If you intend on being serious about your real estate investing business, this question will undoubtedly come up time and time again.

Should you bother keeping a property after it has been rehabbed or should you sell it and grab as much profit as you can from your now much more valuable real estate investment holding?Well, the first questions that you must ask yourself is do you need or want the cash from your shrewd real estate investing prowess now, or can you afford to wait?

You can likely generate the most SHORT TERM cash by selling a freshly rehabbed house. But, you will give much of it away in taxes come next April.

If you keep it, you stand to make more! You will also enjoy some great benefits while you own it such as cash flow, a tax break, and MORE cash with the future appreciation. You can still pull some nice cash a few months after buying it when you refinance (post rehab) the property from your hard money (at 70% loan to value) to long term financing (at 85% or 90% loan to value).

The short answer is a real estate investor is going to make considerably more money by hanging onto a property after it’s rehabbed. There is a downside to it. You have to be a landlord, and you have to decide if you want to do that. I don’t think it’s too bad as long the landlording is done correctly.

Let me illustrate the difference in overall money between rehab and sell, and rehab and rent investing with this example;

Let’s say appreciation rates are 5% in your town and the average price of a freshly rehabbed property in the neighborhoods real estate investors buy in is $100,000. Let’s also say there are two real estate investors, Andy and Robert.

Andy sells his properties after rehabbing and makes $15-18,000 per house. Atta boy Andy!

Robert keeps his rehab projects and cash-out refinances, pulling out around $10,000 per house within 3-6 months of ownership. (Robert trades his 70% loan-to-value (LTV) ratio hard money loan for long term, 30-year mortgages at a lower interest rate with an 85-90% loan to value ratio.

He pockets the difference between what it costs to pay off the hard money and the new mortgage less closing costs. This works out to about $10,000 per property.)

Andy (rehab and sell) makes a great living. Ten houses per year is $150,000-$180,000 per year…nice jingle! The downside is that Andy has to keep rehabbing to keep making that living year-after-year and pays taxes on all that money as regular income (ouch!). So his $150,000 per year is in reality somewhat less.

Robert (the rehabber) also makes a great living. Ten houses per year makes him $100,000 or so in tax free, spendable cash. But, Robert controls a million dollars in real estate and it’s hopefully going up in value year after year. Even if it does not his purchase basis point makes him comfortable.

Also, Robert pays no taxes on that money he gets from the cash-out refinances. It’s part of a mortgage, so must be paid back, therefore is not income! I love that part!

Let’s look at what Robert’s doing more closely.

Let’s say Robert bought 10 houses valued at $100,000 each, owes $90,000 on each one (after the 90% cash out refinance), so he controls $1,000,000 in property. If he keeps them 5 years (assuming a low appreciation rate…which is pretty conservative):

Purchase year – 10 houses x $100,000 = $1,000,000 Year 1 – Same 10 houses X $105,000 = $1,050,000 Year 2 – Same 10 houses X $110,250 = $1,102,500 Year 3 – Same 10 houses X $115,762 = $1,157,620 Year 4 – Same 10 houses X $121,550 = $1,215,500 Year 5 – Same 10 houses X $127,627 = $1,276,270
Essentially, Robert makes an extra $50,000 per year for keeping 10 properties. After owning them 5 years, if he sells, he puts $276,000 in his pocket.

Let’s say you want to “top out” at owning 30 houses. Well, in just a couple of years your buying will slow down to a trickle and you’ll start selling and cashing out of properties. I mean, how many ten-house years to you need to string together before you are set for life? – What if you hold these houses 10 years? The numbers get pretty exciting.

If you’re like me and you don’t want to do this for too many years, then holding properties for a few years makes a lot of sense, especially if you don’t have much personal money invested in them.
So what of poor old Andy?

Chances are, Andy will satisfy his need for short term cash, then start holding property.

What do you think?

This Is Truly The Best Real Estate Market Ever For Those Who Are Seeking To Promulgate Wealth And Prosperity For Themselves And Their Families

According to reports today by the Associated Press, mortgage defaults are up for the 8th consecutive quarter. Equally eye-opening is that mortgage defaults, (the number of people who were late making their mortgage payments) shot up 53 percent in the fourth quarter of 2008 from the same period in 2007!

Did you get those last two stats?

1. Mortgage Defaults Are Up For The 8th Consecutive Quarter
2. Mortgage Defaults Shot Up 53% In The 4th Quarter Of 2008

Any doubt that this is the BEST REAL ESTATE MARKET EVER?? Seriously, while it is unfortunate that some are losing their home, this is the business that we all chose to make our personal fortunes in.

