UTAH REAL ESTATE INVESTOR

I want to start investing but I don’t have any time. What can I do to get started investing in real estate?

Getting started investing in real estate does not require a significant time investment. Time is essential in working in real estate but it doesn’t necessarily require your time. While there are a myriad of ways to invest without investing your time, here are a few ideas to consider.

• Be a Cash Investor
• Be an Equity Partner
• Partner with an Experienced Investor
• Invest utilizing Property Managers
• Invest in Commercial Real Estate

Let me summarize each of these options and show how they fit into our real estate investing business model.

Be a Cash Investor
Once we find an investment opportunity there are usually some up-front costs (earnest money deposit, inspections & fees, applications & permits, fix-up & repair, upgrades & construction, buying notes & loans, etc.). The up-front costs are paid by a cash investor. These investments are short-term, generally less than 1 year in length. The interest rates are significantly higher than typical investments and we are usually able to double their investments every 3-5 years. The time commitment involves a brief project review and possibly participating in a single closing.

Be an Equity Partner
The equity partners are involved with our long-term investments. Once we’ve established a significant equity position (greater than 20%) we often hold our properties instead of selling them. The equity partner is the investor who will help acquire the long-term financing on the project. The equity partner will get a significant portion of the profit from the deal and the time commitment only includes a brief project review and participation in 2 closings (a refinance closing and a selling closing).

Partner with an Experienced Investor
Becoming a partner on an investment project doesn’t necessarily require more time depending on the level of participation. Participation can be as simple as referring cash investors and equity partners to us for our investment projects. It can be as involved as participating in every aspect of the investment. It simply depends on the time you’re willing to invest and the proportional returns you want to qualify for.

Invest Utilizing Property Managers
A significant portion of time can be spent in managing an investment property. By hiring a good property manager to deal with the day to day operations can free up a significant amount of your time. The property manager is responsible for finding & keeping tenants, repair & maintenance, yard care, signing contracts, showings properties, collecting rents & fees, etc. The challenge is finding a good property manager because a bad property manager will cost you a lot of money in lost rents & high vacancy, large turn-over costs (in advertising and up-keep), property repairs (due to property damage), etc. But they can become your best friends as your portfolio grows larger.

Invest in Commercial Real Estate
Investing in commercial real estate is viewed by many seasoned investors as the pinnacle of real estate investing. Commercial real estate includes any real estate that doesn’t fit the standard 1-4 unit residential property such as residential property (with 5 or more units), mobile home/trailer parks, mixed use property (combination or residential and commercial), retail space, office space and industrial space. These types of properties usually include property management already in place or are self managed (such as the “triple net lease” where the tenant takes care of all property responsibilities). The challenge with the commercial property is that the financing terms differ from the residential loans and usually require more money to get started.

This is just a brief summary of a few options available to someone who has the interest and desire to invest in real estate but may not have the time currently available to invest with. We’re looking for people who want to be involved with the amazing industry of real estate investing. If you’re interested and would like to get started investing please contact Khayyam Jones at (801) 787-7797 or email to Khayyam@KhayyamJones.com and we’ll contact you shortly.

This business model is taken from Mike Watson’s Foundation to Success:

1. Know the “Foundation to Success“
2. Create your “Red Button Statement” (Your personal WHY)
3. Find incredible deals (competing & non-competing methods)
4. Evaluate Properties for “Highest & Best Use” (short-term & long-term strategies)
5. Buy property with the two OPM’s
6. Expose vision and put up for Sale (“flixer”)
7. Create and Enhance Equity (“fixer“)
8. Sell property for a Profit (Short-term capital creation)
9. Refinance any property that doesn’t Sell (Long-term wealth strategy)
10. Share & Educate Others; Expand the Team

I want to start investing but I don’t have any money. What can I do to get started investing in real estate?

