InvestorLoft Real Estate Investing Blog

In real estate, a picture is worth more than you can imagine

The Property Photo.

Why is it such an elusive thing?

Here at InvestorLoft, we work with multiple MLS services and feeds from across the United States and notice one glaring thing, time and time again:

Property listings with no photos.

The headline to this week’s blog post is no bait-and-switch – it’s the plain truth. If you want to close more transactions, you MUST post property photos along with your listings. A Realtors’ Association study stated that 83% of buyers considered photos to be “very useful” information. We’re not really concerned about the other 17%, are we? You’re in business to earn a living and it’s likely real estate is what you love – so get those photos posted. It’s easier than you might think.

Whatever your reason is for putting your listings up without photos, they’re not good excuses. There are a ton of solutions to help you make your listing more visually appealing. Let’s face it: humans are visual creatures We gravitate towards things that:

1. Catch our eye, and
2. Keep our attention.

Improve your Rental Property on a Dime

Sometimes we have to face the reality that it’s time to spruce things up a little bit at our rental properties. However, improvements often mean down time between tenants – so how do we make decisions that will:

Improve aesthetics

Up our asking rent

Result in as little downtime as possible between tenants?

Here’s a list of five simple improvements that you can do to your rental property in less than two days that won’t only NOT break the bank, but result in virtually no downtime between tenants!

• A Fresh Coat of Paint: If you stick with a neutral color in a high-hiding variety that will go on in one coat, you’re done in a day! True Value has a handy paint calculator that will help you figure out just what you need. Don’t go for designer varieties – stick with staple colors from major paint manufacturers so you can get more when you need to touch up or paint again.
• New Baseboards: With the advent of the “no-mitre” variety, you can now just install all of your corner and radius pieces and make straight cuts. This decreases install time significantly. Check out Home Depot and Lowes as they generally have baseboards in contractor packs in sizes up to 3.5 inches. Get a contemporary look with low wallet impact. Hint: use a satin or kitchen & bath finish paint in Swiss Coffee instead of traditional white – shows less wear and can be wiped clean! Most condos and homes can be demo’d in a half day and re-installed in one. Paint your baseboard strips the same day as the demo to speed-up the process.
• Get Rid of that Grass! Xerascaping (also known as desert landscaping) is not only eco-friendly but easy to do as well. If you live in water-sensitive areas like AZ or NV, often the government has a program to PAY YOU to remove your grass and replace it with low-maintenance landscaping. Having a yard that a tenant does not have to keep maintained not only increases the desirability of your property to prospective tenants but lowers water bills, increases curb appeal and will make your property inherently “pet friendly” too!
• Plumbing Fixture Update: It’s a breeze to install new faucets and showerheads, so hop on it! They’ll spruce-up a lackluster sink or shower and lower your maintenance costs in the long run. Keep them fresh and even if you’re not the “handy” type, your property manager will have a handyman who can go in and replace everything for you in one day.
• Lighting Fixture Update: There are so many attractive, low-cost lighting options available that it’s time to put those “Hollywood lighting” bath bars to rest (permanently). Look for options where the sconces are upward-facing so you can use compact flourescent bulbs to save energy (especially important if you’re including utilities in the rent). For closets and hallways, flush-mount flourescent fixtures like these are not only cost-effective but easy to install as well!

Released November 28, 2008, the Federal Housing Finance Agency report threw out some pretty staggering statistics about the residential real estate market. Home prices slid and additional 1.8% in the third quarter of last year, establishing a record decline for the Agency’s purchase-only index. And mind you – this is a 17 year-old index! But wait…there’s more.

The FHFA’s All Transaction Price Index slid 4% over the previous 4 quarters, marking the largest four-quarter drop in the index’s history (33 years).

Frankly, we could all sit around and bemoan the fact that:

• Arizona property prices fell 13.5%
• Florida property prices fell 16%
• Nevada poperty prices fell 20.9%

Creative Real Estate Financing Strategies

Funding your investment property purchases — how do you get it done these days? No one want to tie-up the bulk of their liquidity to pay cash outright and everytime for a portfolio purchase, so where do you turn when traditional financing and mortgage options are more challenging to obtain?

This week’s blog entry focuses on 3 financing thoughts for the “creative real estate investor” out there. We’d love to hear more thoughts from the lending and Agent/Broker communities on how your clients are getting the deal done as well. Feel free to leave a comment below (and gain a valuable linkback to your site!)

