Is it EVER okay to purchase real estate investments at full price?!?

Lee’s Notes: Good post from Vena Jones-Cox..

Is it Every OK to Pay Full Price for Real Estate?
Here’s an idea that’s gone out of fashion: building humongous wealth in real estate is a long-term process.

I know, I know…wholesaling, retailing, buying and selling creatively-they all hold the promise of quick cash. That’s why sales of courses and bootcamps on these topics will continue to outstrip those of courses on long-term buy-and-hold strategies by a margin of 100 to 1.

But let’s face it, not everyone is cut out to do the wheeling and dealing that these strategies require. Each and every one of them requires the investor to sift through dozens of potential leads to find the one deal where the seller is desperate enough to take 70 cents on the dollar for a quick sale, or is open to creative finance deals that are way outside of the average American’s frame of reference and comfort zone. In other words, the investor has to be both willing and able to negotiate a price and/or terms that make the deal work for him-and find a seller for whom the terms work as well.

Furthermore, depending on the strategy, the investor (let’s just call him “you” from now on) has to have the time (and in some cases, skills) to make the deal make money after the purchase. In the case of a retail deal, the low purchase price does not automatically equal a high profit-cost overruns, holding expenses, poor neighborhood selection, and unexpected repairs can quickly eat up any potential gain. In many creative buy/sell deals, as little as one month a year in vacancy can kill the profits for the entire year.

Now, don’t get me wrong-I am a big fan of (and practitioner of!) these short and medium-term deals. Like most full-time investors, I depend on them to take care of immediate cash needs, build money for long-term holds, and, frankly, to keep food on the table. But the source of my wealth-and that of every other real estate investor in the country-is the tax breaks, appreciation, and mortgage pay-down that comes from owning rental properties.

And what’s more, quick-turn deals just don’t fit into everyone’s lifestyle. Many people are just downright uncomfortable with the negotiation factor; others are unwilling or unable to commit the time it takes to deal with dozens of sellers for each property they buy; still others are in a tax situation that makes any type of short-term capital gain a major tax burden. And a mega-profitable quick-turn business requires a lot of volume-1,2, or even 10 deals a year aren’t going to make anyone a millionaire, especially since the profits are ultimately taken out in cash which, let’s face it, we tend to spend rather than grow into more profits. And doing more than 10 deals a year is difficult for anyone who plans to keep their “day job” for whatever reason.

So what if there was a way to become a millionaire in real estate without hard-ball negotiation, without a full-time commitment, and without making dozens of offers for each deal you buy? What if, in short, you want to be a completely hands-off, passive real estate investor?

There is-but in order to do it, you have to be willing to go against all of the training you have that says that smart investors don’t pay full price for properties. Oh, and you may have to consider investing outside of your own geographical region. Wanna hear about it anyway? Here goes.

When and Where to Consider Paying Full Price

First, some background for readers who live on certain parts of the east and west coast, Arizona, and Florida.

In most of the United States, it’s possible to purchase single and multi-family rental properties in decent areas for full price, pay 20% down or less, and still have positive cash flow at current interest rates.

This rule primarily applies to properties with an after-repaired value of 120% or less of the median house price in the area, and becomes MORE true as you move DOWN the scale. For instance, in Cincinnati, the median house price is around $125,000; a home with an ARV of $170,000 will rent for about $1400 a month and have positive cash flow if the mortgage is 80% of value, or $136,000

On the other hand, a home with an ARV of $70,000-which will be in an almost all-rental neighborhood-will rent for about $800 and will have a cash flow of $200 or so with $56,000 mortgage at 6 %.

A $50,000 property-which will be a high-demand rental, but almost certainly in a “border zone”, will rent for $700 a month and have a $300+ positive cash flow if mortgaged at 80% of value.

The trade-off, of course, is that the $170,000 will appreciate a LOT more and have a LOT more tax benefits than the $50,000. And needless to say, there are factors other than the mortgage payment that must be considered; in cities with very high property taxes or additional fees for garbage collection or landlord licensing, the numbers clearly change. But on the whole, here in flyover country, it’s possible to break even-or even make money-paying full price for a property and financing it conventionally.

