Category: Real Estate
There are no yardsticks to measure the value of a freehold property. This is because evaluating a freehold is not an accurate science. However, you can follow certain guidelines on what you need to take into consideration when valuing a freehold, which is produced by the advisory services that give free advice to leaseholders. You must also take these three factors into consideration:
1. The current value of the property
2. The annual ground rent
3. The number of years currently left on the lease
Also, evaluate the expected percentage increase in property value that results from extending the leases of different lengths, along with forecasted long term interest rates and inflation rates.
Take help from an expert valuer rather than trying to work out a figure all by yourself, to present before the freeholder. An expert valuer will be able to give you the best advice, which will enable you to make a practical offer.
You will find expert valuers online. They will help you with the entire process of negotiation and buying the freehold.
For the benefit of the freehold, most surveyors add a little extra to a property’s value. This is done after comparing it with similar property with the same number of years on the lease but no freehold.
First, approach your freeholder informally, before you serve him with a first notice. This document should include your preliminary offer for the freehold, which starts off the legal process of buying it.
A word of caution. Never produce an initial notice without obtaining an expert valuation. If you make the wrong evaluation in the initial notice you won’t be able to take back the offer. After the initial notice, wait for the freeholder to reply to it with a counter notice by a date that you have given. The freeholder must be sanctioned at least two months from the date the initial notice is served.
If the freeholder is not sending his counter notice within this period, the leaseholders can take matters into their hands. They can apply for a vesting order at a court. It is now up to the court to move the freehold to the leaseholders. So freeholder’s should respond on time to the initial notice for their own benefit.
Buying a share of freehold will make little profit if you already have had a decent length lease. You would still have to give the same authorized costs as someone with a short hire, but would lead to a drop in the value of the property.
Whether you are considering a home renovation or exploring designs for a new house, one of the common suggestions that you will get both from architects and engineers is to make it adaptive and earth-friendly. For those who may not be too inclined on the technical details of home designs, “adaptive” and “earth-friendly” are just words, that also often appeal to be expensive and complicated to achieve.
However, with the ever changing trends in home designs, we need to start equipping ourselves with knowledge on economical yet safe home design choices. With this, we will try to look into the basic concepts of earth-friendly and adaptive homes – two concepts that are closely interrelated.
Earth-friendly Home Designs
These designs are born out of the campaigns of several countries for an environment-friendly lifestyle or sustainable living, which of course includes house designs. Along with this, professionals in home construction and design have also innovated their skill set to meeting these new standards.
When we speak of environment-friendly home designs, this has a lot to do with the materials used to build or renovate the house. For instance, some architects have been practicing the use of biodegradable materials in house interiors.
These design techniques closely resemble that of the ancient times, when majority of the house materials come from natural sources. Even the paint products for the house have to be eco-friendly, which is not only safer for the walls, but for the occupants’ health, as well.
Other strategies being applied by architects is the creation of outdoor rooms in the house.
This means using natural light and air to save on energy for the room. All these, along with eco-friendly household practices easily contribute to having an environmentally sustainable lifestyle.
Adaptive Home Designs
This type of home design deals with two major things:
1) the ability of the house to adapt to the changing lifestyle of its residents, and 2) ability of the house to adapt and withstand the various environmental changes.
Also operating around the concept of sustainable living, these designs are meant to make the house last longer and the family living in it safer. Common feature of these homes are sturdy lumber and concrete, insulated panels, and dome-shaped ceilings. These type of house built has been proven to be more resistant to storms, tornadoes, and even earthquakes by the Wind Engineering Research Center. With natural calamities hitting the country almost every year, it pays to be keener in the construction materials used for your house.
When it comes to adaptive spaces for home, this is where secret rooms and sliding door comes in. This is also an innovative trend that architects and interior designers are looking into, in order to make a house with limited floor area still spacious enough for a growing family. Aside from choosing space-saver and multi-purpose furniture, it is also important to choose a house design that is easier to renovate in case the need for expansion arises. And this is exactly what your architect mean when they speak of adaptive home design.
Because of the many environmental concerns, threats and considerations, many buyers, as well as homeowners, today, have become more – and – more concerned with various factors, often referred to as green real estate. There are many considerations, and variations, as well as degrees of greening individuals are interested in. Some (however a minority) are real environmentalists, and want their home, to exhibit their concern and attention, to this very important issue. Others merely want to proceed in a somewhat balanced manner, and want to include reasonable green characteristics. This article will be a basic one, and discuss, in general terms, 6 considerations, regarding making your home, a greener one.