Getting started investing in real estate does not require money. Money is an important tool but it is not a requirement for investing in real estate. While there are a myriad of ways to invest without cash here are a few ideas to consider.

• Assist an experienced investor
• Shadow an experienced investor
• Apprentice with an experienced investor
• Partner with an experienced investor
• Use your good credit and work history (traditional funding and refinancing)
• Access Lines of Credit (HELOC, BLOC, SBA, etc.)
• Use OPM (money inside your (SOI) Sphere of Influence)
• Seller Financing options

Let me summarize each of these options and show how they fit into our real estate investing business model.

Assist an experienced investor
Investing in real estate on a high level requires a team of people doing various jobs. Someone is responsible for doing research on each property before it is purchased, discovering property details, market conditions, target market parameters, financing options and so forth. Another person may be responsible for the follow-up with sellers, buyers, lenders, repair crews, cleaning crews, construction managers & workers, city officials and marketing campaigns. The next team member is responsible for the paperwork associated with each project or deal, completing everything from purchase contracts & addendums to work orders, repair requests, permits & applications and so forth. Another team member may be responsible for answering and returning phone calls, arranging contractor bids, setting appointments and showing property, tracking down owners of vacant property and many other tasks. So being involved in real estate investing can simply be a question of time, effort and energy spent in a good real estate deal.

Shadow an experienced investor
One significant aspect of investing is meeting with buyers, sellers and investors. These meetings and contacts are best done in teams (groups of at least 2 people). Our business includes knocking on the doors of homeowners in many neighborhoods of our cities. Often we stop to visit with For Sale By Owner (FSBO) sellers as we drive by their homes. This can pose a potential safety issue but going in teams increases the safety of our partners. It also creates an opportunity for a novice investor to shadow an experienced investor and learn how to talk to and negotiate with sellers, buyers and investors. It also allows the investing team to leverage the use of their experience to contact more people and increase the opportunities for investing.

Apprentice with an Experienced Investor
Working directly with an experienced investor allows you to see the details of getting an investment deal done. By helping and creating the marketing campaigns, advertising and flyers there is an opportunity to understand how to be successful in finding property and selling projects. There is also an opportunity to help with the business promotion to find additional investors and capital for the group. This allows you to learn the less glamorous but essential side of investing and it leverages the experience of the investor to get more work done.

Partner with an Experienced Investor
Partnering is a step above assisting, shadowing and apprenticing because you become a significant part of the actual investment deals. As a partner you are significant in finding equity & capital for the deals. There is a responsibility to find referrals & leads of buyers, sellers and investors who are not yet associated with our group. As a partner you begin to receive part of the profits, equity and cash-flows of each project.

Good Credit and Work History
Many people have good credit and a solid work history but just haven’t been able to save enough money to invest in real estate. These people are a significant part of our long-term investment strategy. In our business model we buy property, increase its value and sell it for a profit; but if the property doesn’t sell we refinance it and hold it long term for all the benefits of real estate investing. But there is a limit to the number of loans any one investor can have so we are constantly looking for additional people who can refinance our investment properties for the long-term. As our equity partner they get a large percentage of the profit and generally have no additional obligation to the project. And there is no cash required from our equity partners.

Lines of Credit
These investors have a different role in our system. Unlike the previous investors who refinance for the long-term, these investors use their money for the up front and short-term aspects of the project. This includes the earnest money deposit, inspections & fees, applications & permits, fix-up & repair, upgrades & construction, buying notes & loans, etc. These monies are used short-term and are repaid upon the sale or refinance of the property. Most people who have good credit and a strong job history can qualify for unsecured lines of credit, credit cards, HELOC (Home Equity Line of Credit), BLOC (Business Line of Credit), SBA Loans, etc. There are a lot of funding options even if your personal savings account is small.

