High Profit Real Estate Investing--Make a Good Deal Every Time!

Knowing what a Good Deal is-is the Key to Success in
Real Estate.

Dear Investor,

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Take this little survey: The most important key to Real Estate Success is:

1. Finding Motivated Sellers

2. Funding Your Deals

3. Negotiating

4. Knowing a Good Deal when you see one.

Yes all of them are important. And if you answered # 4-you're right
on the money. Why, because if your deal is a good one, not all your other skills
and marketing and power will not make you money, and may even lead to disaster.

On the other hand, if you can target unfailingly good deals, you will always
be successful and all the other skills and your marketing methods will need
to increase your success.

What is a Good Deal?

It's a loteasier to state the question than give the answer. Why? Because
it depends on many factors like:

-Market value and purchase price

-Expenses, carrying costs, repairs

-Cashflow and profits

-Holding time

-Loan terms

-Risk factors

-And more ...

And most importantly, it depends on the type of deal you're doing. For example,
if you have a loan on a property that you intend to rent or sell on a lease
option, the terms of the mortgage, future tax increases, and current area rents
are critical to consider in insuring a positive cashflow. However, if you are
planning to do a short rehab job, and sell or just flip to another investor,
rental income is irrelevant as are future tax increases.

It's What You don'tThink About that Can Get You

The thing that trips up many investors, is that in our enthusiasm to do a deal
that we've found, we don't take into consideration "hidden" costs.

For example, if you're doing a renovation and you've done your due diligence
on contractor costs, have you also considered your carrying costs such as mortgage
payments, utilities, etc. not only during the renovation, but also the time
it will take to sell and close with a new buyer?

Or if you're using a realtor to sell the property, have you calculated the effect
of a 6-7% commission and the closing costs the seller will pay on your bottom
line. A 10% profit margin can shrink pretty quickly to zero under those circumstances.

Read Those Loan Terms Carefully

Orhave you taken into account, not just your loan to value ratio on the property,
but your investment to value ratio (e.g., the total of all outstanding loan
balances plus the additional funds you've put in from your own cash or borrowed
from your home equity line or friends and family)?

And on the income side, have you calculated how long you should hold the property
to receive a significant profit from the pay down of the mortgage. With a new
30 yr loan, you may have to wait 5-10yrs to get the same pay down you'd get
after a few years from a 30yr loan that's been seasoned for 10 years.

And did you carefully read the note contracts to take account of adjustable
rates and pre-payment penalties?

Checklists aren't Enough

A number of courses and real estate gurus will give you checklists. That's helpful
in not forgetting something, but it doesn't help you with the laborious and
complex task of putting all the numbers together.

There's just something about working with the actual real numbers, that brings
the reality of the deal into actual focus. Our hopes and wishes dissolves before
the actual profit and loss calculations.

Moreover, the numbers can pinpoint the weaknesses in a deal, and point the way
to a solution. No mere checklist can do that.

What About Risk?

I think you'll also agree that a Good Deal is not just High Profit, but also,
most importantly Low Risk. Many a dream of a golden future has come crashing
down because some little thing went wrong.

Many inwould-be mogul, is now working at a 9 to 5 because their killer deal
was wrecked by an unforseen glitches. This is what we mean by high risk.

The successful investors do deals with low risk. Deals that are so robust that
even if almost everything went wrong they'd still come out with a profit.

Build In A Safety Margin

For example, suppose you have a rental with a positive cashflow. Is your cashflow
high enough or your payment option, big enough that even if you had to evict
your tenant for non-payment and it took you 2 months to fill it with another
cash-paying customer, you'd still come out ahead?

Or, is your investment to value so low that even if you had to offer your buyers
big discount for a quick sale, you'd still walk away from theclosing table
with a fat check?

In real estate things can and usually do go wrong. It's Normal. So, wouldn't
you like all your deals to have these kinds of safety margins?

Fixing the Problems with Your Deal

Now, if you knew in advance that your risk was too high, or your cashflow was
too low, or your profits over the life of the deal wasn't enough, you'd want
to think of solutions.

This is what is meant by being a "transaction engineer." Find the
solution, fix the problem, test it on the numbers, and then negotiate it into
the deal.

And if you can't find a solution (but there always is one) or the seller won't
accept it--NEXT!

