Category: Updates & General Information

How to Evaluate A Real Estate Investment Deal in Cape Coral, Florida

This blog was forwarded to me by one of my Wholesale Property Investors, Brandon Mitchell from his Investor Carrot web site.  Timeless information for anyone interested in Investing in Real Estate.  Thanks Brandon:

We talk with lots of people looking to buy real estate investment properties in Cape Coral and surrounding areas. Some of them know what they’re doing… and some of them are still in the learning process.

But, since our entire business is finding great deals… and often passing those deals onto real estate investors like you at huge discounts… I thought it would be a great idea to share with you some resources on how to effectively evaluate a real estate investment deal. This works in any market… Cape Coral, surrounding areas, florida, any other states across the country.

When you really boil it down… evaluating a real estate deal is a pretty simple process. If you’re looking to buy real estate as an investment, wholesale properties, hold them for rent… whatever, one of the most important parts is buying it right (i.e. – not overpaying).

So lets dive in.

How To Evaluate A Real Estate Deal – (for single family houses)

There are just a few main elements when you’re evaluating a deal.

  • Cost of repairs needed to get it back up to good condition
  • The after repair market value of the property (what it’s worth and can sell for today once it’s fixed up)
  • If you’re going to buy and hold for a rental… you need to know what you can rent it out for and what your “debt service” (mortgage payment) will be. Knowing this makes sure you’re buying so the property cash-flows each month

There are other things you can (and should) look at too… but those 3 are the main important things to look at first.

Cost of Repairs

One of the things you should do when you are looking at a property is find out how much it’ll cost you to fix it up to a point where it’s in great shape. In other words, the cost of repairs. This could be a new roof if it needs it, carpet, paint, a new kitchen, yard, maybe even more.

To find a good estimate of cost of repairs, the best advice we have is to get to know a contractor or two in your area and have them walk through the properties with you the first few times… have them quote out the repair cost… and build that into your offer.

After Repair Market Value

This is simple, but many investors get stuck on this part. This is essentially what you could sell the property for today… after you repaired it and brought it up to a great condition. This is found by finding out what other similar houses in the same area are actually selling for. NOTE: Don’t look at the “Listing” price… look at what houses similar to yours have actually sold for in the past 3 months. This helps you determine how much you could actually sell that house for if you had to… right now. You never want to over pay to a point where you can’t sell it for a profit in the next 3 months.

How do you find this? There are services out there that can help you with this… but often times the best way to find out the true value of a house is to talk to a Realtor that you know… or an appraiser. Heck, if you don’t know one… call up a few today… tell them you have a property that you’re potentially going to sell in the near future… and ask them what they think it should sell for.

Buy And Hold For Rental 

So, you’re going to buy and hold for rental? Great! You don’t need to worry about what it’ll sell for right away. What you need to know is if it’ll pencil out on a month to month basis. You know… cash flow.

So, talk to a mortgage broker (or a private lender) and find out what the monthly mortgage payment will be for that specific property.

Then find out what you can rent the place out for on a monthly basis.

Then, you work backwards… and find out at what purchase price your mortgage payment will be low enough so you can make the monthly cash flow you need to make on the property. Be sure to figure in other expenses too like property taxes, maintenance expenses, property management fees, and keeping money in reserves for future repairs.

So, your offer price here should be:

Monthly Mortgage – Monthly Rents – Operating Expenses – Taxes & Insurance – Monthly Cash Flow = Offer

Simple enough right?

The cool thing is, the more you’re bringing into the deal in cash… the lower your mortgage is.

Making An Offer

We’ve been talking about how to look at the numbers and analyze a real estate deal.

From there, just make an offer. Many times the properties we let you know about will already be so deeply discounted that we get multiple offers… often above our asking price.

So, if you really want a property… find out what is the bare max you could buy the property at… and offer that. Otherwise you may lose the deal because someone else is likely making an offer too.

With that said, the golden rule in real estate is to never over pay for a property. That’s why our own deal analyzing criteria is so darn strict… and why our buyers (like you) get such great deals.

I hope this little tutorial has helped you sharpen up your real estate deal analyzing skills… and we really look forward to working with you in the near future.

If you have any questions at all… don’t hesitate to contact us anytime for anything.

Happy investing!

Motivational Monday – January 23

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Investment Property Renovation ROI

Pinterest Post from LifeHacker.com

 

The Best and Worst Projects for Increasing Your Home's Return on #Investment #homeimprovement #soflahomeseller:

 

Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
 Real Estate Services of SWFL, LLC
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

Motivational Monday – October 10, 2016

images (12)

 

Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
 Real Estate Services of SWFL, LLC
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

Foreclosure Increase Leads to Rise in Vacant Bank REO

Recent article posted by Jacob Passy on September 9, 2016  on National Mortgage News website:

The percentage of vacant bank-owned properties is larger now versus a year ago as banks are completing more foreclosures, according to Attom Data Solutions.

Overall there are fewer abandoned properties, as roughly 1.4 million, or 1.6% of all residential properties, were vacant at the end of the third quarter, RealtyTrac’s parent company Attom reported in its U.S. Residential Property Vacancy and Zombie Foreclosure Report Thursday. That figure is down 3% from the previous quarter and down 9% year-over-year.

Similarly, the number of zombie foreclosures fell 9% from the third quarter of 2015 to 18,304. As a share of the total properties in the foreclosure process, 4.7% were vacant.

But as the number of real estate owned properties has grown, it has led to an increase in bank-owned vacant homes. Attom found that there were 46,604 vacant bank-owned residential properties at the end of the third quarter, which represents an increase of 7% from the previous quarter and up 67% from 2015.

