Trying To Fix A Mess…Creating A Bigger One

Just from the title, you should understand the point I’m trying to make when it comes to homes and real estate in general. In the latest article we discussed bringing up the value of a house by doing some work to it and then just flipping it for something else. In this article, I will talk about the dilemma we put ourselves in, when it comes to homes and residencies in general. That is deciding to either try and re-construct a messy home with a lot of damage done to it (like mold, water damage, holes in the wall etc) or destroying it and building it from scratch.

Basically let’s be honest with ourselves. The only dilemma is the the financial one: you aren’t sure if just renovating the place will be a good/wise decision versus demolishing it and building it up from scratch. Basically your main fear is that the new concrete and asbestos won’t stick to the building in the long run. Well turns out that according to the partner of a residential demolition company, demolishing something (like a residency) and building it up from scratch can turn out to be cheaper in the long run. The argument according to people like him, is that the kind of repairs you will need to do a renovated building within the next 10 years, will more than cover the expenses of demolition. Also, according to this “expert” demolition costs have gone down significantly compared to twenty years ago and it is actually more affordable nowadays.

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Flipping Homes VS Buying Foreclosed Homes

Wow…this one is very spicy and in fact, it was suggested by someone that reached out to me by e-mail. You know what that means? That your topic of discussion can also be mentioned here, assuming that you let me know.

This actually a very interesting subject: we pretty much (almost all of us) know someone who does this for a living, or did it for a while to make some cash and to move on to other real estate projects. Flipping homes, is actually very good for someone that can do it in a timely manner and has the “know how” to get things done around the home. So you basically need to know how to build it up. It makes sense for people that know how to work a hammer and control a small group of other workers, building the home back up, and thus raising the value of the property. Whenever someone flips homes however, it is like playing the music chairs. You better be sitting on a chair when the music stops.

What I mean by that, is that real estate of course works in cycles. You got the good and the bad times. So whenever you decide to flip a home, you better be able to get it done fast, to get it back on the market and get rid of it. You don’t want to buy an older home, and decide to sell it a few months down the road (a lot can change.) If you could buy and re-sell the house in 1 months, that would be ideal (I know in most cases it’s not possible) but that is the only true way you can be more secure. Whether this is profitable or not though, a factor you need to bare in mind is what your time is worth. In other words, if you are spending most of your time preparing these homes, when you could be working on larger real estate deals, then you may be leaving a lot of money on the table. So you need to make sure that what you are doing makes financial sense.

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Partnerships In Real Estate? Good Or Bad?

In the latest article I did I said about people going into partnership situations when in real estate, especially when talking about different locations (so say a friend of yours is in the area you want to invest in.) There are of course other reasons you may want to partner:

  • don’t have enough funds for the 25% down payment
  • want to utilize the expertise of someone else
  • are scared to in on a deal by yourself (which ties into #2)
  • don’t have enough time to do all the work on your own

All these reasons are good reasons for you to want to partner. But remember that for every reason you want to partner, there are probably 3-4 reasons why you wouldn’t want to partner. For example, if you don’t have enough funds, are you sure you want to get into real estate? Money and financial success if often an indicator of how business oriented are you. So if you lack the funds (say you don’t even have $100,000 to invest) then you need to bee up your business skills. Because whether you like it or not, real estate is 70% business (some people will argue and say it’s 100% business but I want to be more conservative.) So make sure real estate is something you need to be doing right now (versus getting a real estate education.)

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Invest In Your City – Not Something Unfamiliar

This is a great topic of discussion, probably one of the best articles to have been written so far. So please pay attention to what I have to say here. Many people believe that images on Loopnet or some other real estate site are good enough to make a million dollar decision on a property. If you don’t see the product in real life and even walk the property, you will get burned – I promise. The thing is, you can’t even rely on someone else that is in that location to make the decision for you. Always make sure you know 150% of the information you need to know in the areas you invest in. So say you are interested in a certain property: what are the tenants saying? Are there any repairs that you need to keep in mind as expenses? These are all things that a broker won’t tell you, even if it’s your father.