Use OPM (Other People’s Money)
There are many individuals out there who have created money to invest, either through personal savings, intelligent investing, retirement accounts, etc. Many of these people want to be able to invest their hard earned money in safe and secure investments. Because you may know some of these individuals you can bring them to our group. We gain access to their funds and they get fabulous returns on their money (usually doubling their investments every 3-5 years) and you get a portion of the profits from the deals.

Seller Financing
Seller financing can allow for the purchase of property with little or no money out of pocket. Once properly understood and utilized, the investor understands that seller financing is actually better for the seller than the buyer but it does allow the investor access to the property. While the applications of seller financing are virtually infinite, the point is that there is the ability to invest in real estate without money from your own pocket.

This is just a brief summary of a few options available to someone who has the interest and desire to invest in real estate but may not have the funds currently available to invest with. We’re looking for people who want to be involved with the amazing industry of real estate investing. If you’re interested and would like to get started investing please contact Khayyam Jones at (801) 787-7797 or email to Khayyam@KhayyamJones.com and we’ll contact you shortly.

I have people asking me all the time…”how can someone buy a home with no money down.” It seems to be the ellusive investor’s dream. But there is hope. There are several ways to get into a home with no money down:

1. Rent to own/lease option to purchase; start as a renter while you save money for the down payment or build purchase credit and then buy the home you’re renting.

2. Seller finance; find a seller who needs to sell but doesn’t necessarily need their cash right away.

3. Short term seller finance purchase and equity refinance; you can start with a short-term seller finance but you will refinance the property using and equity in the property as the down payment.

4. Investing partner; find someone who has cash to invest and use their money for the down payment. You’ll need to make some financial arrangement, usually monthly payments, to repay the investor and set a time limit on how long you plan to use their money.

5. FHA purchase. This isn’t completely a no money down but they still allow grant money for the down payment.

I’m assuming that you have decent credit (at least 600 fico scores or better) and have a steady job. The down payment is the easy part but you need to be in a position to finance the property at some point. Keep the FHA loan in mind…in is pretty handy right now.

There are several sources for finding foreclosure homes. But to be more accurate, the foreclosure homes are the ones that are actually at the auction. Those auction notices are published daily in your local newspapers.

Finding the properties before they go to auction, while in pre-foreclosure, you will probably want to talk to your local Real Estate Investment Association (or club). They are probably already tracking most of the Notice of Defaults already but can show you where to look yourself. Usually a title/escrow company will email that list weekly. You can also check with you local county land records (usually online) daily.

After the foreclosure sale you will be looking for bank REOs (Real Estate Owned). These are usually on the market 2-6 months after the auction. They have to get appraisals or BPO’s (Broker Price Opinions) to estimate market value as well as other paperwork for the specific institution before they get listed and sold to the general public. These are found through a few local realtors who get the bulk of these listings and you can find them online through your local MLS, Realtor.com or most of your local agents will have some link to local housing information searches. (If you go this route I would recommend finding the main agents and contacting them directly…you’ll get faster information and less red tape since they make more commissions if you buy directly through them.)

Each stage of the process has it’s pros and cons…

Pre-foreclosurePros: You get a chance to work directly with the owner, the banks have some flexibility on price (for a short sale), great discounts on junior liens, more options and terms to negotiate.
Cons: Not all homeowners are willing to work with you (in a state of denial), not all lien holders feel the need to negotiate, usually need cash or access to quick money, usually requires educating the sellers.

Foreclosure (auctions)Pros: opening bid is usually at the amount of the first lein only, (right now) few bidders & lots of property, no negotiations.
Cons: requires cash, no guarantees (it only takes on idiot to bid up the price), no inspection period.

REOsPros: regular purchase process with loan qualifying time and inspection periods, full representation.
Cons: more competition from investors, less flexibility from banks, subject to rules of traditional lending.

Keep in mind that all three options have opportunities for fabulous deals. It’s up to you to pick an option that fits your style for investing.

Additional websites:
RealtyTrac.com
Foreclosure.com
ForeclosureFreeSearch.com
Foreclosure.net