I’m not going to say much, as you can read the article yourself. However, CNN.com is now jumping on board with the same mentality that most intelligent investors have had for months now. It’s a GREAT time to be buying property, especially investment property. It’s about time the media starts cluing in to reality. If you’re one of the ones who are ‘waiting for the bottom’ before jumping in, I can guarantee that you’re going to miss the best deals. Then, your excuse will have to be something else. The early bird gets the deals. Read for yourself and let me know your thoughts…

I came across a great blog post today by Stewart Hsu, talking about the latest Population Growth Projections for the US. This first image is a map of the US with Growth Rate Projections for 2007 - 2012 (source: CCIM, stdbonline.com). At the very top of the list is Arizona, Nevada and Florida.

The next image is data Hsu assembled from the US Census Bureau data showing Growth Projections to the year 2030. Arizona tops the list with a 209% change, beating out Florida (179%), Texas (160%), and North Carolina (152%). What’s interesting to me is that Arizona’s projected growth rate of 209% far outweighs the entire United States’ Growth Rate of only 129%.

What’s that mean for investors? Stability, security, comfort of knowing that a long term Real Estate Investment here in Arizona is safe. Let’s say you bought the cookie cutter, All-american house here in Arizona- 4bed, 2bath, 2300sf home. It’s worth $265,000 (median price range), but you got it in foreclosure for a decent discount. Let’s say you paid $225,000. Assuming an average appreciation rate of 5% (pretty standard here)- in 13 years your property will be worth $499,697. Assuming you didn’t pay down the principle at all, you’d have $274,697 in equity alone. Now, don’t forget about the tax benefits of owning rental property, as well as any principle you’ll pay down during that time. TALK ABOUT A GREAT TIME TO INVEST! And, with the fastest growth rate in the Country- you’ll have no problems selling your cookie-cutter property. My personal belief is that Arizona will also see a significant increase in appreciation rates as well, thus boosting your overall ROI.

If you’re interested in picking up some foreclosures or other rental property, please contact me asap.

Data Sources: US Census, stbonline.com

I am constantly asked about using Hard Money in my deals, and am surprised by the amount of people who don’t know or understand the benefits. So, I’m going to write a 2 Part post as to what a Hard Money loan is, and the benefits to using one.

A Hard Money loan is typically made from a single Investor, or, group of Investors under one corporate umbrella or entity. The differences between a Hard Money loan and traditional loans are:

• Higher Interest rates
• Very few points, closing costs and fees, if any
• Equity based loan- doesn’t use your credit score or debt to income ratios
• Can close in a matter of a few days or as soon as a Title Report can be issued
• Payments may be deferred until payoff
• Meant for short term loans

The going interest rate for Hard Money in Arizona is 18% APR. Now, pick your jaw up and keep reading further- you’ll see the benefits soon, I promise. Yes, it’s insanely high compared to a traditional loan. However, most Hard Money Lenders charge a nominal processing fee. All the lenders I’ve used here in AZ charge $500-600 flat fee, that’s it. There’s no points, processing or other junk fees added in. We’ll look at this a little more in depth in Part 2.

A Hard Money loan is issued SOLELY on the amount of equity in the property, and intent of the loan. They don’t pull credit reports or report to credit bureaus. They don’t care about your Debt to Income ratios- shoot, I’ve never even had a HML ask me for income statements or my social security number! So I could have filed Bankruptcy last week, and still be able to obtain a Hard Money Loan on a deal. Most HMLs want to see 25-30% of equity in a property before agreeing to do the loan. They pull their own comps, might do their own drive-by appraisal, and then decide the maximum amount they will lend against the property. Most won’t do a loan in a foreclosure bailout situation- typically they only lend to Investors looking to flip, or, refinance their position out and hold as a rental. Also keep in mind a Hard Money Loan will always be a first lien holder. No HML will loan money for a 2nd position lien. Read the rest of this entry »

I know it’s your guilty pleasure. It’s ok, we all watch them too. It seems like you can’t turn on 2nd Tier Cable Channels anymore without seeing someone flipping a house. Whenever I tell someone I’m an investor, their first response is ‘oh, kinda like that one tv show’. Yeah, kinda like that. HA! To this date, I’ve only seen 2 episodes that were filmed here in AZ- and those were during our boom. If you pay close enough attention to those shows, you’ll notice that the majority of them are filmed in either California during a rising market, or in the mid-west. Let’s talk about these 2 sceanarios…