So you need to be able to determine whether the property is worth as much as its listed under, or even if it’s a good deal. The first thing you need to look at when thinking of properties is: do you love the deal? Because if you love the deal, then price doesn’t matter. If the deal is a good deal, you don’t mind overpaying for it. But you can’t know this beforehand. You need to be able to know your market. Is that part of the city ghetto communities? Will you have to deal with the tenant that got shot because he couldn’t pay for the latest shot of heroin he got?

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Buy A Real Estate Deal For Only 25% Of Value (easy)

Hi everyone!

Today I will show you how you can a discount in a real estate deal as much as 75%. I am talking about any deal: not the one your cousin is setting up for you, or a good friend is looking to make more lucrative for you.

I can go right now, and assuming I have 25% of the value of any deal (I don’t care if it’s worth a few million or even hundreds of million) I can buy myself that deal. What is the 25% of course? The down payment!

Oh…so Anthony is talking about loans again? Yes!

See, people are afraid of loans: they are scared they won’t be able to pay back and even keep up with the interest, but what they don’t often understand is that you don’t risk much (aside of that 25% down payment.) And in most cases if you are smart in your investing, you can minimize your risk to ensure a successful real estate deal and process. But most people are even scared to walk out their front door, so what I’m saying may sound a bit strange to you all.

But say you are looking at a $5 million dollar deal (say it is multifamily – less risk.) The amount of money that can buy you that deal is $1,250,000. Now of course many of you don’t even have $200,000 to invest in real estate. But you can use that 25% rate to smaller size. The point is that you can pretty much get to any deal, with a down payment that will convince a bank to give you a loan. And guess what: if you don’t have the cash amount for the 25%,  you can go and raise it from investors. The thing is you have so many options, and that is what I love about real estate. Many people would love to invest in your venture to get a passive income of 6% on the borrowed amount. And basically everyone makes money.

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Is Real Estate Hard? (Honestly)

The same question I could ask you (and probably would get the same answer) is: are Mathematics difficult? Does 1+1=2 appear to be difficult?

Well…if you are just jumping into it and have no idea about it, you could probably lose your shirt. But you probably thought in first grade that one plus one did four. It’s all part of the learning process. What I see, is people that are too focused on things in their every day lives that frankly, don’t make any sense or at least don’t help you improve your financial situation and state of success. People generally look at real estate, as the “passive income” solution. Everyone imagines themselves lying around in the Bahamas, and cash rolling in. But in reality, unless you are a Hollywood actor on set, that couldn’t be further from the truth.

That is because real estate, is a full time job of its own. Whoever gets into it, to just work a few hours a day, will get themselves crushed…I promise!

Real estate isn’t something that can be taught necessarily. How come people didn’t predict the 2008 disaster? Theoretically when you master something, you won’t fall for such a disastrous situation. The thing about real estate, is that it’s an always learning process. You never can know it all, and that is because it is so unpredictable. Who would be smart enough to think that the range of years between 2008-2010 would be the best for investing? People that invested back then (like our President) made a small fortune. Basically, the general rule of thumb in real estate, is that you will make money when you sell, and someone believes that in buying the piece of property you have, he can make more off it. I mean if you are selling because the piece of property has no potential, then you won’t find a buyer. So always, there is someone that is right, and someone that is wrong. But on top of that, you have variables (a bunch of them) such as luck, emotion and personal reason. For instance, if someone inherits a property he doesn’t like, or needs to pay such high taxes on, that would rather get rid of it, then he isn’t wrong in selling it, and the buyer isn’t wrong either. It’s just that motives are completely different, and both happen to be right. The seller wants to sell to afford tax payments, and the buyer is getting a bargain.

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Your arrival at GMS Properties

Guys, I know…it has been too long! We kept on promising a launch date without being able to stick to it and for that we deeply apologize. A bunch of things have been going around here, and this is the first change we’ve had to get a launch.

What is that they say? Better later than never? Well…we are here and we are here to stay!

A lot of information to be shared with y’all very soon and in the upcoming days.

Thank you for your continuous support.

Peace!