Tampa Real Estate Investors Alliance Blog

I will never forget my first business/real estate mentor. I was set to taxi the plane out to the runway on a flight to Carrabelle Florida. My passenger for the day was a wealthy real estate investor and developer. I was flying him to FL for the afternoon because he was in the middle of developing a new condominium community on a prime piece of water front real estate that I had watched him negotiate and purchase a few weeks prior on a separate trip that I flew him to Florida for.

At this point my real estate career didn’t exist at all. I was a pilot flying for a medical supply company in Macon, GA. My passenger (Lee) was a friend of the owner of the company I worked for. The owner had invested in Lee’s next development and had given him access to the plane (and me) to take him down to the development site when he needed. At this point in time I was working on my flying career but I was slowly getting the real estate bug. Little did I know that in less than a year from that fateful flight, I would be completely out of aviation and full time in real estate, never to look back.

As we taxied out to the runway on a beautiful spring day Lee said something that would change the course of my life forever “what’s that button for?” Read More→

Welcome back…again! Quick refresher: We’ve been discussing two classic & powerful, tried & true real estate investing strategies:

Wholesaling and Lease Options, aka “Ugly” vs. “Pretty”.

Part One of this series was devoted to Wholesaling, and Part Two was focused on Lease Options. Examples were given. Terms discussed. Money put on the table. Moving on…

Whenever a ‘newby’ investor asks me where they should start, I usually tell them that wholesaling is a great way to earn some great money while learning the business, so they should consider starting there. After a while, and when their marketing starts generating leads from pretty house sellers, I tell them that it’s a great idea to learn that part of the business so that they can start to make money from those leads as well.

It’s a beautiful thing when a deal fits easily into a ‘type’ of transaction we know how to do, and it’s even more beautiful when all the stars are in alignment & a deal closes smoothly. But we live in the real world here, right? Besides, we’re problem solvers, and that’s why we get paid the big bucks! :) Read More→

As investors we have to watch numerous indicators to insure we make a profit when we buy. Knowing the value of a property is extremely important. Today the adjustment in property tax values is for once a viable market indicator.

Knowing the true value of real estate is critical, try to do a deal without it and see. The guidance and data within REIAComps has consistently shown investors how to determine both solid acquisition value and after repair value to earn lasting profits.

Property values nationwide continue to rebound, according to numerous local and national reports. The taxable value of real and personal property nationally has increased 2.38 percent from 2014 to 2015.

Of the 10-20 reports I regularly review, they show the assessed value of real estate, which is 50 percent of market value, increased 2.75-3.0 percent. Translation, the real estate market is still up, although it is a gradual, slow increase. Read More→

People often ask me, “Russ, how do you stay so motivated, confident, and upbeat?”

My answer? I know my assets, and I make sure that I have more assets than liabilities.

Do you know your assets?

Knowing your assets will allow you to assess whether or not you are heading in the right direction. It will show you if you are winning or losing. I like to know what my assets are because it builds my self-esteem and feeds my ego. There is nothing like a good ego boost!

Here are the 4 types of assets:

1. Physical/ Money
2. Community
3. Education/ Skills
4. People

Physical/ Money Assets

When we think of assets, we typically think of money! But there is much more than that. There are physical assets. Read More→

One of the best ways I know of to grow personal wealth is by creating multiple streams of income in your life and in your business. In an uncertain economy, it is important not to place “all your eggs in one basket.” In order to protect your income long term you need to consider diversifying your investments so whether in a bad economy or a good economy you still have income from some of your investments.

As a real estate entrepreneur, there are several ways for you to accomplish this goal. One way to create multiple streams of income has to do with the way you purchase properties and structure your deals. You can wholesale properties for immediate income, or you can lease/option properties so you get some money today, some each month and a big chunk of cash at the end. When you do a lease/option with a tenant buyer, just remember to increase the initial asking price of the property by at least ten percent so you realize the gain in property values over the year. If you extend your lease/option for a second year, you get another chunk of cash; you increase the price again and continue to get a monthly income from it.

You can also hold onto rental properties and have someone else manage them for you. This way, you get to go the mailbox, get checks and not have to do any of the work or deal with the tenants. Apartment complexes and storage units are another great stream of income, especially when they are managed by someone else. Not only do you realize the gain on the property long-term but the monthly checks are even bigger. Read More→

Many Buyers start house shopping without even knowing the price range in which they are qualified. At Sell Fast Realty, our company policy is that the Buyer must be pre-qualified by a Mortgage Lender and has already submitted all their financial documents so their debt to income ratio can direct them to the correct price range of homes. I get a lot of Buyers who have no idea if they can qualify for the price of the home that they want to buy. My Mentor Students and I use my Buyer information sheet to pre-qualify all of our Buyers.