1. Windows and doors: Obviously, energy conservation is a major environmental concern. We often speak about a business’ carbon footprint, but, obviously, certain houses are far more energy – efficient than others. When were your windows replaced and/ or upgraded, and are they efficient? Do they keep out most of the cold, in the winter, and minimize the amount of heat, which enters in the hottest weather? What materials are your windows and doors, made of? Do your doors leak? Begin by having someone do an energy inspection, and see if you are losing much heat, because of inefficiencies. Doors can often be made more efficient, by having them re – hung, and putting a properly installed, sweep, on the bottom of the door. How much money, and energy are you wasting?
2. Solar, geo – thermal, etc: Some houses are candidates for solar panels, while others are not! What direction does your roof face? Are there any large trees blocking your roof? How many hours a day, of sun, does your roof, experience? Have you had your home examined, to discover whether you might be a good candidate for geo – thermal? This often requires a combination and evaluation of your property, pitch, location, and layout.
3. Energy – efficient burners/ boilers, and air conditioners: When was the last energy efficiency evaluation, you had performed? How old is your burner/ boiler, and is it efficient? What type of air conditioning do you use, and what it the Energy Efficiency Rating?
4. Roof: Light – colored roofs reflect heat, while darker ones, absorb it. Therefore, doesn’t it make sense, that warmer climates should use lighter ones, and colder ones, darker? What is the material being used? Is it efficient, effective and safe? How old is the roof?
5. Insulation: What is the rating of your insulation, and how well insulated, is the house? Have the walls (especially outside ones) checked, for efficiency? Older houses tend not to have updated insulation, or may contain less than the safest materials. An ounce of prevention, makes lots of sense!
6. Materials: Are you using safe, sustainable materials, in your house? This is generally more relevant, in newer houses, or extensions, but if you are concerned with the environment, you should consider the sustainability, safety and impacts of your home!
If you are a builder or Fix and Flipper, you have undoubtedly thought about whether or not to outsource the General Contractor role on your projects. The obvious benefit to not hiring a General Contractor is the money you will save, but what is the cost to save that money?
A General Contractor is someone that will oversee your project. They will manage all the subcontractors and help get you to the finish line. They are generally not as skilled at specific tasks, like plumbing or electrical, but might be more organized and should understand the basics of the entire project.
BENEFITS OF ACTING AS YOUR OWN GENERAL CONTRACTOR
In most cities you will be allowed to act as your own as long as it is a smaller job or you hire and manage licensed subcontractors. General contractors will want to be paid for the value they bring to your project so if you choose not to hire one, that savings will go directly to the bottom line. Paying less for the rehab could mean more profit for you.
Another benefit of acting as your own is the experience you will gain. As a real estate investor, it is a good idea to have a basic understanding of what it takes to rehab a house. This will help you with future projects or come in handy if you ever hire a bad contractor.
Finally, if you don’t have one in the way, you will be in much more control. Not saying it would happen, but I could see when there might be a time when you end up with a bad one. Getting a General Contractor off the job is not easy. They could have their crews working and they might owe their subs money. Dealing directly with the subs actually doing the work is often times much easier.
BENEFITS OF HIRING A GENERAL CONTRACTOR
Although I am acting as a co-General Contractor for a house I am building for my girls and I, I am a big believer in using one on your projects. This becomes especially true as you grow as a real estate investor. It is extremely hard to scale your investing business if you are working in it, so anything you can shift to someone else while still making a profit will help you grow. Aside from shifting the workload, here are some other reasons why you might consider paying for a General Contractor:
They understand building code and can ensure work is done according to that code.
If you have a good one, you will save money on your holding costs because they know how to complete a job in an efficient manner.
It is a great way to shift liability. If something is not done correctly, you can shift that responsibility to the General Contractor or their insurance. They should also manage any warranty issues.
They could actually save you money, because often times they have good relationships with subcontractors and get preferred pricing. This could be true with material suppliers as well.
Although I think it is best for most investors to hire one, there are good arguments either way. It is not a terrible idea to go through some deals without help so you can learn the process. That is exactly why I decided to take on that role with my new home. It also might come down to how much time you have and your ability to do the job. Most investors can handle smaller jobs without the help of oner. Experienced investors can likely handle even large jobs without any help. If you have the time and want to maximize profits, I can see you taking on the role, but if you are limited on time or are more interested in growing, you probably want help.