So what’s so exciting about breaking even?

Well, not much-IF your goal is to live off the cash flow from the property today. But remember, for the vast majority of people looking at investment real estate, cash flow now is not as important as cash flow later, wealth-building, and, most importantly, ease.

Even full time investors like me aren’t generally looking to their rental properties for immediate income; instead, I’m looking at my rentals as a retirement fund that have no impact on my income right now, but have a major impact on my TAX situation right now. My income-the putting-the-food-on-the-table money-comes from my short term, highly taxable wholesale and lease/option deals. My wealth-the retiring-young-and-traveling-the-world money-comes from rentals. And in the meantime, I want to be able to focus my time and energy on my high-profit, quick-cash strategies, and have someone else worry about filling and managing my rental homes.

So in order to evaluate the REAL benefits of paying full price (or close to full price) for we have to look at the long-term impact of owning the property. And this means evaluating the tax implications (which affect your income immediately) and the growth implications (which affect your future) of owning rentals.

The Tax Benefits. The IRS allows owners of single family investment properties to “depreciate” the property over time. In other words, for tax purposes, the home is treated as if it were “wearing out” and decreasing in value each year, instead of growing in value.

Single family homes are depreciated over 27 1/2 years, and a conservative accountant will tell you to set a “basis” on your property of 80% of your purchase price. The resulting number is then deducted from your net income from the property. And if THAT number is a negative number-which it almost always is in the first 5 years you own the property-that “loss” can flow over and shield your ordinary income, as well.

A paper loss of $1,000 a year equates to a tax savings of $150 in a 15% tax bracket, $300 in a 30% tax bracket, and so on. Although the tax breaks are something most people think of only on April 15th, they are a real, quantifiable addition to your yearly income, and must be taken into account when looking at the overall profit from the property.

Long-term appreciation. Another benefit of owning properties for the long haul is the growth of value of the property over time. Although the appreciation in the last 3 years has been NEGATIVE, all this means is that by paying full price, you’re buying at or close to the bottom of the market, and are positioned to get the appreciation that will be driven by the recovery of house prices.

If you use 3% as an extremely conservative estimate of yearly appreciation, over the next 5 years, a house worth $150,000 today will be worth $168,000 in 5 years-an untaxable, unspendable, but very real profit of $18,000.

Equity Paydown. At the same time that the property is increasing in value, the loan amount is decreasing thanks to the efforts of the tenants to pay it off for me. As you know if you’ve ever looked at the amortization schedule of a 30 year loan, this takes place slowly at first and accelerates as time goes by.

Nonetheless, in our example of the $150,000 bought with 20% down at 6% interest, the tenant pays off $1,473 of my loan in the first year-another real, untaxable profit center. Of course, this number gets bigger each year as principal payoff accelerates, but even in the very first year, it affects your overall return.

So, sometimes, for some people, in some situations, paying full price for investment real estate is a smart move. But before you run out and do this, let’s talk about what it takes to make it work in the real world. No matter what your financial situation, do NOT contemplate this strategy unless:

The property is fully renovated when you buy it. Obviously, it doesn’t make sense to purchase a home for full retail price if it needs work to bring it up to full retail value. But it also doesn’t make sense to pay full retail less the actual rehab costs for properties that need repairs. The whole attraction of this technique is that it is relatively hands-off; if you’re going to do work to a property, you can and should be paid for the time, money, and energy you put into repairing it. And since the idea is that you’ll be paying close to full price anyway, it just makes sense to buy something that won’t need a roof, an electrical update, plumbing, etc. in the near future.

The property has at least break-even cash flow, NOT including the effects of appreciation, tax savings, and equity paydown. The only time it makes sense to buy rental properties that have significant negative cash flow is when the same property has very large appreciation potential-and expecting a property to appreciate 10-20% a year in today’s slowing market is speculation at its worst.

