Draw Me Self

I am not practicing real estate right now but even I see that the real estate industry and all affiliate industries need market transformation and they need it fast. I can remember the days where life was good when I was a real estate agent. Working on 4 and 6 active contracts a month. Attending 4 to 6 home inspections, helping buyers with financing options, meeting mortgage lenders and coordinating everyday 4 and 6 transactions a month. Then getting paid. Then, in the middle of all of this I had 4 and 5 buyers to work with and 3 or 4 sellers who wanted market analysis on their homes. Who ever said agents in the residential and commercial markets don't work hard?

Try a schedule like that. Now, try to picture all of this gone. Can you imagine a world where an agent shows a buyer 20 and 30 homes, and they don't buy or even with great credit the lender turns them down?

Try picturing the fact that agents are doing this for 4-6 buyers? Can you imagine writing contracts and having back and forth communication on situations that you know will not work? Sellers painting on the agents recommendation just to have a home sit and sit. Builders who have land that is not developed? Paying taxes while you can't pay your contractors and your support staff is dwindling. Agents advertising with their own money and houses just don't sell? Did I mention you, as an agent, pay $2000 a year to stay in the business, for incidentals such as license renewals, ads, association and MLS dues and continuing education credits? How about the loan officer who keeps trying to refinance people and can't get them a loan? Think of the home inspector who waits for the agents to write business. Everyone is hurting.

Is there any end in sight? Is there anything that can turn this around? YES!

Now I have another scenario for you. You are a buyer or seller of real estate. You want an agent who is green certified to help you understand green attributes in homes. You want to put your home on the market or buy and want your agent who is also your friend or relative to help you. They tell you they have a certification 6,000 have and been green certified by Green Real Estate Education. They like the fact that they only had to pay $99 to learn of what energy efficiency and green these issues have to do with the home you may want to buy or sell. In the current economy, they didn't choose to spend hundreds or thousands (and neither do you) to learn about energy efficiency so you respect their budget conscience mindset. Can you already see the value in working with this agent? This Certified Real Estate Professional has been trained to assist you to understand how you can keep your utility bills low and have a healthier indoor air quality. That agent works with 2 or 3 ( GCHI's ) Green Certified Home Inspectors. They have 2 Green Certified Mortgage Professionals (GCMP) who know of ways to finance energy efficient upgrades or special loans for newer energy efficient homes.

This agent likes working with buyers who also want a utility bill that is only $500-$1000 a year. Sparking interest already? You hear that green building ideals offer healthier indoor air quality. Interesting. You find a home that has an Energy Star, Environments for Living, Green Build or LEED green certification. Priced the same as other homes, that home has a low utility bill and energy efficient systems and utilizes solar and is in the perfect area too. What will you choose?

You call a Green Certified Real Estate Agent, a GCREP and say, what can I do to help my home sell in a year or so? They come by, recommend you replace all light bulbs with compact fluorescent or LED products that are much more efficient and paint with non toxic paint, add healthy and efficient insulation. Aren't these suggestions a bit different than the normal advice. They also have that certification 6,000 have across the country.

In the years to come, you may not want to sell now but that Green Certified agent, inspector or mortgage professional has taken his or her level two certification to learn even more and offer advice that you get an energy audit, and from the results they suggest you upgrade the widows, insulation, the roof and you don't want to get a second mortgage. They begin to tell you about the state offering a program with PACE concepts. What is PACE you ask? Property Assessed Clean Energy (PACE) programs are designed to allow property owners to install energy efficiency, renewable energy, and water efficiency projects and repay those costs as a line item on their property tax bill or utility bill (depending on state law and local options). Wow, half of my family members are in the construction industry and out of work, what a great way for them to have work. Are we thinking job creation? You didn't even know about this. Thank you for green real estate education.

Stimulating the real estate industry is possible. I do not feel this has anything to do with democrats or republicans. A clean energy economy reduces our dependence on foreign oil. Energy efficiency concepts will create jobs. This is not new to other countries, and we need an economic stimulation NOW. So I will ask again, can green education transform the real estate industry? What do you think?

