It’s Time to Hone Your Marketing & Reseach Skills to Locate Distressed Homeowners

September 24, 2017

One of the reasons real estate investing is so interesting is the interaction of so many global to local economic and political
Dean Graziosi

It’s Time to Hone Your Marketing & Reseach Skills to Locate Distressed Homeowners

September 22, 2017

One of the reasons real estate investing is so interesting is the interaction of so many global to local economic and political
Dean Graziosi

It’s Time to Hone Your Marketing & Reseach Skills to Locate Distressed Homeowners

September 20, 2017

One of the reasons real estate investing is so interesting is the interaction of so many global to local economic and political
Dean Graziosi

Weekly Wisdom #161 – It’s a Wonderful Life?

February 25, 2015

Weekly Wisdom #161 - It's a Wonderful Life?

Visit Welcome to Dean’s Weekly Video Blog as we talk about how to make profits in today’s real estate market… …

It’s Not Too Late to Add Real Estate to a Retirement Plan

November 22, 2014 tracks home foreclosures and a lot of other real estate market sales and price data. In a recent report, RealtyTrac says that distressed residential properties sold for a median 37 percent below market prices in September 2014.

Sure, there are far fewer foreclosure properties on the market today than there have been in recent years, but there is still opportunity for investors. This discount is based on a median distressed property sale price of $ 130,000 nationally as compared to $ 205,000 for non-distressed properties. We can see from this data that there are still some great bargains out there for the investor who is willing to overcome poor property condition and other pitfalls.

Generally, these homes are in less than stellar condition, some in really poor states of repair. However, 37 percent leaves a lot of room for corrective action, even for the aggressive flip investor. For the rental property investor who wants to keep the property as a long-term investment, there is still a lot of opportunity. Rehab of a distressed property that comes in under around 90 percent of current market value results in a purchase that locks in an investment profit at the closing table.

It’s the long-term positive cash flow that seals the deal for rental investors though. When a property can be purchased below market value, it’s easier to keep expenses of ownership below what the property will rent for in the current market. This monthly positive cash flow can be used for other living expenses or reinvested in rental property. If you’re investing inside an IRA or 401k, keeping the cash flow profit in the account allows your investment to grow with pre-tax dollars. These are called “self-directed” retirement accounts, and your choices of account custodians is limited. There are also some strict rules, so if you check into this do a thorough job of it.

The point of this article is to show the potential for retirement account building with rental property, and to let you know that it’s never too late to start. The RealtyTrac report tells us that there are still bargains. Of course, real estate should only be a part of your overall retirement plan, so discuss your allocation of assets with someone you trust. Single family rental home investment isn’t the only avenue to invest in real estate. An interesting article over at titled “Why Mobile Home Parks Are Wowing Wall Street” describes one alternative investment avenue.

We’re talking here about mobile home parks that charge rent for the space where a privately owned mobile home is parked. A very interesting statistic in the article tells us that 98 percent of mobile homes never move from the original spot to which they were delivered and set up when purchased. Turnover certainly doesn’t seem to be a problem. When you compare this to vacancy rates in even the best of rental portfolios, it’s impressive.

Several other data points in the NuWire article help to illustrate the opportunity in mobile home park investing:

Recession resistance — Because the tenants in mobile home parks are for the most part in the lowest income demographic, they continue to work and earn through the ups and downs of the economy. It also costs thousands to move a mobile home, so they aren’t going to leave on a whim.
Rents are flexible — Mobile home space rents are low, generally around a quarter or less than the rent for an apartment, so there’s room to push them upward when the need arises.
Low maintenance costs — Land and installed utilities are the major costs involved in operations. Land requires little or no maintenance (landscaping maybe), and utilities are also low maintenance items over the long-term.
Double-digit cash-on-cash yields — The combination of all of these factors produces a great yield on money invested, particularly if you can buy a park at a discount to value.

I’m not recommending buying into a mobile home park for all investors, just pointing out an overlooked investment opportunity that may appeal to some investors, particularly those living where mobile home parks are common.

The point is to think about diversification into real estate in a long-term retirement plan. Single family homes are still a great asset, but getting creative can provide alternatives that involve less competition and at far higher yields than other investment types.

Dean Graziosi

It’s Not Real Estate — It’s the Economy Stupid

September 9, 2014

Whether you’re a real estate investor, a homeowner, or you’re just interested in how home prices are doing these days, it’s easy to find media coverage to support just about whatever attitude or bias you may have. News was very consistent from 2007 through 2010, as the crashing market kept everybody in a bad mood. However, from around 2011 to the present, news about the “recovery” has been all over the map.

A recent article on a website for mortgage professionals tell us that California cities hold the top five spots for home price and market improvements recently. The same report states that Ohio, Florida and Missouri are sharing the bottom of the list for improvement. Headlines are confusing, telling us that:

• 30 percent of all home purchases have been by investors with cash.
• The millennial generation is moving back in with their parents, not buying homes.
• First time homebuyers are just nowhere to be found.
• Some markets around the country are recovering to the point of bidding wars.
• The median price for a home is now $ 191,600, up 9 percent year over year.
• The U.S. is becoming a nation of renters.

When it comes to housing news, it’s a new movie title: “The Good, the Bad, and the Mediocre.” We can continue to analyze the housing market and home prices till the cows come home, but it really isn’t just about homes and whether the American Dream is still intact. It’s just logic that as long as people have the financial ability to own a home, they’ll prefer that to renting. We all want to own our little piece of the planet.

When it comes to the financial ability to purchase a home, make the mortgage payments, support other debt, and to feed, clothe and protect our families, we’re not in a good place on average. Right now, more than half of Americans surveyed believe that the economy is “getting worse,” while 41 percent think it’s improving.

The Organization for Economic Cooperation Development reports study results for 2001 through 2011 related to household net disposable income in the U.S. Net disposable income is the maximum amount people can afford to spend without having to take on debt or tap their savings. The study shows that this amount has risen on average only 2 percent per year over the ten year period. With inflation over the same 10-year period averaging 2.4 percent, it’s not a pretty picture. In March, the median family income was $ 53,000, lower by 6 percent than the $ 56,271 number in December of 2007. The average non-farm worker’s income in April was $ 24.31 per hour, up only 1.9 percent from a year ago.

There are arguments about whether the massive increase in student debt is a major contributor to a drop in home purchases by the younger generations. It really doesn’t matter as much as the lack of high paying jobs available to these indebted graduates. Another set of statistics shows that first-time homebuyers have dropped from 40% of the market to 30%. This statistic comes from the National Association of Realtors report: Realtors’ Confidence Index. However, the same association has a long standing report titled Profile of Home Buyers and Sellers that tells us just the opposite. The latest report states that the percentage of the market made up by first-time buyers is holding steady. The discrepancy is in part aggravated by the spurt of buying due to the first-time homebuyer tax credit in 2009 and 2010.

A lot of people are employed in tracking the real estate market, mortgages, foreclosures and home prices. They need their jobs, so they should keep up the good work. However, I’m solidly in the camp believing that “It’s the economy stupid.”
Dean Graziosi