Incidentally, if you’ve never owned rental property, you may not be aware that “break even” cash flow, in the real world, means negative cash flow in some years and positive cash flow in other years, evening itself out over the long term. If you live in a market where it’s impossible to buy a decent house in a decent area with break even cash flow, you may have to consider buying a package of properties in another region of the country and having them managed to make this work for you. Remember, the idea here is long-term growth with minimal hassle, NOT to get rich in 5 years from high appreciation, and NOT to spend your own money “feeding” your rentals year after year after year.

You’re qualified for the financing that makes this work. In theory, when you buy a property that breaks even in year 1, it should be cash flowing by year 5 and cash flowing strongly by year 10 due to rent increases.

However, this scenario really only works with a fixed-rate, low interest loan. It’s a fact of life that our mortgage interest rates will be increasing in the foreseeable future, and it’s also the case the rent increases normally lag interest rate increases.

If you can’t put 20% down, or can’t qualify for a low fixed-rate 30 year loan, it just flat won’t work.

You can leave your money invested in the property. Since this entire scenario is based on long-term growth and mortgage paydown, it’s crucial that you have the ability MAKE a downpayment, and then LEAVE it in the property (I know, I know, there are gurus all over the U.S. who would be rolling over in their graves right now, were they dead). But if you refinance the property at any point to pull out cash, you’ll not only decrease your cash flow a that point in time, you’ll also set yourself back years in terms of the mortgage paydown. Investing this way is like buying stock-you should be in it for the long haul, or not at all.

You are absolutely certain that the property will be well-managed. The success of this strategy-both long-term and short-term-hinges on good management. Whether you plan to self-manage or hire a property manager, your razor-thin cash flow margins depend on keeping the property rented, keeping the tenants happy, and collecting every dime you’re owed.

The 20% expense allowance in the examples assumes that you DON’T put a tenant in your property that’s going to do major damage to your property, and that you DON’T lose out on months of rent each year through vacancy, non-collection of rent, or lengthy rehab periods between tenants. If you can’t run your rental business like a true business, hire a good, competent property manager who will.

A note: if you’re going to hire a manager, talk to your tax professional first to make sure you won’t be subject to passive loss limitations in your tax write-offs.

Buying rentals at full price certainly doesn’t give you the “rush” that some of the other strategies available in real estate do. But real estate is such an important part of every financial portfolio that if you aren’t ready or aren’t able to do what it takes to wheel and deal in the real estate world, it’s sure better than doing nothing at all. For the right people in the right situations, it’s the obvious alternative to waiting to start a real estate career.

Finding Lease Options in Realtor Listings! – Wendy Patton

Wendy Patton talks more about Buying and Selling Real Estate on Lease Options in Indy and elsewhere.  She isn’t trying to sell you guru abilities, she is actually teaching you.

She speaks about talking with Realtors in Indianapolis and elsewhere. How to qualify Realtor listings and educate Realtors about creative selling techniques in Indianapolis and elsewhere.

Over 35 minutes of class time boot legged(not really) from Wendy Pattons’ Buying and Selling Real Estate Boot Camp… People paid thousands of dollars for this bootcamp, and you are getting a taste of it for free!

If you are looking to invest in real estate in Indianapolis or elsewhere, this is some great info!

Time management and the Indianapolis real estate investor!

Lee’s notes: Jon and I were talking the other day about Pareto’s 80/20 rule, and motivation etc.. Not sure if that was his motivation for this post, but it’s all good….

Jon Zorrer takes a Cuzz, and talks about time, and how to manage it. Talks about Greg Clement from realeflow.com, and Jack Walker who are creators of the Smart Internet Marketing Solution System(SIMS). Talks about finding 40 new buyers a week with little to no effort. All the deals you can handle while buying, selling, and investing in homes in Indianapolis, or wherever.

Three types of days: focus days, buffer days, and freetime days. Focus days are where you concentrate on the 20% of things that produce revenue(Pareto Principle).  Buffer days are where you catch up, and do the 80% things that need to get done, but don’t necessarily produce revenue. Freetime days are where you do your best to complete no work whatsoever. Basically you take 24 hours to rejuvenate, rest, and regenerate.