There are only three reasons to be in Real Estate, if any one tells you any differently then they don't understand real estate investing.

The three reasons to be in real estate are Cash Now, Cash Monthly and Cash Later. Let's take a closer look at each one of them.

Cash Now. Let's face it, we need money to live and pay the bills. With out this cash we would have to go back and work for "the man". If you're not a full time investor, this is a reason why a lot of people are afraid to quit their job and work for themselves.

Cash now is the money that you get from "Flipping" properties. Whether it be from Wholesaling, Rehabbing, Subject To, Lease Option or Pre-Foreclosures we need the cash from each of these investing models to put food on our tables and clothes on ours (and our children's) backs.

Cash Now is good. Having rehabbed over 450 properties in just a seven year period, (I use each of the above methods to acquire my properties) I'm used to those big checks coming in. But then I realized that if I didn't continue to get Cash Now through flipping properties, then I would not have any cash coming in at all. Which meant I was not as free as I thought I was.

So I changed my strategy. While those big rehab checks were coming in, I put some of money in my account so that I could live, and then I started to put the rest of the money in Apartment Houses.

Owning smaller Apartment Houses is virtually the same as investing in single family houses. If you're doing your marketing, you run across Apartment Houses all the time. If you are like most investors, you probably just ignore them and continue to search for the next single family deal.

Apartment Houses will give you greater Cash Monthly. In just a short time, you can build yourself a substantial passive monthly income just from your Apartment Houses. That's how Robert Kyosaki does it in Rich Dad/Poor Dad.

Cash monthly will give you freedom. Freedoms to do what ever you want when you want. I'm not telling you to stop buying and flipping single family houses, that's Cash Now. I'm saying to get Cash Monthly (Apartment Houses), use some of your Cash Now (single family flips) and buy yourself some freedom!

Pretty soon you will be building an empire. You'll have enough Cash Monthly to be able to take a month off in the summer or what ever else your freedom desires! If you were only flipping single family houses and you took a month off in the summer, you wouldn't have any income coming in. Do you see how Cash Monthly will give you freedom?

You can get some Cash Monthly from owning single family houses long term but not as much and not as fast as owning smaller apartment houses. And it's a lot riskier to have all of your money in single family houses.

What happens if you lose your tenant in your single family house? You loose all of your income. You're going to have to dip into your own savings to pay the mortgage until you get a new tenant. That hurts!

If you lose a tenant in a three family house, you've only lost one third of your income. The other two floors will cover your mortgage until you get another tenant. That's just one of many reasons that owning small apartment houses is smarter that owning single family houses, but that's another article all together.

Now that you have Cash Now and Cash Monthly, Cash Later takes care of itself. It comes when you sell, exchange or refinance those apartment houses somewhere in the future.

You see, with apartment houses you have an appreciating asset. No only is it appreciating every month but your tenants are paying off your mortgage. So between the appreciation and the mortgage pay down, your equity just gets bigger and bigger!

You can sell your property and get a boat load of cash. If it's creating a lot of Cash Monthly, you may want to keep those checks coming in. If so then you will want refinance to get you cash out.

Not 100% of your cash, which will only get you in trouble. You should take out about 75% of your cash leaving 25% equity in the building, that way if there is a down turn in the market, your protected. Not only that, at 75%, you should still have a decent positive cash flow. Did you know that you do not pay tax on any of the money that you take out during a refinance?

Now take that money and go buy some more apartment houses and get some more Cash Monthly! In doing so, these apartment houses will start appreciating and the tenants will begin to pay down your mortgage for you. You've just increased your net worth because you have increasing equity in one or two more buildings instead of the building that you started with.

Can you see how your empire is being created? Can you see how it can be created in a short time? Holding single family houses will make you money. Holding apartment houses will make filthy stinking rich! Which do you prefer?