Yes, in California when their market is rising, it was somewhat easy to find a deal for $500k, throw money at it, let’s say oh, $120,000, and sell the thing for $900k. Not a problem. Kinda like buying a home here in AZ during our boom and flipping it for $50k higher a week later. What cracks me up is that the beginner investors act soo surprised when their REALTOR® tells them how much their flip is now worth. - DIDN’T THEY KNOW THAT BEFORE THEY PUT MONEY INTO THE THING? Oh, how nice it must be to live in the promise land. I would guess that if you talk to any California investor during their down cycle, they would paint you a different picture. Funny how the networks don’t air episodes in those times, huh?

Let’s look at the mid-west. Ahhh- the beauty of picking up a home for $40k, throwing $20-30k into it, and selling it for $250,000+. Well, believe me, it’s never as easy as they make it look on tv. You’re cramming months worth of hard work into 42 minutes of air time- they’re bound to skip a few details. I’m not saying it can’t be done, there’s just a ton of details left out of the process.

One thing’s for sure- you can’t pick up a house for $40k, throw $20-30k into it and sell it for $250-300k+. At least, not in this market. The mid-west doesn’t have subdivisions like we do here, and subdivisions dictate your comps and values. I always wonder who is buying a $300k house right smack in the middle of $40k dumps? That just doesn’t happen here in AZ. If you pay attention to the shows now, they quickly end the show with their ‘Potential Profit’ if they sell the house for the projected amount. There’s no discussion of holding costs, closing costs, employee costs, etc. 2 years ago we knew how many days it took to sell, the final sales price, closing costs, Agent’s commissions and net profits. Now we’re swept away with ‘potential profits’ and ‘what-if’ scenarios as the closing credits are rolling across the screen. Funny how things change right under our noses. It’s still pretty glamorous when you don’t notice the little details, huh? Read the rest of this entry »

In a meager attempt to get the ball rolling on this blog, I decided to throw together a quick Top 10 list. Really, I could go on and on about why you should use a REALTOR®, and I had a tough time cutting this list down to just 10 reasons. The benefits far outweigh any reasoning against it. Now, I’ll admit, there are MANY ‘unqualified’ REALTORS® out there, who are not investors themselves, have never done a deal, and really have no clue what a great deal is. Obviously, as a buyer of Investment Property, you would search out the Professionals who specialize in Investments and make the best decision possible before hiring the guy who left a magnetic calendar on your front door. Let’s move forward…

10. Trusted Name Reputation
9. Required to Stay Current with Education
8. Knowledge of the local and national markets, and knows what a great deal is
7. Duty to protect their client’s best interest
6. Licensed by the State & Required by Law to Follow Specific Guidelines
5. Access to MLS where the great majority of property is listed
4. Gives accurate, unbiased Fair Market Values
3. Purchase Contracts & Inspection Periods!
2. Solid Network of Professionals in the Industry who refer deals!
1. FREE!

10. Trusted Name Reputation - As a REALTOR® your name and reputation IS your business. It’s a people business, and if you’re not trusted in the Industry, you’ll starve. Yes, it makes me sick to see the business card with the wife, kids, and retriever all cuddled up together, and I wonder how much business they get off of those car-wraps we see everyday on the freeway. But you have to give them credit that if they had a bad reputation, they surely wouldn’t be plastering it all over their car!

9. Required to Stay Current with Education- The State mandates that you have a specific number of credited hours of education every couple years to maintain your license. Beyond that, there’s not a day in my life that I can’t open my email, go to the office, or talk to my Team without hearing about a seminar, education event, luncheon, etc going on. It’s next to impossible to avoid it! Staying educated is just a day in the life. Read the rest of this entry »

Welcome to REI Pipeline! I’ve been around for a while, but made the decision to revamp the site to a blog style instead. If you stick around, I’m certain that you’ll find many interesting posts and articles to benefit your Real Estate Investment Portfolio. I’ve got a lot of commentary on the subjects of investing, flips, rehabs, rentals, pre-foreclosures and a wide world of everything in between. So sit back, enjoy the ride, and let’s make some money together! Please feel free to join in and post comments as you see fit. I look forward to interacting with you!