Full time investors should be using a schedule of: Mondays are focus days. Tuesday is a buffer day. Wednesday and Thursday are focus days. Friday is a buffer day. Saturday and Sunday are freetime days(try to avoid work at all costs).

Urgent Politcal Action Needed By All Real Estate Entrepreneurs To Defend Private Property Rights! HR 1728

Thank you to Dyches Boddiford, Elmer Diaz and National REIA for sounding the alarm and organizing vitally-needed action on this issue . . .

Pete Fortunato recently brought this Bill to my attention.

It has already passed the House of Representations and has been sent to the Senate. If it passes in its current form, it will restrict owner financing to once every 36 months (HR 1728 Sec 101(3)(E)). While this may not be much of a problem when we get owner financing from sellers, it severely restricts our ability to sell with owner financing.

Though the bill mainly deals with amendments to Truth-in-Lending for mortgage brokers and banks, this one section could reap havoc. This could limit not only your sales where you take back a mortgage, but _your lease-options and land contracts as well_.

Here’s the latest version of the Bill: http://www.govtrack.us/congress/billtext.xpd?bill=h111-1728

All owner carryback financing should be exempted from this bill. As one commentator noted, if this is left as is, it is a taking of private property rights. We can wait for someone else to fight it, but as for me, I am contacting my Senators today to let him know what I think. I suggest you do the same.

You can find and contact your Senators here: http://www.senate.gov/general/contact_information/senators_cfm.cfm Keep it short and to the point, but let them know your thoughts! Pass this along to your investor friends.

Dyches Boddiford

How to get Fannie Mae financing on an investment property!

My real estate investing lawyer, Matt Griffith, hit me up last night about a new Fannie Mae program that allows investors to get financing on some of their REO properties… This comes from a local mortgage broker, Mickey Brooks (317 218.0283), who has the contacts to get deals done in a couple of states nationwide, so give him a call, and if he can’t help you, he can prolly refer you to someone who can!

“Dear Valued Partner,

As we enter 2009, the crisis in the financial markets seems to be the top story on every news channel. But many of the reporters and so-called pundits don’t understand what really happened, what’s happening today…and what may happen next.
That’s why I’m excited to tell you about a series of articles I’m creating to put an end to the confusion once and for all! In these easy-to-understand articles, with help from many resources, I explain in layman’s terms exactly what caused the current financial crisis, what the almost daily news reports really mean – and what to be watching for in the near future.  The content for these articles comes from various services that I have invested in to stay up to date and educated, in order to always best serve as your trusted advisor. It’s important to me to stay on the leading edge as a professional, and when I saw these resources, I wanted to make them available to you as well.   I’ll attach basic stories behind the crisis for your review, to help you better understand what happened, why, and where we’re going from here. The few minutes you spend reading them will open your eyes to what very few experts truly understand.

As your trusted advisor, I’m committed to doing whatever I can to help you understand what the current economic situation means for you going forward in 2009.
Give me a call if you want to discuss strategies for strengthening your financial future in the weeks and months ahead.

Fannie Mae HomePath Financing Program
Fannie Mae has just released a new program called HomePath to help consumers buy and finance many of their REO properties.  All FNMA REO properties are not eligible for HomePath financing.  Only those properties listed at the following web site http://www.homepath.com  with the HomePath logo qualify for this program.

Mortgage Financing  The benefits include:
•  Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
•  You may qualify even if your credit is less than perfect
•  Available to both owner occupiers and investors (Primary, Secondary, Investment)
•  Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer (2% Seller Maximum)
•  No mortgage insurance
•  No appraisal fees
•  Also eligible for HomePath Renovation Mortgage (see details below) (Primary Residence Only)

Available only on homes you make your primary residence  and offers these benefits:
•  Financing to fund both your purchase and light renovation.
•  Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate).
•  Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer.
•  No mortgage insurance.
•  Renovation funds are borrowed as part of the purchase financing and held in escrow until the renovations are completed.
•  Renovation Costs limited to 20% of the “as repaired or completed” value or $30,000, whichever is less, and renovations must be completed within 3 months of closing.