I can tell you from experience, a real bad or risky deal is NEVER WORTH DOING--no
matter howenticing the vision. The personal stress, heartache, and loss of
confidence can be even more harmless than the potential financial loss. In the
words of an ex-president's wife, if you are faced with doing a bad deal--Just
say No!

What's the Answer?

Some experienced investors have to feel for good deals, and can avoid trouble
most of the time. Others only do a particular type of deal and use a rough ' rule
of thumb "to evaluate their risk and profit.

However, what's really needed is a "calculator" or computer program
that will take in all the variables and

1) Calculate the exact profit and cashflow for all kinds of deals.

2) Measure and Evaluate the financial risk in the deal

3) Use standard and safe criteria for what constitutes agood deal

4) Suggests alternatives to fix what is wrong

The Deal Evaluation Tool

We've taken tons of real estate courses and looked at all kinds of real estate
software, and nothing has come close to what we as investors need. So we decided
to create our own Deal Evaluation Tool.

Well after several months of testing and improvement, we now use it for all
our deals--short sales, subject to, lease option, wholesaling, rehab, and
even some commercial.

Since we can try out different "what-if" scenarios, it's kept us away
from some real pitfalls, and helped us negotiate better profit margins. We wouldn't
"leave home without it".

Constantly Meeting The Needs Of Investors

Well, some other investors wanted to try it, so we put iton our website. Much
to our delight we now have a community of users and to users group that shares
their insights about doing deals and creative ways to use the Deal Evaluation
Tool.

Their suggestions, are leading to a rapid improvement of already incredibly
useful tool. There is just nothing out there like it. We've also put a demo
up for those investors who would like to get a feel for using it. And we hold
classes for new users.

Knowing all the numbers, and having evaluated our risks with the Deal Evaluation
Tool gives us more confidence in negotiating deals with sellers and more consistent
high profit real estate deals.

And that's what we all want, isn't it.

High Profit Real Estate Investing--Make a Good Deal Every Time!

Advanced Retirement Planning 3.0

The Times They are a changin'

I wonder if Bob Dylan had retirement planning and health care costs in mind when he wrote those lyrics. I happen to be a pretty big Dylan fan, and although his new stuff is great, his message and priorities certainly have changed over the years.

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What are your priorities to and through retirement?

As we all get closer to retirement, there is no doubt that our priorities change: Perhaps it starts with substituting a soda for a glass of Cabernet, wearing shoes for actual comfort and of course taking a little less risk with the money we've saved. No longer are we or should we be willing to take the chance of significant losses. A National Retirement Risk Index has shown that even if people all their financial assets annuitize includingexecuting a reverse mortgage, 44% will be at risk of being unable to maintain their standard of living in retirement. And that does not include rapidly rising health care costs. When these costs are included, the percentage of households at risk rises from 44% to 61%! Therefore, making important decisions about our finances as we approach and live in retirement is critical to maintaining our way of life.

Retirement reality
Unfortunately, as the reality sets in that our working years are limited, our concerns begin to change. It's no longer just about asset allocation and what stocks or funds ought to be a part of that allocation. Outliving assets, health care costs, long-term care, inflation, longevity risk, income and mortgage protection ... those are the things that that topour minds. Of course, asset allocation and portfolio management are the foundation to successful retirement planning and need careful attention. However, people are living longer than ever due to recent medical innovations which only add to the dilemma. People over age 65 spend four times as much on healthcare as their younger peers, according to AARP research, and that end-of-life care can easily eat up 50% or more of an individual's lifetime funds. Failing to prepare for retirement's major expenses can be the biggest challenge to living comfortably in our golden years.

For the most part, the major health care expenses faced by retired households are premiums for Medicare Part B (which covers physician and outpatient hospital services) and Part D which covers drug related expenses:the co-payments related to Medicare covered services and or services not covered at all. Keeping track of all the many concerns is overwhelming to say the least. It is no wonder that in a recent PBS program, people in the street were asked what was their greatest fear about aging. The most frequent answer was ending up in a nursing home.

Below I have illustrated the 7 key steps for a successful retirement. I have called these:

The 7 great wonders of successful retirement planning:

1. Stop losing money: A proper Asset Allocation and Risk tolerance of assets is essential. Most retirees are simply taking too much risk than they should and they are not getting paid enough in return. Review your allocation and rebalance constantly.