1. Are they a Homeowner, Investor or Realtor?
2. Their full name, telephone number and email address.
3. What are their wants versus needs: how many bedrooms, bathrooms, and then garage/pool etc.
4. How much money do they have to put down NOW? (Notice the now, because they could be waiting on income tax refund, lawsuit or gift money etc.
5. How much can they afford monthly? I use this rule of thumb: If a house is selling for $100,000 then their monthly payment will be close to $1,000 principal, interest, taxes, and insurance (PITI). However with lower interest rates, then their payment would be lower).
6. Are they a CASH or Mortgage Buyer?
7. If Cash, then what is the price range they can afford? We would request a bank/IRA/investment statement showing this amount.
8. If they are a Mortgage Buyer, have they been pre-approved and for how much?
9. How is their credit? Good, Fair or Poor and what is their credit score?
10. Have they ever filed bankruptcy and when was it discharged (Chapter 7) or dismissed (Chapter 13)?
11. How soon are they looking to move and why?

Before I give information about the house that I am selling, I will ask these questions. If they are represented by a Realtor then I want to know if they are a CASH, FHA, VA or Conventional Mortgage Buyer. Read More→

We always hear how it is important to get a solid Buyers list whether large or small but ultimately of people that can perform. One such Buyer that is relatively untapped for wholesalers are Builders. These are in many ways some of my favorite Buyers because they can oftentimes pay higher prices than investor Buyers who have to hire them. Let’s take a look at why this is:

• Builders can choose whether or not to pay themselves during a build process. If they choose just to get paid on the end profit, this averages a savings of 15-20% that an investor Buyer would have to pay to them.
• Builders can save on their construction costs by not marking up anything. Investors are often billed a markup for these materials costs since they or their subcontractors have to source and pick up the materials.
• Builders save on the overhead of timing. Time is money and a builder has less people to coordinate with to accomplish building a house whereas an investor has to manage more people.
• Builders may do some of the labor themselves. Some of them just love to get their hands dirty no matter how good their crew is.
• Builders may have their own capital. Many investors leverage private capital but a well funded builder may have their own capital, thus saving on interest fees.

When you start mixing some of these potentials savings together, you can see how they can pay more for a house than an investor can thus making the difference in having a deal done vs having no Buyer. Let’s look at a specific example. Read More→

There are certain expenses a real estate entrepreneur will have in the business, and the more it ramps up, the more these expenses will increase along with revenue.

Fortunately for us, our overhead is extremely small. And when I say extremely, let me do a few comparisons for you:

When my restaurant was open, my break-even was approximately $100,000 per month. That’s just what it took to keep the doors open, including all the costs inherent in a restaurant and most other businesses like labor, insurance, utilities, product, etc. The food alone was $.40 of every dollar that came through the door. That’s a tough nut to crack for any business, especially when you’re dealing with small numbers like those found on your dinner check. There were many times I wish I could sell a filet mignon for $10,000 like we get out of houses with little overheard and very little work.

In the restaurant business, we’re open for lunch and dinner most of the time. There were always at least 12-15 people on duty with over 50 employees total, open seven days a week, and a manager or assistant manager had to be there 100% of the time. If that manager happens to be the boss, that pretty much sucks up that life. Read More→

The real beauty of owning rental property when the seller will allow you to pay them directly every month allows you to collect rent from each rental property you buy to pay for those properties.

The key to make this strategy work is to buy each income property so a tenant who will be renting the property will pay enough rent each month to cover 1/12^th of the annual property taxes, 1/12^th of the annual property insurance cost and at least 10% to 15% of the monthly rental income to cover the cost of the maintenance for that property when needed. This money for maintenance is set aside to pay for making the property look new when a tenant moves out such as new carpet, paint and any other damage to the property the tenant did during their stay. Also money for when the roof on that property eventually wears out, when the water heater eventually goes bad or the furnace or air conditioner breaks down and also enough money remaining each month to make the monthly payment to the seller and hopefully provide extra money each month for the owner to put into their pocket. Here is an example to show what I am talking about.

For this example each rental property brings in $1,000 in rent each month. This is the formula I use to determine if enough rent collected for each potential rental property to support itself and also provide extra income for the owner each month. Read More→