This vacancy situation is the result of a seller’s market that has motivated lenders to complete foreclosures on vacant properties, according to Attom Data Solutions Senior Vice President Daren Blomquist.

“While that has reduced the number of vacant properties in the foreclosure process — so-called zombie foreclosures — it has also resulted in a corresponding rise in the number of vacant bank-owned homes,” Blomquist said in a news release.

“Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures, but they still represent latent inventory in an inventory-starved housing market.”

 

Posted here by:

Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
Real Estate Services of SWFL, LLC
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

 

 

 

 

 

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Mike Cathell,
Broker/Owner, Investment Property Consultant

Real Estate Services of SWFL, LLC
Real Estate Services of Citrus County, LLC

Cell:  (239) 770-6250   Fax:  (239) 288-2505
Email:  InvestSWFL@gmail.com
 
Real Estate Services of SWFL, LLC
#Florida Real Estate     #Cape Coral Real Estate    #Fort Myers Real Estate
#Real Estate Investing   #Property Investments   #Wholesale Properties
#Wholesale Florida Properties  #Commercial Real Estate Funding

 

Decisions Decisions…LLCs vs. Land Trusts for Real Estate Investors?

Good Information from Steve Gibbs of Gibbs Law Firm:

standing man and 2 way street to illustrate decisions involved in choosing an LLC verses a Land Trust?

Hello Friends & Colleagues!

This week’s topic is a key asset protection question for real estate investors who hold multiple properties.  This question concerns how to hold real estate investment property, and this depends upon the goals and preferences of the investor.

The 2 most common “recommended” ways to hold real property investments are an LLC or Land Trust.

Exploring the pros and cons of these estate planning options is the stuff of this week’s article.

For Florida Investors Doing Estate Planning, Florida LLCs and Florida Land Trusts Are Both Effective Ways To Hold Real Property Depending Upon One’s Goals.

An Easy Way To Think About The Benefits and Detriments of LLCs Verses Land Trusts Is That LLCs Are Arguably Simpler To Establish and To Administer Whereas Land Trusts Offer a Some Added Asset Protection Benefits.

LLCs are extremely simple to set up in virtually every State and everyone in the real property world, from brokers to County workers, essentially knows about them.  This means that people are not typically confused by your asset protection structure (of holding assets in an LLC) and this means that your daily life may be less complicated.   LLCs are extremely flexible, and if prepared properly, offer key asset protection benefits.  Of course, by prepared properly, I mean that setting one up yourself without an Operating Agreement may not be an effective strategy, whereas, getting professional help and creating a solid LLC structure goes a long way.

If you set up an LLC for estate planning purposes to hold your real property investments, you’ll need to decide whether you’ll be the only owner of the membership units (a single member  LLC) or whether you’ll have other partner members (multi-member LLC).  In many jurisdictions, such as Florida, multi-member LLCs offer a more solid asset protection plan than the single member LLC.

My recommended process to create an LLC is to file Article of Organization with your State of choice and then have supporting documents created to support your LLC.   The State will require a renewal fee every year and you’ll need to decide who your Registered Agent will be…whether you or a third party.   For more information about what should be considered in creating a solid LLC, visit our previous post.  After this, the real property may be transferred to the LLC and you’re good to go, noting that the LLC needs to be administered with certain formalities.

The Land Trust option is different because it typically is not filed with the State and thus offers greater privacy and anonymity.  A Land Trust is essentially holding real property by contract.  So, the Trust document (contract) is created and the Trustee (who must be a third person or entity) is appointed by the Trust.  The Trustee will essentially hold the real property for you or your entity of choice as the Beneficiary.  So, privacy is an added benefit for Land Trusts.   Key disadvantages in my experience are that City and County officials tend to more easily become confused by Land Trusts.  You also need to be comfortable essentially conveying your title to a third party as the Trustee if you go this route, noting that the Trustee will be bound by fiduciary duties and the terms of the Trust.  Land Trustees often charge annual fees as well.

If you decide to go with the Land Trust option, you can still utilize an LLC as the Beneficiary of the Land Trust, so as to essentially double your asset protection.  For more information about Florida Land Trusts, visit here.

Real Estate Investors In States Other Than Florida, Texas, Arizona, Ohio, Illinois, Indiana, North Dakota, Virginia and possibly California, may not have the estate planning option of a Land Trust.

The states referenced above are the only ones that have land trust statutes and generally the real property must be situated in the State that the Land Trust is created.  This is a key distinction with LLCs because a Florida LLC can hold real property located in Texas, and this is usually the case with LLCs in various States.

Moreover, the Trustee ideally should also be located in that same jurisdiction as the Trust and the real property, so the rules are more restrictive than LLCs, because the LLC Managers can be anywhere although the Registered Agent must be locally based in the State.  Also, with Land Trusts, if you have multiple real properties in the same State, they must be “contiguous” (next to each other) in order to title them in the same Land Trust, and this is not the case with LLCs.

Of course, all of the above is a basic distinction and a great asset protection plan may utilize both Land Trusts and LLCs.  All of the above should also tie into your overall estate plan and this may require directing the real property in your LLC or Land Trust to your Revocable Living Trust upon death.

As always, I hope this clears up a bit of confusion and…

Until next time.

SJG

Contact Gibbs Law Office Today.

For estate and business attorney service in Fort Myers Florida, call us at 239-415-7495 or contact us online to schedule an appointment.

Gibbs Law Office, PLLC
8695 College Parkway #2330
Fort Myers, Florida 33919