2. See the doctor: Treat any healthailments as soon as possible. Many insurance companies are changing policies to not include many seemingly minor health issues such as bunions and hemorrhoids.

3. Pay yourself first: It's the distribution that counts ... not just accumulation. Position your assets and manage them appropriately so they will be able to distribute guaranteed income for life. Say goodbye to those risky investments of yesteryear, and stop holding that old portfolio out of emotional or sentimental reasons. This money has to last you the rest of your life and you can't make it back. Many people fail to realize that they may spend more time in retirement than they did working.

4. don't give Murphy's Law a chance: "covered by insurance all the way up to 65 when Medicaid kicks in, and don't risk it.You would be amazed at the number of healthy people suddenly get sick the day after their warranty ends. COBRA usually covers you for 18 months so liberation day may be Ta 63 .5.

5. Mothers little helper: Prepare for your long term care .... now. More than two thirds of those over 65 will need long-term care for two years or longer at an average daily rate of current 3 or $ 77, 745 per year.

6. Keep that day job: Work as long as possible. Each year a person postpones retirement reduces his or her need for retirement savings by about 5%, while increasing Social Security benefits by 7%.

7. To be or not to be, that is the question: Quite simply, be the expert or work with one. Find a professional who understands the goals and needs of people preparing for and livingin retirement. Most advisors are trained primarily in investment products for the accumulation phase and are ill prepared for the real challenges you will face in retirement.

Be the expert ... or hire one!

Personal finance and creating a retirement plan is serious business, and outliving your money can ruin your whole day! You had better understand the impact of health care costs sky-rocketing figure, long-term care, inflation, etc., and get the fundamentals of guaranteed income down pat. There are no second chances. Successful Wealth Management Advisors as well as investors spend a lifetime updating the ever-changing rules and laws, and constantly keep informed on the ins and outs of calculations for retirement. Managing your own money is a daunting task. Become an expert or hire one.The overwhelming number of choices, accompanied with the fear of making a mistake is paralyzing, and often leads to the bad decisions. The Retirement Income Challenge is a real one for all of us as we attempt to live comfortably through our golden years.

For our recently published Special Report on Summer Planning necessity for retirees, entitled, New IRS Rules to Help Your Retirement and Estate Planning, visit http://www.capfas.com

Advanced Retirement Planning 3.0

Are Real Estate Markets Flattening Out?

For the past 6 months or so, it has really begun to appear that real estate values and demand are flattening out. Now, in late 2005, the financial programs and some new media "talking heads" are saying that the hot real estate market seems to be cooling off.

These are changing times for the real estate investing
business, and the challenge is to recognize new trends and
develop a strategy that makes sense.

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There has been noticeable slowing in the market. One
of my contacts reports that after years of strong
sales of log homes in the North Georgia mountains
this summers market slowed to a virtual crawl.

It appears that rising rates are taking a toll on the
number of buyers who can qualify for a mortgage.
Higher energy prices meanhigher home maintenance
costs. And, the seasonal drop in buyer demand,
common in winter months, will add to the slowing
peace of real estate sales.

In the investment community, appraisers are being
pressured to be more conservative as lenders, stung
by fraudulent deals and high foreclosure rates, are
fighting back.

Many loans are requiring more than one appraisal in order to
verify the value.
Some appraisers, in an attempt to keep lenders happy, are
dropping appraised values by as much as 15%. This is going
to have a snowball effect in 2006, as today's flattening
purchase appraisals become tomorrows comparable sales.

Overall the economy is still strong, and with interest rates
still at historical lows, there is noreason why investors
cannot continue to profit from real estate, as long as we
use common sense when evaluating deals.

In a crunch, the only real protection you have against such
market conditions is your equity. I know all the arguments
about how you can't spend equity and how people with equity
don't have any cash. BUT I can also assure you that
the people who cash out their equity and use it for spending
money find that this habit will eventually lead to trouble
in a flattening market.

The refinancing craze of the late 1990 's and early 2000 's
was based on the assumption that prices are always rising.
We are now entering a cycle where this is not a reliable
assumption in all areas. For the average investor in the
currentmarket, refinancing should only be done to eliminate
other debt payments, and not for spendable income.