This is the business that we all have chosen to provide wealth and prosperity for our families. And this is the market cycle that will allow us all to realize that prosperity.

We can not be ashamed or timid in taking advantage of these times in being truly Capitalistic in grasping the branches of fortune that are now, more than ever, within our reach.

You Can Not Ignore These Statistics And Still Call Yourself A Professional In Real Estate

You can not ignore these statistics and still call yourself a professional. We are FAR from the bottom of the market and we as real estate professionals can really help the economy turn around for other by being adept at our craft of liquidating these non-performing assets for lenders and distressed sellers.

We have buyers literally frothing at the bit to take advantage of the opportunities in undoubtedly the BEST REAL ESTATE MARKET EVER. Many agents are leaving the business and are not making any money because of what they were taught and what they were told by veteran agents.

Everyone was taught and many are still following the adage of going out and getting listings and they are starving.

This Is A BUYER’S Market. If You Are Still Coddling Sellers Then You Are Missing Out On An Unbelievable Opportunity To Make Some Serious Jack!

This is a BUYER’S market. If you are still coddling sellers then you are missing out on an opportunity for great wealth and continued prosperity. If you knew how to market to buyers and show them how there are many, many, opportunities in today’s real estate market, you would be making a killing!

Do you doubt this? Before you answer affirmatively please tell me how many buyers you have in your pipeline. At the very minimum ask yourself that question.

Here’s another stat. There are no predictions that show the foreclosure and default of mortgages subsiding any time soon. Most say we are looking at a term of maybe another 18 months or so before these defaults stabilize.

I even doubt that. In fact I am hoping that they continue to rise. Why? Because that means that I, and my clients, will continue to rake it in.

February Ended And Now We’re In March. A Quarter Of The Year Is Almost Gone. What Does Your Pipeline Look Like For March And April? Are You Going To Make Any Money?

As J.D. Rockefeller said, “the time to buy is when blood is running in the streets”. Enough said. If you call yourself a real estate professional and are not taking advantage of the BEST REAL ESTATE MARKET EVER, then you are truly missing out.

It’s just plain good business practice to learn how to successfully execute a short sale. Think to yourself right now…if I had taken the Short Sales By The Numbers Course last month, what would my commission checks for March or April be looking like?

If you are not looking at a minimum of $15,000.00 in commissions lined up from closings scheduled for March, then you will have wasted 25% of your time this year.

Only you know what you want to achieve financially the rest of the year. Right now all you have to ask yourself is are you doing what you need to do today to make sure you will be where you want to be in December.

Do it today! Enroll in the Short Sales By The Numbers Online Video Course. Or you can continue wondering where your next commission check is coming from…and when. I think you want to succeed in your profession. We’ll help you all the way through.

Do it today! Enroll in the Short Sales By The Numbers Online Video Course.

Now Available on DVD!

I am often asked, “What kind of real estate investors do you work with?”. When I hear this question the first thought that pops into my mind is, “The kind that wants to make money in real estate.” I have never been the kind of person who had to categorize everything and label it. However, since I do get this question quite often, it got me thinking about how I would classify different types of real estate investors. Feel free to let me know if you can think of one I have forgotten.

The Shark

Usually at the top of any real estate market’s food chain, the Shark is the go to person in that area. There are only a few sharks in each individual market. You can distinguish a Shark by going to your local real estate investment club. They are the people standing on the outside looking in, usually talking amongst themselves and pointing at all of the fresh bait in the audience. Your local real estate investing club owner or president is usually the most prominent Shark.

The Player

The true picture of the Player is a full time real estate investor that knows all the ways to make a deal happen. The Player will own some investment properties for long term investments, be working on a few rehab deals, have some wholesale properties waiting to be bought up, and be putting contracts on a few more, usually all at the same time. Real Estate is the Player’s BUSINESS and he knows his business well. You can usually spot a Player in the market because if you are actively investing, you have either bought, sold, or possibly even borrowed money from him on a deal or two.

The Landlord

This one is pretty easy. The Landlord is a real estate investor with a long term business plan that involves holding property long term and playing them like blue chip stocks. The Landlord is one of the most savvy of all investors and knows exactly what he wants, because he follows a plan. This group could be full time investors that own many rental units, or someone that owns a couple of units and it holding them for the long term.

The Rehabber

The group with the hardest job, by far, but usually with the largest potential for profit, that is the Rehabber. I know people in this group that do rehab projects full time, with multiple projects going at the same time, and I know people who rehab properties one at a time, in their spare time, usually a couple of times a year. These are the risk takers, those that will take some risk in order to make a windfall profit.