I am a big believer that in order for you to maximize income, you need to focus on two things. What you are good at and what makes the most money. In my opinion, finding and negotiating deals is a much higher paying activity than managing subcontractors. That, and I am learning that not everyone is good at running a project.
Want to invest in real estate with no financial risk and no money or credit? Wholesaling houses is a popular choice. I personally think wholesaling can be a challenging way to get started, but the fact that you can get started in real estate investing without any barrier of entry makes wholesaling an attractive option. If you can get good at this side of the business, you will be success with anything you want to do. The reason I say that is finding deals is what makes a wholesaler successful. If you can get good at finding deals, you have unlimited potential.
Once you find a deal, you need to understand how to sell it to make your profit. Here are four ways you can structure your wholesale properties.
Contract Assignment: This is the easiest, but comes with some risks if not done correctly. It is also somewhat restrictive as bank owned properties will prevent this. This works well when you negotiate your deals directly with the seller. The way this works is you will get a house under contract and then you will assign your rights in the contract to another buyer for a fee. That new buyer will take on the rights and responsibilities in the contract and will close in your place. It is best to get your fee paid up front, but it is very common to get your fee when your buyer buys the house. Here are a few things to keep in mind when assigning contracts.
Be sure that you always disclose to your seller that you are or may assign the agreement to another buyer for a fee. I suggest you actually put this in the contract. Sellers should be OK with this if you are transparent that you are an investor who buys houses for a profit before you start to negotiate.
I would get money from your money that is at least enough to cover any earnest money you put up with your seller. That way if your buyer defaults on the agreement you at least cover your costs. Always try to get the entire fee paid when you assign the contract.
I like this way the best because it is easy to do on your end, it is easy for the buyer and the buyer’s lender, and it is the cheapest way to go.
Double Close: This just means that you actually buy the house and then resell it. There are several ways to do this, but the most common is to buy and sell in the same day or within a day. Typically, you will need to bring in financing to get your closing done with the seller, which is why this is my least preferred method to wholesale. Also, because you have two closings you will have two sets of closing costs, so it is the most expensive way too. With that said, some wholesalers prefer this method because they do not have to disclose to the seller their intent to resell and they can both keep their deal with the seller and their deal with their buyer private. It is believed by some that this is a good way to protect your profits. The information will all become public record at some point, but that is well after the closing.
This is the method you will use by default if you do not do your contract on the front end correctly, so we do see double closing frequently.
Flip the Entity: This has become the most common way to wholesale in my market. Most, if not all, the successful wholesalers will use this strategy. Especially when wholesaling foreclosures where contract assignments are forbidden.
The way this works is the wholesaler will set up a separate entity, like an LLC or a Trust, and put that entity as the buyer of the house to be wholesaled. They will then sell the entity itself for a fee. The benefit with using this strategy is that actual contract on the house does not change. Since the buyer of the house is the entity, there are no issues with any regulation or assignment restrictions. The downside is it could be more work because of the extra step to set up the entity, and there could be additional fees to register the entity with the state. The risk for the buyer is whenever you buy a company you are buying all of it. So, if the entity was used in another transaction and owes money to anyone, the new buyer could be on the hook. Knowing this, the best way to do this transaction is with a brand-new entity used for this one purpose.
Relationship Close: I don’t know if there is an actual name for this method. In fact, it is rarely seen. What I mean by relationship close is that you have such a strong relationship with a buyer that you write offers in the buyer’s name. For this to work, you should be a licensed agent and preview houses for your buyer. You would need to understand their criteria and only offer on houses they will want to buy. I have a client that works this way. He has an agent write his offers and the agent/wholesaler gets paid a commission with each successful closing. They do 2 to 3 deals a month with this strategy. My client just signs contracts without looking at them at this point and trusts what the wholesaler is putting together solid offers. There is always an inspection clause protecting the buyer and the agent, but more than 9 out of 10 houses that go under contract close. That is because the agent/wholesaler knows the business and knows what this buyer will buy.
I would stay away from this method, especially if you are just starting out. A lot can go wrong. I wanted to mention it because it is one of the 4 ways that I see people wholesale. If you are just getting started I would focus on contract assignments and then flipping the entity.
“Pain don’t hurt” or so says Dalton in the movie Road House. I loved that movie and I love that quote. The truth is pain does hurt, but the temporary and manageable hurt creates success!
