Marketing for $100 per Month

Dollars

Without marketing, you won’t have a business.  I’ve already given you 100 ways to market for real estate buyers and sellers.  Now, even if you’re just beginning, here are some ways you can start your marketing with as little as $100 per month.

The following post was written by one of our coaching students. This is not intended to be your end game, but it offers some ways to start your process:

“I am a firm believer in the power and effectiveness of direct mail as a source of motivated seller leads. Frankly, I’m not as convinced that the ROI is as strong for identifying cash buyers with direct mail compared to other methods, but for motivated sellers? It rocks.

As I set things in motion for my upcoming direct mail campaign this week, I thought to myself “Direct mail is awesome, but what would I do if I didn’t have $300-400 per month available to spend on this and only had $100 per month?”

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Depreciation Advantage for Hold Properties

Tax forms

Tony Robinson, one of the coaches for our local Mastermind coaching groups, wrote the following article on the value of depreciating your properties.  Depreciation gives you HUGE tax advantages which is a large income stream that not everyone considers when they’re contemplating becoming a landlord.

I hope the following explains some of the advantages you may not have considered.  If you have any questions about depreciating properties, please add them here to the comments section so we can clear up any confusions.

Here’s a synopsis of Tony’s article:

Many of us using the long term hold strategy fail to capitalize on one of the true benefits of owning real estate. Though the benefits are many, I find the ability to offset income by maximizing depreciation to be the most valuable of all. Did you know that depreciation allowances offset the gross income received on real estate?

Let me explain. The IRS extends the benefit of depreciation to owners of rental property.  Here, the government is actually giving us an incentive to own real estate! The depreciation factor for single family residential property is 27.5 years. This means that you can take depreciation on the “dwelling” spread out over 27.5 years.

An example of how depreciation works is as follows:

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Designing a Bathroom

Bathroom

Ok, so I’m designing a bathroom. We’re renovating and adding a master bath that has about 9.5 feet by 10.5 feet.  So far it’s gutted (ugh) and I have to figure out what to put back in.

Do you know the standard sizes and dimensions for items inside bathrooms? I’ve been finding out!

* 2-1/2 feet x 5 feet is the standard bath tub size

* 32 inches x 32 inches is the typical size of shower stalls

* 2-foot depth is standard for actual space for clothes along a closet wall

* 2-foot deep cabinets in the bathroom are standard

* 32-inch doorways are ideal

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State of the Real Estate Economy

House

Facts and figures are coming at us from everywhere.  The important thing for you to know is what’s happening in your market, in your economy.  Those are the numbers that will really affect your property values, what you can pay when you buy and what you can expect when you sell.

That being said, here are some interesting recent figures from Standard and Poor’s and the US Census Bureau.

According to David M. Blitzer, chairman of the index committee at Standard & Poor’s, average home prices across the country are now at the levels they were in the fall of 2003.

“It still looks possible that the housing market might bounce along the bottom for the foreseeable future before showing any real improvement that will filter through to the rest of the economy,” Blitzer stated.  This statement, by the way, seems to be the one that I read most consistently, no matter what the source.  I, personally, believe it will be three more years before we see a measurable turn around in the real estate market.

Data just released by the US Census Bureau states that the U.S. homeownership rate dropped to 66.9 percent during the second quarter of this year, hitting its lowest mark in more than 10 years.

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How Much can You make When You Buy a Property?

Dollar Dice

Do you know how to buy? Do you know how much you should pay for a property?

We use a formula called our “cost to sell” guidelines. Filled out, this chart tells us exactly what our costs to buy will be and what we can offer in order to be able to later make a profit.

We begin with our comps to determine the market value of the property. We then subtract from that number the seller discount because most offers come in 3%-5% below asking price. Next, we subtract out our other costs: realtor commission, closing costs, holding costs, repairs, insurance, loan payoff, etc. We go over these numbers with the seller so they can understand the costs they will incur to sell their property and that these will be our costs, as well.

Most people don’t realize when they list their properties that it will cost them about 20% to sell because of all the associated fees. So, if you list a home for $100,000 you will actually realize about $80,000 at your closing.

I want to share with you the importance of following the “cost to sell” guidelines when making offers.

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Is it Better to Buy or to Rent?

Calculator

The New York Times Business Day put out a great calculator that I hope they never take down!

It shows costs accumulated for 6 years for both buying a home and renting a property.

What they determined (and I will argue a bit with their conclusions in a minute) is that it is better to rent if you’re staying less than 6 years but better financially to buy if you plan to stay in the home longer than 6 years.

