MemphisInvest.com Announces Cash FLow Pros Expo

Kent Clothier & Family are hosting a one time only 3-Day Bootcamp for Building an INCREDIBLE Real Estate Business…
Are you going to be one of the lucky few who ACTUALLY USES this opportunity to take action!!  Learn from the best and get on the right track to success.  This is an amazing opportunity…  Kent Clothier is the founder of Mid-South REIA, and many of you have had the opportunity to hear him speak. Now he and his sons are going to share ALL of their expertise to help your build your business.

With the over-whelming demand we have opened up an  additional room and doubled the size fot the weekend!  Seats are only $97 per seat for the FULL 3-Days (ALL study and  note materials are included)!

Here are the details:

Embassy Suites Hotel – Shady Grove, Memphis, TN
Initial Check-In will begin 30 minutes prior to start each day!

August 27th  8:00 AM – 6:00 PM
– Starting Your Real Estate Business
– Secrets to Purchasing Real Estate at a Discount
– Raising Capital Funding for Your Deals

August 28th  8:00 Am – 6:00 PM
– How to Market Your Real Estate Business
– Secrets to Building a Buyers List and Selling
– How to Properly Manage your Rehab Properties
– How to Sell 20 Houses in a Day

August 29th  9:00 Am  – 4:00 PM
– How to Set up and Operate a Property Management Company
– The Top 2 Secrets to Exploding Your Real Estate Business

* All Materials will be provided
** There are no houses for sale!
*** Content only & the Event WILL BE Filmed!

Registration at http://conta.cc/CFPEMem.

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Investment property management tips from Memphis Invest

When I bought my first property and placed my first tenant…I was a complete disaster!  No point in beating around the bush right!  As a Memphis real estate investor, I learned just enough about rental property management in Memphis, TN. to be dangerous and I certainly was.  I was dangerous to my bottom line and dangerous to my future earnings.  By not being diligent with the learning process and making sure I had all the information I needed in place, I was jeopardizing my families investment in that property.  Here are some tips that I learned the hard way and you can learn the easy way!  Follow these steps and operating an investment property as the landlord can be made easier and less stressful.

What are the laws in your state or municipality

There are different laws around the country for both landlords and renters and you absolutely must know the laws that pertain to your area.  That being said, here is the easiest way to learn those laws.  First, contact local property management companies and ask for their guidance with local land lording laws.  It may take more than one call, but be proactive and ask for their assistance.  Most will be more than happy to answer a few of your top questions.  Second, contact local landlords that advertise properties for rent in the local papers.  Many times, with an offer to buy them lunch or dinner, a local landlord will spend time telling you how they operate and what they know about local laws. (Read More)

The “Buy & Hold” Strategy is a True Long-Term Wealth Strategy for Real Estate Investors

Did you see this article online this week about real estate investing?  This is EXACTLY what we do in Memphis, TN and why our clients are poised to do fantastic on their discount investment property portfolios.

Source: Les Christie, staff writer, On Thursday August 5, 2010,  CNN Money

No More Flips? RE Investors are now in Buy-and-Hold Mode

The real estate market is still dominated by distressed properties, and as opportunistic investors, we can’t ignore short sales, foreclosures, and defaulted note buying. One thing seems to be changing though. Whereas the preferred exit strategy used to be flipping a property or note for a quick profit, that strategy no longer works in many cases, due partly to new federal rules such as HAFA and HAMP, restrictions on same-day transactions, seasoning requirements, and general market factors.

Cash(flow) is King Again

However, there are other reasons that vulture investors are looking beyong the quick flip–and that’s because buy-and-hold returns are so good right now. (Read about Tanya the “vulture investor” below and do the numbers yourself.) All of a sudden, investing for cash flow never looked so good. (Robert Kiosaki is smiling and nodding…)

Like everything, the current situation creates new winners and losers. The real winners seem to be well-capitalized investors who can pounce on these distressed properties–either by buying at auction, buying REOs, or by acquiring non-performing notes with the intent of getting access to the underlying assets. (This lasts strategy, a favorite among hedge funds, is probably the least understood method of picking up distressed real estate, and we’ll go deeper into in a future article.)