Buy when the market is bust, and sell when the market booms, this has always been the age old philosophy in the market. As interest rates, are at their historical low a large number of Americans have now realized the importance of buying property as opposed to staying in a rented accommodation. Every month as you pay your rent, that money is lost forever, but when you own your home, every payment that you make, increases your equity in the property. Now that you've decided to invest, the next logical step is to look for finance. To help people finance their investment, banks offer loans or loans that are secured by real property. To be eligible to issue loans, the banks is required to establish a policy that determines the amount of loan that may be given, the need for paying off the loans, etc.

A loan can be obtained to buy, renovate and even refinance properties. Before you apply for a loan the first step is to get a pre-qualified certificate from the commercial mortgage broker. The broker is also the best person to help you navigate through the process and help you find the best rates for your real estate loan. You could also apply for these loans online, wherein the real estate lenders review your application and send the paperwork required for your home, which is to be signed before a notary. Once the paperwork is processed, you are ready to collect your loan amount.

But before you apply for loan it's important to compare loan rates. The interest rates could vary vastly, thus a thorough research before real estate investing can save you thousands of dollars. When looking online, it's easy to get a general idea about the different quotes, thus allowing you to choose wisely. These quotes are generally dependent on various factors like the applicant's employment history, the value of the property, etc.

Real estate loans can be defined under different categories, viz. home equity line of credit; that allows the equity in your home to secure credit, home improvement loans; that allow you to borrow to repair, renovate and improve your home, residential equity loans; that allow you to obtain loans against the equity that's built in your current home, residential lot loans; that are issued for purchasing or even refinancing a residential lot that's intended for the construction of your residence, and finally the recreational property loans, that allows you to purchase or refinance a recreational property that's meant for personal use. Real estate investors can also go for commercial real estate loans. These loans offer low interest rates, when compared to other types of loans. However the costs that are associated with borrowing under these types of loans could be high.

While many predicted the current collapse of the real estate market, others were taken by surprise when the market that had left plenty of opportunity in the last few years for profit began to tumble.

Certainly, one of the leading events that eventually resulted in the crash of the real estate market was the crumble of the subprime market. As a result an unfathomable amount of companies suddenly were suddenly facing foreclosure. Even those companies that were not forced to declare foreclosure found they had suddenly lost billions of dollars.

The news has been filled with reports regarding the subprime market crash; however, while it has affected most property owners to some degree there remain many of remain uncertain exactly how this came to be.

Just a few years ago subprime mortgages were a great advantage to many property buyers. Buyers who were interested in taking advantage of the hot real estate market but who lacked good credit histories were able to take advantage of subprime mortgages in order to obtain loans. The underwriting guidelines for these loans were generally more lax than traditional mortgages. This allowed even buyers with poor credit to obtain a loan. In exchange for making a loan to buyer with less than stellar credit, lenders were able to charge a higher rate of interest. In addition, so the theory went, lenders relied on the belief that they would be able to foreclose on property and sell it for a profit in the event the borrower defaulted on the loan.

The money which funded these loans came from a variety of sources. Low interest rates made it possible in many instances for lenders to actually borrow money and then loan out those funds to home buyers. In other cases, the money was obtained from more complicated sources. As you may or may not be aware, it is not uncommon for governments to borrow money from central banks. This practice is particularly common in the United States.

At the time the housing market was stable. In fact, the housing market was experiencing a high that had not been seen in quite some time. Beyond the fact that many homebuyers were taking on massive amounts of debt there also existed another problem. Due to the health of the real estate market at the time, in many cases there were expectations regarding future growth that in hindsight now appear to have been unrealistic.

The last two years of the real estate boom occurred in 2005 and 2006. During that time period lenders did not hesitate in the least to lend money to borrowers regardless of their credit profile. These loans represented a tremendous money-making opportunity for lenders. Problems really began to occur; however, when interest rates began to rise from their previous lows. Historically, rising interest rates have always had a negative effect on the real estate market. When rates are low they help to produce demand; however, when they are high they ultimately cause prices to fall. Until mid-2006 home builders could not build new homes fast enough to meet the growing demand. During mid-year; however, the demand began to slow. It was also about this time that the rate of defaults on loans began to increase.

