the sale, by fire or other cause,is assumed by Seller until the time of closing. However, contracts relating to the purchase and sale of industrial or commercial real property sometimes include optional provisions for the Seller, without any obligation on the Seller’s part to do so, to repair or replace damaged property entirely at his own discretion. In such instance, the Seller must notify the Buyer within a prescribed period of time of his intentions to replace or repair or to do otherwise. Should the Seller elect to go forward with the replacement or repairs, Seller must notify Buyer of the timeframe in which he will carry out the restoration work and the closing will be adjourned for this purpose and without cost or penalty to either Seller or Buyer.

If, conversely, the Seller does not elect to make the repairs or replacement, or if he elects to make the repairs or replacement but fails to complete the same before the adjourned completion date, a Buyer of an industrial or commercial interest is under the obligation to advise the Seller of his intention to either: i) declaring the contract of purchase and sale cancelled in which event the deposit or down payment paid by Buyer shall be refunded to Buyer and neither party shall have any further obligation or liability to the other; or (ii) completing the purchase without reduction in the purchase price. In this instance, if Seller’s insurance covers the loss or damage, Seller shall turn over to Buyer at the closing the net proceeds actually collected by Seller under the provisions of any insurance policies, to the extent that they are attributable to the loss or damage to any property included in the sale. In the eventuality that the Seller has not yet received such proceeds, Seller shall irrevocably assign to the benefit of the Buyer any future collection of any such insurance proceeds.

Clearly, frustration does not follow the general path of negotiating, performing and closing contracts of purchase and sale. Exceptional care must be taken by the parties – and their Agents to make sure that any amended terms be carried out swiftly and fully for everyone’s best interest.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton Centre Realty in Burnaby, BC.

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How to Find a Great Real Estate Agent

Writen by Robert Lipply

After deciding to buy or sell a home, one of the first things you should do, is look into finding a knowledgeable and experienced real estate agent. There are many ways to find a qualified agent. One of the most common is word of mouth. Hearing from a friend, coworker or acquaintance that they loved their agent, is a great way to find someone that you will trust and feel confident in. This person will be representing you and your home, and having a good background of experience is a key ingredient in enlisting his or her help.

Another common way people search for a reputable agent is to contact someone who they see on “For Sale” signs in other seller’s yards. Many prospective buyers still drive through neighborhoods they desire, and look for houses for sale. If you commonly see the same agent listing homes, there is a good reason why. Maybe that agent is well informed of the advantages of living in that neighborhood. They could have a great reputation in that area. They may offer a competitive commission rate. Or have been an agent for many years with a lot of experience. If other sellers trust them, maybe you should too!

Many prospective buyers and sellers use advertisements, billboards, and park benches to find a great agent. These tools are useful because they show that an agent is using his or her resources to promote themselves. The more people that contact your agent, the more likely they are to hear about your home. Agents love to sell homes they are listing to their own buyers who they are currently working with. It can cut down on commissions to the seller which helps the selling price for the buyer. It’s a win, win situation!

And don’t forget the internet! Internet web sites and listings are becoming one of the fastest growing ways to find a property. Agents have helpful web sites that are content rich and help to inform buyers of communities and neighborhoods within the city they are moving too. A great internet site can bring an agent business and help sellers sell their homes. Your agent can put photos and information regarding your home on his or her internet page. Buyers who are searching for a home like yours may see it on the internet!

Next you can contact a reputable real estate firm and ask for their assistance in choosing an agent within their firm. Let them know that you not only want the best, but someone who has the time to work with you on an individual basis and not just pass you off to their assistant. These agents are making money on selling your home and if you sign up with a specific agent, you want his or her help. It’s okay to speak to assistants occasionally, but a real estate agent’s reputation is one of his or her best assets.

When choosing an agent, do your homework. Our homes are our biggest investment. Make sure you are happy with the real estate agent who will be representing you and your family!

Bob Lipply is a top Real Estate Broker Associate in the Tampa Bay Florida Real Estate area. He and his team have been helping families relocate to Florida and on the selling end get top dollar for their homes with great success. Lipply Real Estate also specializes in Clearwater Real Estate visit his website where you can search the MLS for up to date available homes for sale.