There's magic in little real estate deals!

Here's a great little investment.

There are two single family foreclosure listings in a city neighborhood near me. One home is listed at $30,000 and the other at $27,000. Both have After Repaired Values of approximately $50,000, and both require about $2,000 to $3,000 in repairs.

Market rents for these homes will be about $700, so here's what I suggested to a young man I know. Offer $25,000 each, for a total of about $55,000 invested after repairs. $7,500 cash out of pocket leaves a mortgage of $47,500 and PITIVR (principle, interest, taxes, insurance, vacancy, and repair) of about $850 per month.

Positive monthly cash flow on these two little deals of about $650, or live in one and rent the other out to basically cover your housing costs.

There's probably a deal out there like this for you.

Now, go make more offers!

Tom
DealFiles.com

Let Christmas change you a little.

Merry Christmas!

Enjoy this Holiday with those you love. Give and be gracious with your time. Be patient with those who need a little extra understanding.

Let peace reign in your heart. Read a Psalm. Read the Christmas story from Luke. Pray and ask God to reveal Himself to you. Thank God for every breath you take and every blessing you have.

Blessings,

Tom Dunn

Real estate investing- how to DOUBLE your conversion rate!

When a phone call comes in from a seller, how effective are you at converting it into a deal?

There are many factors involved in your conversion rate that have nothing to do with what you say or do when they call. For instance, what type of marketing are you using that's getting them to call in the first place? The sellers who call you after reading an ad that says "I buy houses for cash or take over payments" may have a different level of motivation than those who call you from a postcard you mailed to foreclosure listings.

Understand that out of every 100 callers, at least 90 of them aren't motivated enough, so there's no deal there even if you hypnotize them with your melodious voice. Six more have circumstances that prevent you from putting a deal together, leaving about four where a deal might be possible. If you're converting two of those, your conversion rate is fifty percent, excellent in my opinion.

Here's a thought for you. If there are six out of the hundred that have circumstances preventing you from putting a deal together, maybe you could learn one new investing technique, like a lease option or subject2, that would allow you to make a deal where there was none before.

Another tool in your bag is the most effective way to improve your conversion rate. Think of it this way- if you are converting fifty percent of your possible deals as I outlined above, and you increase the number of possible deals from four to eight, you've just doubled your conversion rate.

I can't think of any power words or phrases that can accompish THAT!

Now, go make more offers!

Tom Dunn
DealFiles.com

How to find positive cash flow markets

On December 9th I posted on the idea of investing in markets other than your own home market, especially if your market is overinflated and you want to find properties that will give you an immediate positive cash flow. Now I want to help you locate those kinds of markets.

Use the internet. You can use the search tools available online to find markets where median family home values are under $180,000. Many of those areas are located in small to medium sized cities in the northeast and midwest. Places like upstate New York, Western Pennsylvania, and Eastern Michigan come to mind, but there are others.

Look for Realtors websites in those areas. Some Realtors in positive cash flow markets are even specializing in finding, packaging, and managing rental properties for out-of-town, out-of-state, and even out-of-country investors. Their sites are easy to find.

Once you find a couple of markets, and a Realtor who specializes in positive cash flow income property, do some research on the area to determine what neighborhoods to avoid, and which ones to target. Ask a lot of questions about the economy and property values in the area. Because you'll be holding the properties for a long time, it's not so important that the property values be increasing at a fast pace, but they shouldn't be tanking either. Slow and steady growth is what you're after.

Next, ask about management options and costs. As an absentee landlord, you'll want to make sure you can hire competent management at a reasonable cost. Under 10% of gross collected rents is a good target.

You should find out as much about the city and it's environs as you can before you invest. You may even want to visit. Let the Realtor know when you'll be coming, and they will have a bunch of properties for you to look at. Make your trip efficient and productive- plan to buy at least one and preferably several properties all at once.

These markets are out there. You just need to hunt for them, find them, and take action.

Now, go make more offers!

Tom Dunn
DealFiles.com

Real estate investing financing- are you able, are you willing?

I've been talking to a couple of new investors about financing, and I thought it might be good to explain some of the basics of lending.

First, what exactly are lenders looking for? The answer, surprisingly, is quite simple. Lenders are really only looking for two things: ABILITY to pay and WILLINGNESS to pay.