I had the most amazing experience last year at the Denver and Minnesota Success Summits. For those of you that I was lucky enough to present to, you know that over time I have focused my energy on teaching skills, techniques, and strategies to help you get rich in real estate. I gave my first presentation to a live audience in 2006, and have since taught thousands of investors how to make money. I have written countless articles, reports, and a book. I love getting notes in the mail, emails, or people approaching me telling me how I helped change their life. Someone told me that my book helped them make an additional $50,000 this past year alone. You can probably tell that I have a passion and am driven to help people reach their goals, and now I understand that I was missing a very important piece to this mission. Most people need more than skills, techniques and strategies. Many can acquire all the information they need to make a fortune and still be broke. What most people need is the understanding of what it actually takes to be successful.
At this year’s Success Summits, I tried something new. I tried to breakdown the fear that prevents us from taking action and tried to give techniques on how to move forward past the fear. I had a lot of fun with the presentation, but it also pulled a lot of emotion out of me and the audience. Multiple people told me I touched them, and it was the exact presentation they needed to hear as the try to jump start their investing. I think one of the reasons I had several people approach me in tears is because they know they have not been taking action, to avoid pain, and all that has created in their life is more pain. That is a hard thing for someone to realize. My guess is people left that presentation being hard on themselves. That is not the point. The point is, now they understand what was holding them back so that they can implement strategies to propel themselves forward. The past is the past, and serves only as an educator for the greatness that is about to come.
If you attended the presentation, you learned that our decisions are based on one of two driving forces. Pursuit of pleasure or the avoidance of pain. We talked about pain being a stronger force, and can easily dominate our decision making. The thought of experiencing pain, even if it is not physical, is scary; which is where the fear that stops us stems.
What is important to understand is that pain supports us. Success is developed by experiencing pain. If you look back through time, you will see that all successful people had to endure pain before the triumph, and that all people experiences what could be considered large amounts of pain. No one is immune to this fact. What makes successful people successful is they can embrace it and learn from it. I also believe that once you start to embrace psychological pain, and are able to reflect on it, you will have no choice but to grow and become more and more successful. Things that scare most of us, like being embarrassed, or being rejected, are things that make us stronger, smarter, and better equipped to succeed.
As we move through the year I will write more articles on the subject of busting through fear in hopes that more of you will start to implement the real estate skills, techniques and strategies that we teach. For now, I want you to understand the reason you make the decisions you make. I want you to understand that the fear is based on your attempt to avoid pain, so you can peel back the fear and focus on what the actual results of your decision. Obviously, you can mess up and create pain through failure, disappointment, and rejection, but none of that is that bad. In fact, it is necessary. Focusing on the pleasure you will get from doing the things you are afraid of will help move you forward. And you never know, if you try something… it just might work.
1. Get Educated
No matter where you live, you need to take pre-licensing courses. Thereby, state requirements differ significantly. For this, contact your real estate commission for your state requirements for licensing. Few real estate agencies have particular education requirements, so you may have to opt for an additional course after being recruited on with a company.
2. Pick a Brokerage
A real estate brokerage is a firm or office for which the brokers and real estate agents work. You need to contact the broker before going graduation for your training courses. Brokers have three years additional real estate training and can advise you better when it comes to the working in this domain, as well as selling and listing homes.
3. Obtain License
Real estate licenses need the passing of the national and state exams. Also, you may have to give the criminal background check. Between the courses, licenses and exam fees for the real estate salesperson, you can expect to pay $200 (although rates may vary from state to state).
4. Make budget
While becoming a real estate agent is not too low cost, it is cheaper than entering many professions. The startup costs are between $1,500-2,000.
5. Make the Real Estate Agent/ Realtor decision
To use the title’ realtor,’ you must join the National Association of Realtors (NAR). It is done by selecting a well-qualified brokerage and also attending some meetings designated by your local chapter.
6. Make your Referral/ Client Portfolio
The excellent way to create your portfolio is two-fold, i.e., get a mentor and utilize your network. Pick a mentor in the real estate firm who guides you towards the seller/buyer contacts and splits commission. Ask your friends and family members for the references of people whom you are considering for selling or buying a home. It also helps to start networking well.
Becoming a real estate agent is same as starting a tiny business. Even though you will work within the brokerage of well set real estate agents or realtors, you need a startup fund for the business expenditure and to cover the few months of personal expenses while you create your clients base.
There are many factors that lead a real estate consultant to success.
The challenges of the profession are many. The ability to adapt is the most important characteristics for those who want to have good results in real estate mediation. However, there are routines that can help you.
Here are 5 habits of successful estate agents. Follow them, and improve your results.
A successful real estate broker considers the calendar “an absolute law”.