Before long many mortgage lenders began to find it difficult to obtain money from their previous sources of funding. As a result, would-be buyers discovered that loans were no longer as easy to obtain due to the fact that money was no longer as widely available. Additionally, investors suddenly became wary of taking on risk and underwriting guidelines grew stricter. Homeowners who had taken out loans with adjustable rates began to find it difficult to meet their mortgage payments as interest rates continued to rise. More stringent underwriting guidelines meant they were unable to refinance to fixed rate mortgages in some cases. As a result, defaults continued to rise; fueling the massive rash of foreclosures.

It is very common to hear success stories about people in various fields of real estate and mortgage refinance, and all the money they made last year. Naturally, you think to yourself that you could do that too, be your own boss, set your own hours, and make a pile of money, all the while not having to race with the other rats. If that sounds attractive to you, read on!

First of all, the term "real estate" is really large and encompasses numerous industries and specializations. You have residential real estate (and its sub-categories), commercial real estate (and its sub-categories), investment, residential or commercial appraisal, mortgage lending and banking, construction, management, auctions, leasing, and so forth. So the first choice you must make is which of these fields will be your specialty?

For simplicity's sake, let's suppose you choose residential brokerage, the most popular of these specialties. That means you want to sell real estate, since that is what brokerage is all about. Here is the secret: to be good at sales you must possess two personality traits. The first is empathy and the second is ego-drive. Without these two traits you cannot succeed (in the long run) in sales. Empathy is the ability to feel with someone. When a prospective purchaser says, "I just can't afford that house", your empathy says, "You know, I understand where you're coming from 'cause I've been there." Now your ego-drive must kick in. Ego-drive is defined as the need to persuade. So your ego-drive kicks in and you say, "I know you think you can't afford this house, but let me show you how you really can." In other words, you can't let the prospect fail to buy something because then you feel unfulfilled.

Empathy and ego-drive are learned traits, but they are a part of your personality which is pretty much formed by the time you are five or six years old. If you don't have these traits by that age, the shrinks tell us that your chances of "learning" them are very low. And if you don't have these, you need to go into another facet of real estate.

But assuming you have them, you must first get a real estate license. This requires a long class (the length of the class varies by state) and a difficult exam (with extensive - though not really hard - math). Assuming you pass the class and the state exam, now you must find a licensed broker to sponsor you. If you have a lot of sales experience (in any field), this will likely be simple. If not, it will be more challenging.

Now you must get listings, the lifeblood of the successful real estate sales person. The competition is cutthroat since there are always more agents vying for the listings than there are listings. You say, "that's OK, I'll be a buyer's broker". Remember, even the National Association of Realtors (c) says its most successful associates, as a trend, concentrate on listings far more than sales.

Another choice is the time you are willing to invest in learning your trade. Real estate is not "part-time". Would you want the health of your children in the hands of a part-time doctor? Would you want your defense against a charge of white-collar crime in the hands of a part-time lawyer? Do you want somebody who teaches dance classes three days a week repairing the brakes on your car? If you will sit down with the really successful real estate sales people, you'll find that they work at it 50 to 60 hours per week, and that's not always between 9AM to 5PM, either.

And then there is the pay. Yes, you can make a truckload of money. But you don't get paid if the deal does not close, no matter how much work you put into the transaction. Let's suppose you sell three one-million dollar houses this year. That means you'll have only three paydays this year, too (albeit large ones). There are no benefits, no 401(k) plans, no year-end bonuses, no paid insurance, no paid vacations, no car allowances, and no signing bonuses. You get a portion of the commission your office charges. This is not meant to scare you; it is meant to open your eyes and your mind.

Remember, for some, real estate brokerage can be a great career, but look into all of real estate's facets before you make a decision.