The losers may be individual investors who know the local market well but who either don’t have ready investment capital or who can’t let their cash get tied up for months or years in a buy-and-hold scenario. Solutions for these investors may involve teaming up with private investors as “bird-doggers” or partners. Plus, it’s an exaggeration to say that house-flipping is absolutely dead. It’s not. It’s just getting harder and harder, and the returns often aren’t as good as they were in 2008 and 2009.

What do you see happening out there? Are you still able to flip houses profitably?  Or is the Flip dead as a viable RE investing strategy? Leave a comment below…

Want more? Check out this article from CNN Money on why “vulture investors” (defined loosly as investors who focus on the distressed RE market) are choosing to sit on their investments

The New Profile of the Vulture Investor…

Vultures have a new face–and game plan.

These are the glory days of the residential real estate investor. Low prices, rock-bottom interest rates and stable rental markets have created huge buying opportunities.

“It’s awesome right now. I don’t think we’ll ever see another time like this,” said Tanya Marchiol of Team Investments, which has operations in about 10 states but focuses mostly on the Phoenix market.

These investors are known to many as vultures because they swoop in and buy “distressed properties” — foreclosures and short sales — cheap. Places like Las Vegas, Phoenix and Miami are popular because home prices there have dropped as much as 70%.

But how they’re investing has changed. In the boom years, they would buy a property and flip it for a quick cash out. Today, they are holding and renting for hefty, steady incomes.

Once they analyzed their decisions based on home-price appreciation, which is very speculative. Now they consider potential rental profits, which is far more stable.

Back then, they flipped often and helped to bid up home prices into a froth. Now, the investors say, they can be a part of stabilizing neighborhoods.

“People are not in it to flip like back in the old economy,” said Matt Martinez, an investor and author whose new book, “How to Make Money in Real Estate in the New Economy” comes out next February. “The new economy dictates that you have to have a long time horizon.”

Marchiol, for example, does not even factor in home price appreciation for at least a year. After that, she calculates only a 3% annual increase — a return that won’t turn heads of investors who only want to buy low and sell high.

Marchiol just purchased four separate four-plexes in North Phoenix. Three years ago, each four-unit building sold for $310,000; she paid just $70,000 per building. She intends to spend about $64,000 rehabbing the properties, making her total investment $344,000.

In total, she currently owns about 17 rental units. Usually she buys the properties to keep herself, but she also works with a group of investors who are intent on holding them and renting them out. She can spot the deals and then sell to them.

For example, with her North Phoenix buildings, the investors will buy the buildings for $95,000 each. They’ll put 20% down and finance the rest, about $76,000 per building.

At today’s low interest rates, they’ll get a near 5% loan. That yields a payment of about $400 a month. Figure another 10% of the price for property management, 10% for maintenance, an 8% vacancy rate, taxes, insurance and other home ownership expenses, and you’re talking about a monthly nut of roughly $1,300.

Marchiol projects the apartments will rent for $600 a month each, for a total rent roll of $2,400. That gives the owners a profit of $1,100 per month and $13,200 per year — a nearly 70% annual return on investment.

Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly. In Phoenix it’s changed in just the past six months. Foreclosure auctions are no longer a fertile hunting ground for Marchiol.

“Amateurs have come in and run up the prices,” she said. “In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I’ve bought four.”

Glenn Plantone faces a similar situation in Las Vegas. A veteran real estate broker and investor, he has switched from buying mostly foreclosures and repossessions to short sales almost exclusively. That’s because the inventory of distressed properties available in Vegas is way down, to about a two-week supply.

“The banks make better profits with short sales, so they’re not foreclosing,” Plantone said. “They’ve switched staff to processing short sales and they’ve gotten faster at processing them.”

He tries to purchase properties for at least 10% less than what he considers to be true market value, then he does some light rehabilitation and sells them to some of the 3,000 buyers he works with.

Since prices have fallen about 70% in some Vegas communities and rents have only declined by about 20%, it’s possible for his investors, who are cash buyers, to make money from the first month the homes are rented.

“We’re getting cash flow (net return on investment) of 12% to 14%,” he said.