About Fannie Mae Homes

•  Why does Fannie Mae have properties for sale?  Fannie Mae works with all of its partners to help homeowners prevent and avoid foreclosure; however, sometimes it is unavoidable. When foreclosures occur on mortgages in which Fannie Mae is the investor, our goal is to sell properties in a timely manner in order to minimize the impact on the community.

•  What kinds of properties are available in the Fannie Mae HomePath database?  Fannie Mae’s HomePath database includes only properties that are owned by Fannie Mae. There is a wide selection of homes, including single-family homes, condominiums, and town houses — located in a variety of neighborhoods. The number, types and the sales prices of the homes that are offered for sale may vary substantially. Many of these homes are relatively new; however, older homes are offered in some areas. Some homes may require repairs.

•  How is buying a home owned or managed by Fannie Mae different from other home purchases? Usually, when you buy a home, you deal with a seller who lives in the home. Fannie Mae has acquired these properties through foreclosure, deed in lieu of foreclosure, or forfeiture.  When buying a Fannie Mae-owned home, you should know the condition of the property, as explained in more detail below, the cost of any needed repairs, and the steps in the loan qualification and closing process before you enter into a purchase and sales agreement.•  Has Fannie Mae fixed everything in the house? Fannie Mae may make some repairs to properties to increase their marketability; however, the buyer should be aware that other repairs may be needed. Fannie Mae sells each property “as is,” which means that the buyer accepts the property “as is.” Fannie Mae is not responsible for fixing any problems after settlement. Even if the house has fresh paint, brand new carpet, new appliances, perhaps even a new roof or siding, it doesn’t mean everything in the house is new, or even works. Fannie Mae does not warrant or guarantee any work that may have been done on the property, whether as part of its efforts to sell the home or pursuant to conditions in the purchase contract. Where a home warranty is available, you may wish to buy it at your own expense. You should also consider hiring a qualified professional to inspect the property, whether it has been repaired or not. Hiring a home inspector is a recommended practice, no matter what type of home you buy.

•  What can you tell me about this house? If Fannie Mae knows of any hazards on properties we own or market, we disclose this information through our real estate listing agents. However, we may not have been informed by the previous owner of all hazards. We encourage you to have the property inspected by a professional before you buy.

•  What type of sales contract does Fannie Mae use? Fannie Mae uses a state-specific real estate purchase contract and a real estate purchase addendum for our properties. If there is anything in the document you don’t understand or aren’t comfortable with, you may want to contact a real estate attorney, the real estate sales professional who has listed the property, or any real estate professional of your choice to review these documents with you.

•  Do I have to use Fannie Mae’s selected title, settlement, or escrow companies? No. You may designate the title, settlement, or escrow company of your choice, subject to the terms of the contract.

•  Will Fannie Mae accept an offer contingent on the sale of my house? No, Fannie Mae will not accept offers contingent on the sale of your current home. Other types of contingencies will be considered on a case-by-case basis.

•  Why does Fannie Mae require a lender’s prequalification statement before negotiating a home purchase offer? Fannie Mae wants to be sure that prospective buyers will be able to complete the sales transaction, including obtaining financing when needed. Prequalification allows you to see how much house you can afford and the mortgage amount you may be able to qualify for before you make an offer on a home. It also helps you focus on homes in an affordable price range. A loan prequalification doesn’t mean your loan is approved. You must apply for a loan separately, after you are prequalified and your purchase offer is accepted.

•  Does Fannie Mae provide special financing? Special financing is available on many properties through HomePath Renovation Mortgage.

•  Can I buy a house directly from Fannie Mae without going through a real estate sales professional? No. Fannie Mae depends on the expertise of local real estate sales professionals and accepts offers only through our real estate listing agents. You may work with any real estate sales professional to submit an offer to the real estate agent who has listed the property.What happens if Fannie Mae gets more than one offer? All interested parties may be asked to submit their best offer in writing though the listing agent no later than a specified date and time. Fannie Mae may accept or provide a counteroffer that we determine to be in our best interest. Fannie Mae is not obligated to accept any offer submitted.