The Beginner

You can classify anyone who has done at least 1 deal as a Beginner. They had the guts to take the hardest and most important step, actually get into the game, but they have not done enough deals, or have enough experience to have found their niche and quit their day jobs. These are the people to watch and the future big players in the business. I love to watch beginners because that is where you get fresh perspectives and new ideas.

The Birddog

Sometimes much maligned, but an always needed part of the real estate investing food chain, the Birddog is the guy out on the street that is pounding the pavement searching for opportunities. The Birddog often works for a Shark or Player and is exclusive to them. In this relationship, the Shark or Player are usually mentors to the less experienced Birddog and offer them this relationship to gain valuable experience. Being a Birddog is almost always a stepping stone to one of the other real estate investing groups.

The Learner

Learners are just what you would think they are, they are the ones that buy every course, take every class, go to every meeting, but NEVER do anything. They will spend thousands of dollars educating themselves, but will not act upon that knowledge. I understand that everyone is different when it comes to comfort level in this business, but you can never profit without acting. I have known some Learners that have spent tens of thousands of dollars and years trying to get comfortable in this business. If that is you, you need a different kind of course.

The Clueless

You have all seen them. They are the ones that talk about how they are going to spend all the money that are going to make in real estate. They go to the meetings, talk a pretty good game, but never do a deal. They will not even take the time and money needed to educate themselves in this business. They are the wannabees that look at the successful people around them and all they do is talk about how great it will be when they have that much money. The Clueless will never succeed.

I believe this will pretty much cover all of the bases. There may be a couple of people that I have met so far in my career that do not fit into any of these categories, but I did not think that two or three people would warrant their own group. Now that I think about it, that may be the MOST important category of them all. They are the ones that make their own way and are, by far, the most successful of them all. Let’s call this last group “The Maverick”.

Now go and make your own way!

Hey, we’re back..it’s after lunch here in sunny South Florida and we’re gonna call it a day. Let’s see what kind of day it’s been thus far:

1. 35 registrations for our 1 Park Place system for people looking to buy a piece of property. All 35 regs came from our Google Adwords super secret keyword PPC campaign. Now they’re dumped into an automated marketing campaign of audio, video and property specific content that they requested. We’ll let them chill with the others currently incubating in our pipeline.
2. We turned over 3 requests for showings to one of the agents we work with so she can lock those puppies down and get them to contract. Worked up a sweat answering their emails and then forwarding them to her to go do the showings and write the deals.
3. Checked our PPC campaign on Clickbank regarding some of our outside of real estate venture stuff that’s on autopilot and raked in $5,500 thus far today and it’s only 1PM…I call that sweet
4. Wrote two contracts on a couple of REO properties we found, and already have a few hot buyers to flip to once we decide how we want to handle the deal. But we’ll wait to get info from Ming over in China as to how those deals are progressing. What…you don’t have your own Ming who does what you want and has it in a report when you get back from lunch? Wow..how are you existing.
5. Watched Fox News and laughed at Biden talking about redistributing my wealth and expecting to turn this Country into an oppressed Marxist state…seen the video yet? Check it out!

[flv:http://www.realestateradiousa.com/videos/biden.flv 536 284]

6. Filmed two videos for our online video course for Short Sales (Short Sales By The Numbers) and saw that we had 10 more registrations for that…sweet
7. Worked a bit on our big product launch coming up at the end of next month that is absolutely going to be DA Bomb and will let us take the whole month of December off…and maybe January as well.
8. Read a couple of whiny blog posts about agents who are’nt making any money wondering what their life has become..GEEZ!
9. Had some Sushi and Saki at an early lunch
10. About to hit the gym but before I go, wanted to check out my boys Ryan Deiss and Tim Mai and see how they’ve been making out today and when they were sending me my checks this week for working on their product launches

I’m sorry…does it seem like I was gloating? Sorry..sometimes I forget that I have a lot of real estate agents who are struggling who read our posts.  I don’t mean to sound snide but it really cracks us up when we talk to our boys out there many making an absolute killing right now, even in what people are saying is a bad economy, then have to here from agents how bad it is.

Hey, it’s not the economy, it’s not housing prices, it’s not lack of buyers, it’s not credit tightness…face it, it’s you! Change your way of doing things. Life is WAY too short. Like they say, free your mind and your a#% will follow!

Or not..it’s up to you!

Remember, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”