He doesn’t completely ignore potential profits from home price appreciation because he believes the town is bouncing around the bottom. (Homes already sell for below what it would cost to build new homes.) He does not, however, emphasize that aspect of the investment.

It’s the income from rentals that’s paramount right now.

The beauty of cash flow, of course, is that even if the prices decline another 10% or 20%, the investors should be able to live with that.

“I tell them to plan on holding for five years,” he said. “With cash flow, there’s no need to worry about price drops.”

MemphisInvest.com at Fortune Builders Rehab Bootcamp

So you all know that we are constantly working to improve our operations and educating ourselves when it comes to investing in real estate and we urge you all to do so as well.  Last week we spent 4 days at the Fortune Builders Rehab Bootcamp in sunny San Diego, CA learning new processes and touring the  properties that Fortune Builders are currently rehabbing.  Ryan, who heads the rehab department at Memphis Invest, joined us in continuing his education. This is by far one of the best educational opportunities of the year and we are happy that Ryan could join us.

Kent, Jr., Brett and I had the opportunity to speak to the 300+ attendees in regards to systems implementation, business building and stayed over to give a special presentation to a select group of attendees on the inner workings of the Memphis investment property bus tours that we host.  See below for pictures from last week’s workshops.

Be sure to check out the Fortune Builders‘ home page for future events and make plans to join us for one of the upcoming educational boot camps.  Even the experts still attend workshop weekends to continue to grow and learn as business owners.

MemphisInvest.com Announces Success From Memphis Investment Buying Tour with Fortune Builders

MemphisInvest.com is pleased to announce that Than Merrill, JD Esajian, Paul Esajian and Konrad Sopielnikow, stars of A&E’s Flip This House and founders of Fortune Builders, teamed up with Memphis Invest to host the Ultimate Cash Flow Buying Tour, a two day buying conference and tour in Memphis on July 9 – 10, 2010. The seminar brought 70 investors to Memphis from 18 states plus Canada and yielded a total of twenty nine Memphis investment properties sold.

Day one of The Ultimate Cash Flow Buying Tour was held at the East Memphis Hilton where guests had a chance to learn about investing in Memphis from the experts and an opportunity to network with the MemphisInvest.com and Fortune Builder teams. Other teams were available to meet one on one to discuss the buying and investing process including property locators, closing attorneys, insurance agents, rehab specialists and investment property managers.  Day two began at the East Memphis Hilton, where guests departed to tour available homes in the stages before, during and after the rehab process.  Day three included a hosted tour of Elvis’ home, Graceland.

Over all, the investors who attended left with a very clear picture of investing in Memphis real estate and how a company like MemphisInvest.com can make the investment process easy, affordable and stress-free.  With their unsurpassed level of commitment to quality and service, Memphis Invest showcased the advantages of using a tun-key company to develop a truly passive and positive cash flow portfolio of investment properties.  When you add in the educational opportunities of a partnership with the top real estate educational team in the industry, Fortune Builders, the two day seminar and bus tour weekends are opportunities not to be missed!

The next buying tour will be September 24 – 25, 2010. For more information, visit http://bit.ly/bkxbis.

Memphis Ranked Highest Performance for Metro Markets

According to a July 2010 market report by Clear Capital, a premium provider of data and solutions for real estate asset valuation and risk assessment for large financial services companies, Memphis ranks as the highest performing major market in the country. Cleveland, OH came in at a close second. Below you will find a link to the full market report.

July2010_ClearCapital_MarketReport

Clear CapitalTM: U.S. Home Prices Spring

Forward Aided by Homebuyer Tax Credits

Federal homebuyer tax credits magnify springtime price gains as national quarter-over-quarter price increases reach 5.2%; year-over- year prices up 8.8%.

TRUCKEE, Calif. – July 8, 2010 – Clear Capital (www.clearcapital.com), a premium provider of data and solutions for real estate asset valuation, investment and risk assessment, today released its Home Data IndexTM (HDI) Market Report. Patent pending rolling quarter technology significantly reduces the multi-month lag time associated with other indices to help investors, loan servicers and individual buyers and sellers make more informed, timely and profitable decisions.