I do, however, agree with their original premise that whether renting is better than buying depends upon many factors including how fast prices and rents rise and how long you stay in your home.

This is a very detailed calculator and I love it. A word of caution when you check it out because, as it’s set up, the default that you first see leaves out a few points I consider very important:

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Why Realtors Should Work with Investors!

Cash

In the past week, we have purchased 3 houses. We have 11 properties in some state of renovation. We are part of a local coaching and training program and, together, the 25 businesses in this group by A LOT of properties

Here’s an article dated 07/21/10 by the North Carolina Association of Realtors:  Meet the Cash Buyers: How the Fix-and-Flip Investor Thinks

A significant share of cash buyers are investors, people who are buying properties not to live in but to rent out or to fix up and sell quickly. From January through May, between 14 and 19 percent of all buyers were investors, according to figures kept by the National Association of Realtors.

Investors tend to be less emotionally invested in the homes they are buying than people who are buying homes they are going to live in, according to real estate professionals Inman News contacted. As such, these cash buyers are particularly attractive to some real estate agents.

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Investing in Real Estate – 2

Footsteps

As I said in Steps for Starting a Career in Real Estate Investing, an important part of creating any business is to emulate someone not only doing what you want to do, but doing it successfully.  Do you have someone to follow who does what you want to do and does it successfully?

You need to find someone who’s been through the mine field before and will allow you to step where they’ve stepped so you don’t get blown up.  You can take the time and expense to do it on your own or save time and money by finding a successful mentor you trust.

The best scenario is that your mentor actually lives close enough for you to be able to talk to this person face-to-face.  This is especially important in real estate because, as much as we pay attention to what’s happening nationally, real estate is actually a very local business.  Not only does Arizona differ dramatically from what’s happening here in North Carolina, what’s happening in Greensboro differs dramatically from what’s happening in the mountains or at the coast.  You must get advice from someone who knows your specific market intimately. This is an expensive business.  Don’t get advice from someone who “thinks” they know what is going on in your area.

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BB&T Shadow Inventory

Shadow Inventory

Just received this interesting email from a friend.  Shows how little we actually know about what’s going on with the economy other than what we hear on the news.

For everyone who is ready to speculate in the market again, I would caution you.  When you buy, buy because it makes you money today, not because it may make you money in the future.  This weak economy may be with us a bit longer so it’s best to remain cautious. There are lots of great real estate deals out there and there will be for some time to come. Get training and know what you’re doing when you invest!

Here are excerpts from the email:

“None of us  wants an ever increasing supply of distressed home sales, which of course put continued downward pressure in home prices. I met with a distressed home seller last week who works for BB&T. He attends the meetings with bank brass as they discuss the numbers of homes they have in inventory and discuss how they will manage existing inventory as well as more incoming bank foreclosures.

According to this seller, BB&T brass state that they have 200,000 homes right now that they are holding that are not for sale. The bank feels that as market conditions improve (i.e. less defaults) they will be able to slowly release this shadow inventory at better sale prices. For right now though, they hold these properties on their balance sheet at full fair market value, which of course makes the balance sheet look better than it actually is.

Once the bank releases these foreclosed properties for sale they have to write down the value in accordance with what they normally receive in distressed sale prices.

The bottom line is that the bank brass forecasts another TWO YEARS before they begin to get back to some semblance of balance. However, my seller prospect said that he told the bank brass THREE YEARS. In either event, we all seem to agree that things will get better, eventually. In the meantime, there are a TON of SWEET opportunities right now for investors who are taking the time to execute on their Biz plan.”

Do you have a plan?

How to sell your home.. Discount!

for Sale

The economy is down and the market is flooded with properties, both retail and Bank owned.  This is not a good time to list a property unless you can sell at a discount.

I’ve been reading lots of news articles lately all encouraging low pricing to get your property sold. Trulia, PMI, Moodys, the Wall Street Journal, even the National Association of Realtors all say that retail pricing will not get your property looked at in this market.

This morning on Facebook, a Realtor posted that only 25% of the listed properties will actually sell! That stat is end of 2nd Quarter 2010 based on GRRA- Greensboro area of Guilford County – Realtor Association.  Yikes!

Trulia announced that 24 percent of listings currently on the market as of July 1, 2010 experienced at least one price reduction, up 9 percent from the previous month.  They go onto say that 22 of the top 50 cities across the U.S. experienced price reduction levels at 30 percent or more compared to just 10 cities the previous month.

It appears that the expiration of the tax credit has hit the market hard and there are far fewer “left over” buyers now that the credit is gone than expected. Some are predicting that, due to the slow summer sales, we will experience a double dip in the housing crises during the second half of 2010.

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