Your time is precious and should be harnessed with maximum efficiency. So, schedule all the actions you have to do during the day, or throughout the week. Follow the calendar to the letter. If you only have 30 minutes to visit, use only this time alone.
Planning your work will help you do more, since you do not waste a second thinking “what do I have to do now? / there’s something important I have to do, but I’m not reminded … “.
Successful people accomplish what is planned for the day. There is no way to procrastinate.
A successful estate agent is available to the client
Put yourself in the shoes of your client. If I sent an email, or called, would you like to wait two days for an answer? In that time frame how many other agents would you have contacted?
Nowadays, leads do not expect too much from contacts. Whoever is the first to respond will do the business.
Can your client only visit a house on the weekend? Adjust your work plan to respond to the request. It will be an appreciated effort that will yield a business and future recommendations.
A successful real estate consultant explains all the steps in the process
Most people are not aware of all the work that exists until they are presented with a list of suggested properties. Explain to the client what the selection process is and why you think a property is ideal.
During negotiations, maintain a regular communication channel. Do not leave your client in the dark. It is important for him to know in what state the proposal is.
Communicating is essential if you are selling a client’s property. Keep it up to date with the proposals you receive, the strategy you take and the hours you invest in the sale. Get your work noticed.
Technology is one of the best allies of a successful real estate agent
A well-built platform, can help you boost your business. The promotion of a property is almost nil if you do not use social networks, if you do not work with one, real estate portal, etc. You will have to use the necessary technologies to maximize your results.
An individual management of all the tools available would consume you a lot of time. So if you want to succeed, invest in a CRM that fits your needs.
A real estate broker invests, constantly, in training.
Your schedule is fulfilled, and it is normal that you do not have the opportunity to be updated with all the new techniques and tools for the real estate industry. Take a few hours each month to study. Read ebooks, blogs, and if you can attend an event for real estate agents, do so. It is the best option to listen to experts whose profession is to discover how to improve the performance of those who work in real estate brokerage.
There are multiple options available when it comes to choosing a real estate agent. But there are some common mistakes made while making the choice. A wrong selection of a property agent makes the client suffer financially and leads to inordinate delays.
Exercise caution and avoid the common mistakes in choosing a real estate agent for representation.
Follow Track Record
A property agent often makes tall claims of wide experience in the real estate market. He projects a rosy picture of dealing with all kind of market segments. Do not make the mistake of believing what the property agent says. Look closely at the inventory he has sold in the past one year. Follow the properties he has listed and the corresponding sales figures. Selling 25 properties in a year sounds impressive while pitching for a new client. Try to know the number of listings he made in the last year. Selling 25 properties out of 100 listings is no big deal. Choose the property agent who has a higher percentage of sales.
Do not end up with a property agent who flatters the client and creates an impression of serving him well. Be realistic in assessing the worth of the property in the area. A clever agent tries tricks to win trust and gets hired for the job.He overvalues the property and it remains unsold for months. After frustration sets in, the real estate agent urges the client to slash the quoted price. Some buyers interpret this as a signal of distress. They offer less than what the property is worth.This is a common mistake people make while picking up the right property agent. It is sad that those agents who overvalue the property are considered well-wishers. Clients regret this later.
Choosing friend as agent
While hiring a property agent, the client wants to work with a person he knows – for better coordination and trust. When a person mixes his personal contacts and brings them in the professional domain, he cannot enforce a disciplined approach or seek clarifications if things do not progress well. Small mistakes are expected to be overlooked. The property agent takes a lot of things for granted and does not put in an adequate amount of hard work to meet the expectations of his client friend. When a property agent hired from his friend circle fails to get the best price, there is bitterness in the relationship. In the search for the right property agent, do not settle for options from the personal contacts.
Make it a point to check the background of the property agent. It is a professional arrangement and the client should not make any concession or overlook the key aspects of consideration. Seek references and contacts of his previous clients and review them accordingly. Search online with his full name and find out any negative remarks about his performance. Find out from his clients if they would like to recommend him.
A client should opt for a reputed property agent with a flawless record.Dealing with a reputed name makes things a lot easier.Buyers also trust such agents.Their behaviour and style of conducting the deal are superior.Their language is courteous as they know how to deal with educated and respected people. Sometimes their reputation clicks the deal. They are fast, reliable and cost-effective. These are some factors every client should bear in mind when he hopes to hire the right property agent. But unfortunately, he ends up with disappointment when he does not pay attention to these vital aspects while making the choice.