Report highlights include:

 National / Four Region Overview: Across the U.S., home prices posted 5.2% quarter- over-quarter gains, placing prices firmly 8.8% above levels experienced one year ago. Regionally, the Midwest and South saw the largest quarterly price growth, while the West and Northeast show more stable quarterly gains.

 Metropolitan Statistical Area (MSA) drilldown: Home price gains across the U.S. were helped largely by the quarterly jump in prices by the top 15 highest performing major markets. Quarterly prices for the group are up an average 12.6%, while yearly price gains are up 17.1%.

 Micro Market Analysis: Home prices in the Los Angeles MSA rebounded 13.2% from its market bottom one year ago. While this surpassed the 8.8% gains seen nationally for the same period, conditions varied widely across this large and diverse market.

The Clear Capital HDI Market Report offers the industry, investors and lenders a timely look at pricing conditions, not only at the national and metropolitan level, but within local markets as well. Clear Capital data is built on the most recent data available from recorder/assessor offices, and then further enhanced by adding the Company’s proprietary market data for the most comprehensive geographic coverage available.

“Price trends nationwide have a seen a considerable upswing driven in large part by the flurry of recent sales attributed to the tax credit and springtime buying activity,” said Dr. Alex Villacorta, Senior Statistician, Clear Capital. “This month’s national quarterly gains are certainly a positive sign that many markets have responded to the tax credit incentive, but overall markets remain volatile as evidenced by the six month price change keeping mostly flat.”

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 1 of 8″Metro level markets are showing recent signs of healthy price growth, yet many of these markets are simply returning to their pre-winter levels, and some of the hardest hit areas remain as much as 54 percent below their 2006 peaks,” added Dr. Villacorta. “While there is still a lot of ground to be made up, the 8.8 percent yearly gain is a strong lift off of the severe lows of last year, especially when you consider in the same time period unemployment and REO saturation levels hit their highest point in more than two decades.”

National/Four Region Market Overview (June 2009 – June 2010)

Home prices across the nation made strong moves in a positive direction. Thanks to an increase in springtime sales and the continued residual effects of the federal housing home buyer tax credits, all four regions posted positive gains. Across the U.S., home prices rose 5.2 percent this quarter, bringing the nation back to within one percent of last fall’s levels and placing prices firmly 8.8 percent above levels of a year ago. Regionally, the Midwest and South saw the largest quarterly price growth, while the West and Northeast show more stable quarterly gains.

The Midwest continued to lead the nation with quarterly price gains of 9.2 percent, pushing year-over-year gains to 17.2 percent off the deep lows of last year. The other three regions experienced yearly prices more consistent to the national year-over-year average (8.8%).

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 2 of 8

Despite strong quarterly gains, all four regions remained within two percent of the levels achieved last fall, revealing the price volatility that was experienced this past winter.

As a whole, the REO saturation rate was reduced to 24.6 percent, a decline of 3.2 percentage points from what was reported last month. It’s likely the effects of the April tax credit have been amplified with the onset of the springtime buying season, and while some have questioned the timing of this credit with concern about the downstream effects on demand, it’s evident that the tax credit did succeed, at least in the near-term, in creating an environment more resilient to the ongoing foreclosure influences.

Metro Markets (June 2009 – June 2010)

The overall home price gains across the U.S. were aided largely by the quarterly jump in prices by the top 15 highest performing major markets. Last month’s single digit price gains signaled the onset of these conditions, and have been replaced with double digit quarterly gains among the top ten markets. After the winter drop in home prices, the timing of the tax credit has added another leg to the price volatility experienced in recent years. However, with quarterly prices for the group up 12.6 percent and yearly price gains up 17.1 percent on average, the volatility is in the positive direction which has helped absorb some of the burden on the market maintained through the presence of distressed sales.

The larger markets of the West have remained more stable, falling off the highest performing market list as they exhibit smaller increases than the more volatile markets of the South and

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 3 of 8

Midwest. This is apparent in Memphis, Tenn. and Cleveland, Ohio, which jumped into the number one and two ranked positions, respectively.