Ability to pay is basically the answer to this question: After you meet all of your monthly obligations, is there enough left over to meet this new debt you're asking for? This is a matter of comparing your provable income with your actual expenses. Of course, the bank doesn't usually know your actual expenses, so they apply some formulas and educated guesswork. The income part they get from your paystubs, W2's, and tax returns.

Willingness to pay is usually determined by looking at your credit history. If you have a history of paying your bills and credit obligations on time, most lenders usually asume that you will continue to do so.

Credit scores and algorithms have made the process more complicated than it used to be, but it still boils down to these basic factors. If you understand this, and can view yourself dispassionately through the eyes of the lender, you will know how best to improve your credit standing and get the loans you need to grow your business.

Now, go make more offers.

Tom Dunn
DealFiles.com

Stuck in an overinflated real estate investing market? Spread your wings!

Are you trying to invest in a real estate market that's overinflated relative to the market rents in the area? What I mean is, if you buy a home that will rent out for $1000 a month, how much do you have to pay for it? $90,000? $110,000? $150,000 or more?

Market values obviously vary by area, and can swing as much as 50% to 100%, sometimes even within the same county. That means that in one market you may be able to purchase a $1000 per month rental for well under $100,000, giving you a nice little positive cash flow right out of the chute.

On the other hand, in many markets that same property might cost you $150,000, $200,000, even much more, meaning that there's no way you'll realize any kind of cash flow until your mortgage is fully paid. In those markets rents just haven't kept pace with values.

The solution? Find a different market to invest in. Is there some reason you're locked in to investing in a high-priced market? Of course not. The only thing stopping you from going outside your market area is your own fear and comfort, and those can and should be overcome. Read my article on Eliminating Fear.

There are plenty of markets all across the country, indeed around the world, where rents have kept up with property values. Those are the areas you should be looking for.

How you can find them is the subject for next time.

Now, go make more offers!

Tom Dunn
DealFiles.com

In real estate investing is service the name of your game?

What kind of a service do you provide?

It's a valid question, don't you think? The problem is, most real estate investors don't think in terms of the service they offer, they think only in terms of the properties they buy. But behind those properties are sellers, normally highly motivated sellers.

The reason they are motivated to begin with is they are in distress over some issue or combination of issues they are faced with right now. They need a fast resolution. Maybe they lost their job and can't handle the payments anymore, maybe they're getting divorced, or they might have to move immediately. They need a solution. That's why they call an investor, rather than a Realtor.

The same holds true if the seller is a bank and the property is a foreclosure. Just because the seller is not an individual doesn't mean they're not motivated. The bank doesn't want that property on it's books, so they look to foreclosure investors to help them with their problem.

So the question becomes one of service. Do you view your investing activities as providing a service to the sellers of your properties? If not, you should. The investor who consistently provides the best solutions will get the contract, the property, and the deed more often than not.

Dealing with sellers becomes much easier when you are deeply concerned about their problem, and about helping them find a solution. They will quickly grow to trust you, and if there's a deal there you will most likely get it. Think about that the next time you're talking to a seller, and try to figure out what they need.

Zig Ziglar put it best. He said, "You can get everything in life you want if you will just help enough other people get what they want."

Now, go make more offers, and read DealFiles!

Tom
DealFiles.com

Real estate investing- the foolproof broken toilet repair system

I was thinking about Whitey this morning. Whitey's an investor from Texas that I interviewed for one of my DealFiles. You can read his story here.

Whitey talked about perspective, and choosing what you focus on. It seems that the things he chooses to focus on are what help keep him moving forward in the investing game. For instance, as a landlord Whitey chooses to focus on the fact that his tenants are paying his mortgage down every month, rather than on the toilets and repair calls he might get.

Let's face it, getting calls from tenants on a Saturday night asking for help with a leaky toilet or broken appliance are no fun at all. But doesn't every business have certain things about it that are no fun? Of course. The key is in choosing what you're going to focus on, and in implementing systems to handle the unpleasant things.

If you don't like getting trouble calls from tenants, don't let that stop you from being involved in the great business of rental real estate. Just put in a system so YOU don't have to be the one handling those calls. Hire an on-call handyman, or a property management service. With just a little tenacity, you'll find the right solution for you, and you'll go on collecting those monthly checks.

Now, go make more offers!

Tom
DealFiles.com
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