General Mortgage Lending Terms
(Underwriting conditions may change on a per transaction basis)

30 Year Fixed & 30 Year Fixed with 10 Year Interest-Only Option
3/1 and 5/1 LIBOR ARM & 3/1 and 5/1 ARM with Interest-Only Option
Property Type	Max LTV	Max CLTV	Min Credit Score	Notes
1-2 Unit Primary Residence	95%	95%	660	1 Unit Warrantable Condo Pud
	80%	95%	580	1 Unit Warrantable Condo Pud
1 Unit Second home	90%	95%	660	1 Unit Warrantable Condo Pud
	80%	95%	580	1 Unit Warrantable Condo Pud
1-2 Unit Investment property	90%	90%	660	1 Unit Warrantable Condo Pud
	80%	90%	580	1 Unit Warrantable Condo Pud
30 Year Fixed & 30 Year Fixed with 10 Year Interest-Only Option
5/1 LIBOR ARM & 5/1 ARM with Interest-Only Option
Property Type	Max LTV	Max CLTV	Min Credit Score	Notes
1-2 Primary Residence ONLY	97%	105%	660	1 Unit Warrantable Condo Pud

Real Estate Wholesaling.. Get rich quick scheme, or a lot of work?!?

Real Estate Wholesaling.. Get Rich Quick Scheme, or a lot of work?!?

I work with a lot of investors. I have a booth at our local REIA(Real Estate Investors Association), and I am constantly looking for experienced investors looking to buy my properties(yes I wholesale), or newbie investors looking to get their feet wet with private money lending and tutoring.. Point is, I see A LOT of newbies who want to get their feet wet by wholesaling. A lot of these guru’s preach how easy it is to make 5, 10, 50k on a single wholesale deal.. Most guru’s don’t tell you how much work is involved.

Yes, you can make money in wholesaling, but there is a lot of work involved. There is many facets to wholesaling.. It’s not just making lowball offers on houses, and then selling them quick and easily… You are going to need to find sellers(banks/reo properties are easy enough, but there is decent competition there, so don’t depend on these). You will need buyers(Investors who have cash and are ready to go on a moments notice). You will need to know how to be creative and market effectively. Finding sellers and buyers and coming up with the marketing and the marketing itself are all things that are going to take time… Lots of time!!

Let’s run down the main process, as if we already have some buyers(investors) on the line, and we are looking at REO/Bank Owned properties, and since we are in fantasy land, lets say you are a Realtor and can make your own offers(I kid, I kid!)..

On average you will write 20 offers on houses before you will get 1 under contract… So that means you are going to go look at 20 houses(30 minutes a piece), then spend 10-15 minutes a piece writing up offers to submit. Let’s say they all counter offer and it takes you another 15 minutes each to write a counter to their counter, etc So 1 hour per house @ 20 houses = 20 hours per week plus or minus. Add in multiple second or third counter offers and the time limits can go up.

Once you get one under contract it will be time to submit your earnest money and then on to crunch time and getting it sold… You need to be calling all your investors and getting them in to see the house. Once you get one on the hook, you need to get them to give you the wholesale money and get them on the contract. Sounds easy right?

Let’s talk issues….

You don’t have your Realtors license… You have to drag a Realtor to 20 houses a week. You have the Realtor look up comps for your deal. You have the Realtor write up the contracts on 20 houses. You have the Realtor submit and defend all the offers. You have the Realtor submit your earnest monies. You are probably going to have to submit earnest money checks with each offer(don’t worry, they won’t be cashed unless the deal gets accepted). If you can’t close, your Realtor is going to have to fight to get you your earnest money back.

You can’t find a buyer…. Most likely you didn’t get a good enough deal for most investors, or you missed some repairs. You either buy it yourself, or you have to get out of the contract, and get your earnest money back. Be aware that getting your earnest money back might not happen, and in most cases it will take a LONG time to get your money back(2-6 weeks or longer). Your Realtor will be pissed because he/she drug you around to 20 houses, and you couldn’t complete the deal.