While the seasonal timing and incentivized price swings have played into the substantial quarterly price increases of these markets, it’s important to measure the broader recovery of these markets by looking at longer time periods, as well as isolate the influence of the REO segment. In Cleveland, current home prices are still 54.6 percent below its market peak in 2005. While this is a very steep decline, it’s actually recovered 21.3 percentage points compared to the peak of its decline (-75.9% price change) in early 2009. Further, if you remove REO sales from the equation, the quarterly price growth of the non-REO segment in Cleveland still stands at 8.5 percent, a substantial gain but far below the 20.5 percent combined number used in this month’s rankings.

Similarly, Memphis’ quarterly price gain of 20.6 percent leaves prices 1.9 percent below their levels of the fall of 2009. Prices in Memphis have dropped 51.1 percent from the market peak in late 2005 to trough in 2009, and have recovered 11.8 percentage points, now only down 39.3 percent from the peak of the market. With a quarterly price increase of 5.8 percent for the non-REO market, it further highlights the gains found among the distressed segment.

Nearly all the lowest performing major markets saw quarterly prices swing from the negative to the positive compared to quarterly numbers reported last month. Bolstered largely by markets in the East and West regions, quarterly gains among these fifteen markets averaged

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 4 of 8

1.5 percent while yearly gains averaged 6.0 percent. All markets except Honolulu, Hawaii, saw REO saturation rates decline, leaving a group average saturation rate of 26.3 percent.

Only two markets, Baltimore, Md. and Orlando, Fla. saw prices remain below their levels of a year ago. However, both markets did manage to edge closer to positive year-over-year territory when compared to last month’s reported numbers. Honolulu and the California markets of San Diego, Riverside, and Fresno saw stable quarterly price gains, with each market’s quarterly growth rate varying by less than one percentage point compared to last month’s report.

As recently as last month, many of these markets were on the highest performing list, a reflection of their relative stability compared to many of the current highest performing major markets.

Micro Markets (June 2009 – June 2010)

This section highlights a single market every month with a deeper dive into how the micro- and macro-markets relate to each other.

Home prices in the Los Angeles Metropolitan Statistical Area (MSA) rebounded 13.2 percent from its market bottom one year ago. While this surpassed the 8.8 percent gains seen at the national level for the same period, conditions varied widely across this large and diverse market. At more local levels, some markets saw prices outperform the metro-level numbers, while other markets have underperformed both the metro and national gains. These micro market trends are informative, revealing differences in the buyer base of each market.

With recent demand focused on lower-priced and distressed properties, an area in western Santa Ana (ZIP code 92703) outpaced the rest of the Los Angeles MSA by returning a 29.5 percent gain for the past year. With an REO saturation rate that peaked above 70 percent in 2008, and a property mix of lower-priced single family, condominiums and manufactured housing, this micro market has proved volatile both on the decline (losing 52.2% since peak)

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 5 of 8

and recent recovery. As REO saturation rates declined into the 30 percent range over the last year, the rapid consumption of discounted foreclosures is evident, and indicates the influx of first-time home buyers and investors.

One segment of West Hollywood (ZIP code 90069), an area of high-priced single family homes and condominium units, has seen a -13.7 percent price change over the past year—the worst in the Los Angeles MSA. With few high-end buyers and little incentive to purchase higher priced homes, this normally attractive area has struggled to find a pricing bottom. Price changes of -32.9 percent since market peak (the current year-over-year dip leaves it at its lowest point since 2006), indicates this market is suffering from the slow economic recovery; a contrast to the steep declines and sudden upward bounce of some markets as they feel the impact of incentives and speculative buying.

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 6 of 8

Clear Capital Home Data IndexTM Methodology

The Clear Capital Home Data Index (HDI) provides weighted repeat sales, and price-per- square-foot index models that use multiple sale types, including single-family homes, multi- family homes and condominiums. These models are combined with an address-level cascade to provide sale-type-specific analysis for thousands of geographic areas across the country. The indices include both fair market and institutional (real estate owned) transactions. They also provide indicators of REO activity such as REO discount rates, REO days on market and REO saturation. The Clear Capital HDI generates indices in patent pending rolling quarter intervals that compare the most recent four months to the previous three months. The rolling quarters have no fixed start date and can be used to generate indices as data flows in, or at any arbitrary time period.