Conservative investors have learned from experience that
markets go in cycles, and that hard times will come sooner
or later. We are seeing the end of the investment cycle
that began in the early 1990 's. It is important that our
attitude toward handling real estate investments change
along with it.

Highly leveraged properties can work in a rising market
that is seeing strong demand and growth, but when the
market begins to flatten or drop, as is now the case, it
is critical to avoid being over leveraged. Equity is your
only real protection in a flattening market.

This means that many of the popular strategies of the
past10 years, that led to high leverage should only be used
carefully, if at all. A seller may offer you 100% financing
to avoid a foreclosure, by letting you take over their
house subject to their existing loan. But you have to be
sure you can generate enough income to cover those payments.

Creative strategies that lead to high leverage are not a
good idea in a falling market. They work well during strong
job markets, when housing demand is at it's highest. When
the demand slows down, high leverage deals are the first to
suffer loss of cash flow.

The safest and best way to invest in real estate is not
the sexiest or the most glamorous. The safest way to
invest is to have adequate equity when you buy. Whether
you want to hold foryears or sell quickly, your profit
is in your equity.

I can't sell as many seminars, tapes and courses by
telling you the facts.

To sell stuff, we are supposed to get you all worked up
into a lather over how wonderful it's going to feel when
you start making $ 10 k per month tax free by pulling out
all your equity. But don't forget about the other end of
that strategy ... that tax free income is a loan that someone
has to pay back.

Are Real Estate Markets Flattening Out?

Real Estate Financing-You Can Get A Home Mortgage With Bad Credit

As the real estate market continues to grow rapidly and new technology gains ground, widely accepted beliefs that were true a few years ago may not be true today. Don't jump into anything blindly or sign a real estate contract or home mortgage loan contract or any other type of contract without giving it some serious thought. Before you commit to a real estate purchase you'll need to find a lender for the real estate financing of your potential home or investment property.

Your income and your debts will typically play the biggest roles in determining what price range you should be looking at. Fifteen-year mortgages are an ideal option if you can handle the higher payments and if you'd like to have the loan paid off in a shorter period of time. Thirty-year fixed-ratemortgages offer consistent monthly payments for all of the 30 years that you have the mortgage. And if the market is good, you can benefit considerably from locking in a lower rate for the full term of the loan.

Most adjustable rate mortgage programs offer what is called "rate cap protection, which limits the amount the rate can be increased each year and over the life of the loan and all adjustable rate mortgages are amortized over 30 years. Make sure to get an estimate of your real estate financing closing costs from the lender you've chosen. By law, the lender is required to give you a statement within three days of receiving your loan application. Any of the loan programs for down payments of 20% or less require you to purchase Private Mortgage Insurance (PMI).

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ATmortgage application can be resubmitted many times; it's not uncommon for this to happen. Interest rates can go up if a picture is painted of a rosy economy and that it is flourishing, like more jobs being available. This can lead to inflation which will make the rates go up. Any money that you receive from a lending institution will show up on your credit report and the payments will factor into your debt-to-income ratio.

A FICO credit score reported is not a requirement for most conventional or government loans like FHA loans or VA loans. Potential borrowers can submit information about income, assets and equity to determine just how much a down payment should be. This is usually processed through an automated underwriting system. Twenty-year fixed-rate mortgages allow you tomake a consistently higher monthly payment throughout all 20 years you have the mortgage. The shorter term means you pay off the loan off quicker and pay less interest and build equity faster than with a 30 year loan.

Check with you tax advisor CPA other pr for the most current tax information; your property taxes may be deductible. If you're working with a home builder within a sub-division or housing development and just making moquette tachée, dommage, lighting and appliance selections for a brand new home, you'll probably be able to get a standard mortgage loan. If you're hiring contractors, electricians, painters, plumbers game, and you'll probably need a construction loan, which provides funds to pay the subcontractor as the work goes along. If you plan to borrow money from other sources, somelenders may impose limits on how much of your down payment can come from other sources.

When financing real estate with a conventional loan, it's important to know that a low FICO credit score does not mean you won't qualify for a home loan or home mortgage. The FICO credit score is just one of many factors that are considered in loan or mortgage applications. Although the FICO score is taken into account there are no minimum scores required.