You don’t get any offers accepted….. Most likely you are having a problem comp’ing the house, or the repairs. Your offers are coming in way to low, and the bank is just laughing at you.. hehe Your realtor is going to start getting irked at all the work and no payoff.

You find a seller…. You are going to need to spend time with them, hold their hand, explain the process. You may spend 1-2 hours, or more, dealing with a seller to get them to the point of signing a deal with you. Then you are going to have a lot more time holding their hand throughout the process. You plan to hold their hand right?!?! Most people who sell to us are dealing with stressful extenuating circumstances. You need to understand this and help them feel comfortable with their decision. I know this process is about you making money, but you need to understand that you are doing a far better service for the seller. You are helping them offload a burden, in most cases. You may very well have to listen to a 3 hour speech about how the family pet died and it’s been a downward spiral ever since… DEAL WITH IT!!!

20 hours a week to preview and submit offers on bank owned homes to get 1 deal UNDER CONTRACT. Half a 40 hour work week to get 1 deal under contract. Don’t forget the time you will be spending marketing and dealing with buyers and sellers. Don’t forget the time you will be working with your Realtor(if you aren’t one). There is a lot of time involved in wholesaling. Doesn’t stop me, but I don’t have delusions of grandeur. There is no get rich quick scheme in wholesaling… Lots of hard work will pay off in the end..

Can you paint vinyl siding?

Lee’s Notes: I have a flip house, and the exterior is this hideous mustart yellow. Not the bright yellow of  French’s, but the nasty yellow of Grey Poupon.. Yeah, it’s bad.. of course, it’s winter now, and we cant paint the house if I wanted to, but I digress.. Found this QnA session about paints for vinyl siding, and thought it might be interesting to others.

DEAR TIM: My house has a combination of wood and vinyl siding. The wood siding needs a fresh coat of paint, but I want the color of the two sidings to be consistent. My wife wants a new color that is different than what we have now. Can I successfully paint vinyl siding? If it is possible, are there special paints and techniques that I must use? Donald N., Scranton, PA

DEAR DONALD: If you had asked this question several years ago, I don’t think you would have liked the answer. But fortunately, there have been some major breakthroughs in the paint and coatings industry. Several new exterior paints are available that have been formulated to stick to vinyl siding. They perform so well that the paint manufacturers
offer a long term warranty so long as you follow the paint label instructions.

Painting vinyl siding is challenging for several reasons. Vinyl siding has a very high expansion/contraction coefficient. This simply means that it expands and contracts significantly as it experiences periods of exposure to sunlight and then periods of shade or darkness. This movement of the siding caused traditional exterior paints to fail in short order as the bond between the paint and the siding was severed by this constant back and forth movement.

Vinyl siding also soaks up heat to a great degree. If it gets too hot, it can buckle and distort. This is why many vinyl products are offered in lighter colors. Because of this fact, you can actually damage your vinyl siding if you paint it a color that is too dark. The paint manufacturers highly recommend that you paint the vinyl siding a color that is no darker than the current shade of your vinyl siding.
Installing vinyl siding on your house? Find the best professionals by using my Vinyl Siding Checklist. I offer a 100% Money Back Guarantee.

For example, if your siding is currently a light shade of beige, you can paint it a light shade of green, blue, tan, etc. The trick is to use paint store color chip cards to guide you. Locate a color that is as close as possible to your existing vinyl siding. Use that color chip card as a benchmark and find complimentary paint chip cards that have the same depth of color as your card. You can then select a color that is equal to or less in color richness and depth as your existing vinyl siding color.

You must use the right paint to achieve victory. The ones that seem to work best with vinyl siding are ones that have a blend of urethane and acrylic resins. Water based urethanes mixed with high grade acrylic resins produce a user-friendly paint that has extraordinary adhesive qualities. This is exactly what one needs to combat the daily movement of the vinyl siding. Exterior latex paints that contain urethane are readily available. Simply look for the word urethane on the label of the paint can.