About Clear Capital

Clear Capital (www.clearcapital.com) is a premium provider of data and solutions for real estate asset valuation and risk assessment for large financial services companies. Our products include appraisals, broker-price opinions, property condition inspections, value reconciliations, and home data indices. Clear Capital’s combination of progressive technology, high caliber in-house staff and a well-trained network of more than 40,000 field experts sets a new standard for accurate, up-to-date and well documented valuation data and assessments. The Company’s customers include 75 percent of the largest U.S. banks, investment firms and other financial organizations.

Legend

Address Level Cascade – Provides the most granular market data available. From the subject property, progressively steps out from the smallest market to larger markets until data density and statistical confidence are sufficient to return a market trend.

Home Data Index (HDI) – Major intelligence offering that provides contextual data augmenting other, human-based valuation tools. Clear Capital’s multi-model approach combines address-level accuracy with the most current proprietary home pricing data available.

Metropolitan Statistical Area (MSA) – Geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics.

Repeat Sales Model – Weighted linear model based on repeat sales of same property over time.

Price Per Square Foot (PPSF) Model – Median price movement of sale prices divided by square footage over a period of time—most commonly a quarter.

Real Estate Owned (REO) Saturation – Calculates the percentage of REOs sold as compared to all properties sold in the last rolling quarter.

Clear Capital: U.S. Home Prices Spring Foward Aided by Homebuyer Tax Credits Page 7 of 8

Rolling Quarters – Patent pending rolling quarters compare the most recent four months to the previous three months.

The information contained in this report is based on sources that are deemed to be reliable; however no representation or warranty is made as to the accuracy, completeness, or fitness for any particular purpose of any information contained herein. This report is not intended as investment advice, and should not be viewed as any guarantee of value, condition, or other attribute.

Great contractors are very important for real estate investing.

For all you Memphis real estate investors out there, tell me if you’ve heard this before.  “You

Mark Anderson, MemphisInvest.com

make your money when you buy.  You realize it when you sell.”  Heck, I guess it doesn’t matter if you are a Memphis investor or where you’re located, that advice holds true almost anywhere you are investing.  It’s hard to dispute this sage advice passed down by those who’ve gone before us.  But a lot happens between the time you buy and the time you sell, and most of it involves contractors.  For many beginning investors, finding a good team of contractors is one of the toughest tasks to completing your first deal.  At MemphisInvest.com, some of our own clients came to us because they struggled so much with finding responsible, reliable and reasonable contractors.  Indeed, some of the worst real estate horror stories you will ever hear involve contractors, which is why this is such an important topic.

So where do you find the right contractor, the person who will take your Memphis investment property from trash to treasure?

–        Real Estate Investment Association and Clubs – Many contractors are members of these groups.  This is a good sign as they should be used to working with investors.  Also, ask the other investors who they use.

–        Referrals – This is always one of the best ways to find anything, contractors included.  Word of caution: do not blindly trust what your friend is telling you.  Always do your own due diligence.

–        Supply Vendors – If you are looking for a painter, go to the local paint store and ask who their top three purchasers are.  The supplier will give you the names of the contractors who do the most business AND are current on their payments with the supplier.  You can try this at places like Lowe’s and Home Depot too.

–        Job sites – You get to see the contractor in action.  You can inspect their work and work ethic.  If the job site is trashy, that is a good indication of what your job site will look like too if you use that contractor.

–        Other contractors – Once you find a good one, ask him for referrals.  Good contractors tend to know other good contractors, just like bad contractors usually know other bad contractors.

Of course, there are many more ways than this, but these are some of our favorites.  At Memphis Invest, we’ve remodeled hundreds of houses over the last few years and our team of contractors is vital to our success.  In fact, some investors do everything themselves but hire us just to handle the investment property rehab because they know they cannot replicate our system.  Stay tuned for more but for now, drop us a comment about how you found your favorite contractor.

Categories: Tips & Advice