1. Self-Directed and Real Estate IRA Funding – With the recent downturn in the equity markets and bonds being…well…bonds, investors are looking for other places to stash their nest eggs for the long-term. Retirement plans rolled-over to a self-directed or real estate IRA custodian will allow investors to use their retirement assets to invest in real estate. The balance of some retirement plans can allow some lucky investors to pay cash lock, stock and barrell for a rental property and enjoy the benefits of long-term cash flow into their IRA. Others can use a portion of their retirement assets to acquire a qualifying property (and yes, there are restrictions on real estate purchases in an IRA) and utilize leverage to finance the remainder of the purchase with a non-recourse loan.
    
2. Non-Recourse Loans – When using your retirement accounts to fund a real estate investment purchase, most investors don’t want to tie-up all of their account’s liquidity in one transaction. That’s where non-recourse loans come in. There are several institutions out there like North American Savings Bank that will finance the balance of qualifying real estate purchases made through your self-directed IRA. Lenders generally require around a 30% downpayment contribution from your IRA and they’ll be looking for specific types of properties (i.e. cash-flow potential residential or commericial real estate, no raw land, farms ot condo-tels), but these lenders specialize in helping you “get the deal done” when you want to diversify your portfolio and place a certain amount of cash in each deal. More information can be found in our educational article on non recourse loans in our Self-Directed IRA Learning Center.
    
3. Ask the Bank – We know it sounds strange, but it’s the most obvious place to start asking questions. Many investors have long-standing relationships with their financial institutions, so why not talk to the folks who watch your money? Most institutions have lending specialist who are familiar with the bank’s entire array of lending products and can look at your particular situation and recommend what the bank would perceive as the best-fit product. What’s the worst that can happen? You leave learning about a new product that can help you meet your goals or you move on to other financing options. A win-win either way.

Real estate saw one of the most turbulent markets in 2008 that we’ve seen in years. Now, as we prep for 2009, we’ve compiled this list of top move-forward trends to keep an eye on in real estate during 2009:

1. Realtor and Mortgage Industry Attrition – Those who got into real estate to ride the wave of yesterday’s boom are faced with dwindling client lists and tremendous regulatory changes. Realtors and yesterday’s mortgage brokers will have to a different type of business to have real “staying power” in the current economy. Those who persevere will find that nothing replaces superior customer service partnered with an unsurpassed level of expertise.
2. Growing Levels of Specialization in Residential Real Estate Sector – The recent crisis has demanded a certain level of specialization for real estate professionals. Those that know their way around short sales, alternative financing, foreclosures, seller carry-backs and investment property have pulled ahead of the masses and will likely continue to do so thorughout 2009.
3. Mortgage Metamorphasis – We’re on the lookout for more realistic lending standards. A-paper buyers can’t qualify and the sub-prime borrowers can’t pay, so what’s left? Look for banks to get creative, for the 20% downpayment of our parents’ era return as the norm and for lenders to consolidate and form national lending platforms that are more appealing to Joe American (and likely LESS friendly to Mr. Investor).
4. Hard Money Won’t be So Hard – Purchases still have to close and with the equity markets having been so turbulent, folks are looking for alternative investments in an asset class they know and trust like real estate. Look for a resurgence in private money lending as the real estate industry gets creative.
5. 1031 Exchanges: Hot, Hot, Hot – With 2008 having been so turbulent, we’re expecting more and more investors to look into the benefits of 1031 tax exchanges. Their value for a real estate investor’s portfolio is undeniable so we’ll be bolstering our educational content in this arena for our members.
6. Self-Directed IRA and Real Estate IRA Investing Will Surge – We’re predicting an all-time high level of assets rolled over into truly self-directed IRAs. Investors are seeking alpha outside the stock market and self-directed IRA custodians are wasting no time putting marketing dollars to work to educate investors about this valuable option. Take a look at InvestorLoft’s Self-Directed and Real Estate IRA Learning Center for our 7-part series on the basics of Real Estate IRA investing.
7. A Marketing Paradigm Shift for Real Estate – When lenders and other professionals realize that liquidity lies in the real estate investor’s realm, we expect to see a significant shift in marketing and advertising tactics. Why not advertise and market where your products will be seen by those with the need, desire and liquidity to purchase? Crazy stuff, we know!
8. Home Price Stablization – We can’t speculate as to where the bottom of the market is, but we expect to see home prices stabilize in Q1 of 2009 and remain static until about Q4. It’s a new Presidency and once tax time passes, we’ll see some available dollars head back into the real estate arena as folks see that prices have held for a few months.
9. Refined Refinancing – With so many mortgages set to adjust in the first half of 2009, we’re predicting a new scene on the refinancing front. Sure, rates are low, but if you can’t qualify – what’s the point? Lenders will snap-to and get savvy, tapping into the refinance market to pick-up great borrowers for their books and send high rates packing for those who can qualify. It won’t be so much about the rates this time, but the service and ability of lenders to work with a borrower’s personal situation as the mortgage industry continues to right itself from the 2008 capsizing.