Real Estate Financing-You Can Get A Home Mortgage With Bad Credit

Real Estate Academy

Consider this. Most litigious situations in real estate transactions arise from agents thinking they know everything. Most agents believe the customer expects them to know everything. This could not be further from truth. An RE professional knows what they know, what they don't know and knows the difference between the two. So when they know they share that information with their buyer and when the don't know something they should go check with their broker or get solid advice from a seasoned agent. Most consumers want to work with people that will get them the right answer no matter where it comes from.

Few real estate academy's provide training for real life situations. Most just cover the basics and don't dig deep in to real life situations that you may encounter. For themost part, transactions aren't time sensitive and therefore time can be taken to acquire the right answers to any situation by simply doing some research or verifying something. When getting started as a real estate sales person it's good policy to just be transparent with your buyer if you don't know the answer to a question and tell them you don't know that answer but you'll be happy to find out the answer for them.

Just as you would do in any profession, take action. Don't do minimal work and expect so much in return. A real estate career is just as much customer service as it is acquiring your educational qualifications. Don't forget that.

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Time and again many new real estate agents believe that getting their license will provide them with a fruitful career. Any RE careertakes time, effort and persistence.

Work long hours. When all other agents are resting at home during the evenings you should be on the phone cultivating leads and developing relationships with potential buyers. Get involved with community services. Volunteer for events and community outreach programs. Visit the local better business bureau and get on their radar. Introduce yourself at your local bank. Make strategic alliances in financial institutions and mortgage organizations. If others in the field see you are going beyond the call of duty then they are more likely to call upon you to provide a service to them as well.

One important aspect often overlooked when getting your real estate career started is that there are many moving parts to a transaction and many differentexperts are required to complete the transaction. Here are some of them. Home inspector, lender, termite inspector, lead based paint inspector, escrow company, title company, insurance, and, of course your buyer or buyers.

How to become a real estate agent is one part of the process. How to become an in-demand one is a whole other deal. It's important to network, cultivate relationships and get out in the public eye. Putting in an additional 30 minutes to an hour every day will get you much further ahead in the long run.

Real Estate Academy

Getting Homeowners Insurance

Whether you own a home or rent one, having home owners insurance is essential for protection and peace of mind. One of the problems is that the cost of coverage can vary greatly from company to company. A great way to solve that problem is to get multiple home insurance quotes. Any legitimate company will provide written home insurance quotes. You have to remember that these quotes are based on the information that you provide via the phone or internet. You need to be as accurate as possible in giving the necessary information. You may be asked for things like the current market value of the home, mortgage amount, value of domper like clothes, furniture and appliances, and the value of any surrounding structures like garages and sheds. Theinsurance agent or computer program takes this information and puts it into a formula for your area and comes up with a quote for certain levels of coverage.

Most of the time in evaluating home insurance quotes, the home owner has choices over the protection level that they want. Opting for slightly lower coverage can reduce the annual or monthly premiums that you will be charged for the coverage. Another way to keep your premiums down is to select a higher deductible. Zero deductible may seem like a great idea, but the cost of higher premiums for many years could end up costing you a lot more. You have to look at your cash on hand or savings to decide exactly what deductible amount is comfortable to pay. A deductible is the amount you pay toward cash coveredlosses before the insurance company issues any money toward the claim. You must satisfy your deductible up front before you can receive any money from the insurance company. Since claims are rare, the higher deductible may pay for itself in lower premiums over the life of the policy.

Home insurance quotes can be confusing. Companies present you their numbers in different ways, so it is difficult to compare them to other companies. It is important to get the same information from each company. Another area to be careful of is the list of exemptions stating "what isn't covered and any caps or limits to the amount that will be paid for particular claim items. Discount policies are very good at exempting some of the most likely events, so they can limittheir liability.

A great thing that is available now is the ability to get multiple home insurance quotes from one website at one time. The internet can provide quotes from several leading companies for you to do side by side comparisons. The advantage of this system is that you only have to go to one place for several quotes. You don't have to call agency after agency. Another nice feature of this approach is that all of the information will be presented the same way. The use of similar formats makes comparing them much easier than having to piece them together from separate quotes.

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Getting Homeowners Insurance