To get the absolute best results from this paint job you need to do a few other things. I feel that a clean, dry surface is very important. If you clean your house like your own body or your car, you will have a great head start. This means using soap and water and some good old fashioned elbow grease. You must mechanically remove the dirt film from the existing painted surfaces with soapy sponges, rags or brushes. Do not count on pressure washers to clean your existing surfaces. Not only do they not get all the dirt off the surfaces, but they also can inject massive amounts of water into and behind the siding. This hidden water can cause big problems as you begin to apply the new paint.

If mildew is present on the existing surfaces, use an oxygen bleach solution to remove it. Oxygen bleach will not harm the vinyl siding nor any vegetation near your home. Avoid chlorine bleach as it is highly toxic to vegetation. Oxygen bleach can be found easily on the Internet.

Painting in direct sunlight is also not the best idea. If you can paint your home in cooler weather and preferably on overcast days, the paint will have excellent conditions in which to dry and bond to the vinyl siding and existing wood siding. Windy, hot and sunny weather is not the best time to paint contrary to what many people believe.

Real Estate Negotiation: Final offer, or Highest and Best… What does it mean?!?

I write quite a few offers for real estate in Indianapolis, especially for investors in Indianapolis real estate. Normal chain is that you write an offer, and the seller counters that offer, and you can counter their counter of your original offer , and they can counter your counter of their counter of your offer. You get the picture… These Offers and counter-offers stack up.

I’ll give up the ghost on one of my tricks-of-the-real-estate-trade… Not really a trick, but you get the point..

Eventually you get to a point and either need to go with “Highest and Best offer” or “Last/Final offer”… But there is a subtle difference, can you see it?!? Do you, do you?!? huh?!? HUH?!? hehe

Highest and best limits to whatever the price on that offer is… So if you counter at 100k and say Highest and Best… Then the seller either accepts your offer, or they walk away…

Final offer says “I’m done with the offer-counter-offer thing.. You get one last shot at me before I walk.” So you make that 100k offer, and they realize they need to put up or shut up.

Now, do Realtors and Sellers pick up on these subtle word plays?!? The saavy ones do… The rest will just assume you mean highest and best offer, and you will still get your finality.

If you like what I write about investing in Indianapolis real estate, and are looking for investing solutions. We specialize in Indianapolis Real Estate investing, and can help out the amateurs to the pro’s. Even if all you want to do is make the investment and reap the rewards without all the headaches, we can help!

Ask about how you can earn 8% monthly, guaranteed, on an investment. You get the title, the tax benefits, and we split the profit. We handle the repairs, maintenance, landlording, etc.. Give us a call today(317450-3491)!

Investing in real estate without getting scammed.

The IBJ(Indianapolis Business journal) has a good article about Charter Homes which was recruiting “straw” buyers. The 3-year-old local company took advantage of eager real estate investors by offering them a cash bounty for each home purchased, along with checks from Charter to cover down payments. But as lax credit markets tightened and home values reversed course, the scheme began to crumble, an IBJ investigation has found.

The use of “straw” buyers—individuals who lend their credit, often to unnamed shadow buyers—is considered illegal. During the housing bubble, frauds involving such buyers were widespread, particularly in Nevada, Arizona and Florida, said Curtis Novy, an expert on mortgage fraud and a veteran California mortgage broker.

Ultimately, it takes a team to pull off such a scheme, including a builder, appraiser and straw buyers, Novy said.

A warning sign is high sales prices that don’t make sense to people who know a market.

PROTECT YOURSELF:

If you want to invest in properties, but dont want the hassle of dealing with them. Then make sure you are going in with your eyes wide open. Get your own comps on what a property is worth(fixed up and or needing repairs). Get your own comps on what the repairs are going to cost. Get your own comps on what property management is going to cost. Use your own banks and or appraisors. Most Importantly: If you don’t understand something, either ask more questions until you do understand it, or walk away and invest elsewhere!

My company offers investing for people who don’t want the hassles. I don’t give inflated values, or am not in cahoots with appraisors or lenders. We offer real estate investing without all the hassles, or with all the hassles if you want to go that route. If you are interested, then give me a call and we can talk about your options.. Lee Smith, 317–450–3491