Deals here and deals there!
Wholesale deal in Gardner, MA; 5BR, 2BA, 1084 sq ft, 2 car garage, 2nd lot
ARV – $114k, asking $44k, Rehab est. $30k, needs to close by 8/29/2014. Contact us today for details.
For you out of area investors:
Cascades – Pfl – 412 Cascades Ave, Unit #2, Pflugerville, TX 78660
2215 Creekside Gtown 4Plex, Georgetown , TX 78626
Good afternoon investors,
Vice President Certified Exchange Specialist New England Region (877) 781-1031 Toll Free patricia.flowers@ipx1031.com
I was talking to Patty Flowers from IPX 1031 Exchange Services the other day. I asked her what the main reason there were for real estate investors to exchange properties and why it’s important to know about this even as a beginning investor. She shared this article with me about the five reasons to exchange your properties.
FIVE REASONS TO EXCHANGE – A story about Appreciation, Depreciation, Cash Flow, Diversification and Tax Deferral
If a real estate investor bought an apartment building for $100,000 in 1975 and it is now valued at $1.8M dollars, the property has appreciated significantly and is now worth eighteen times what it was in 1975. Clearly, this was a great investment. But, like all investments, one should analyze whether it is now better to hold or to divest the asset. The apartment building is currently owned free and clear of debt. It has been owned for more than 27.5 years so it is fully depreciated and no longer eligible for annual depreciation deductions on the investor’s tax return. Reviewing the cash-flow, after property taxes, maintenance, and insurance, it produces net rental income of about $3,000 per month.
$36,000 per year on an investment property worth $1.8M amounts to 2% annual income on the investment. However, the original $100,000 investment has grown by 1800% and there is now $1.8 million dollars’ worth of equity tied up in one asset. Since interest rates are at historic lows, what better time than now, when property values are lower than they were a few years ago, to unlock some of that equity and exchange, tax deferred, into one or more properties with greater income and long-term appreciation potential?
Through an I.R.C. §1031 exchange, this real estate investor can sell his investment property and accomplish a number of tax and investment goals. A 1031 tax deferred exchange permits the investor to defer federal and state capital gains and depreciation recapture taxes. The investor can buy property with improved cash-flow, and if encumbered, with an interest deduction to be claimed. If the replacement property is greater in value than the
relinquished apartment building, then depreciation deductions will also be available for the increased basis (the difference between the purchase cost of the new property, less the gain deferred on the exchange of the old property). Additionally, because multiple properties can be acquired through a single exchange, the investor can diversify the real estate portfolio, thereby hedging the investment risk inherent in a single property.
Appreciation, depreciation, cash-flow, diversification and tax deferral are important drivers for doing a §1031 exchange. Investors should examine their real estate holdings and do the 5 point analysis suggested in this article. If repositioning a real estate portfolio is in order, the valuable tax benefits of a 1031 exchange should be considered. Investment Property Exchange Services, Inc. (IPX1031®) is a Qualified Intermediary providing a full range of tax
deferred exchange services across the country including forward, reverse and build-to-suit transactions. We look forward to helping you and/or your clients maximize qualifying investments through a §1031 exchange strategy.
Be sure to join us on June 19th when Patty breaks down the process of 1031 exchanges.
Are you networking your way to success? We all go to networking meetings, collect business cards, shake hands and network with people. MOST people go home, put the stack of business cards on a shelf and don’t really do anything with them. However, what we do afterwards is what truly determines if we are amateurs or pros and ultimately this dictates our success. On Thursday, April 17th at 5pm, we are doing a special coaching session from 5pm – 5:30 pm for members of Boston AREIA only. We will cover how you can go from being an amateur who just spends your time going to meetings to a pro.
Learn to: 
Members must RSVP for this coaching session by Tue 4/15 via email at dette101@gmail.com.
See you on April 17th!
Happy Investing,
Bernadette Trafton, Boston AREIA Chief Connector
Good afternoon,
Are you working the probate angle? Working probate means spending some time at the courthouse going through probate records. Not all courthouses are automated or have an internal network where people can go online and check recent deaths. So, the process can be a little tedious, but, can definitely be worthwhile. First….what is probate?
Probate is the court process used following the death of an individual to deal with the decedent’s estate. Often real estate must be sold as part of a probate or estate case. You can purchase real estate in probate either through an auction or a direct sale. Although there are differences between the two processes for purchasing probate real estate, many of the same requirements exist, no matter which procedure you use.
Ideally, you want to connect with the Executors and the Attorney involved in the case before probate is settled. If you can connect with these folks before probate is settled and let them know that you are a cash buyer, you may get a phone call finding out what you want to offer. The sweet spot is when the new owners are out of state and have no idea what to do with the property. Often times they don’t want to be a landlord and they want to get out from under the property as soon as possible. You will want to send a letter to all of the Executors as well as the Attorney. Their information is filed within the documents that are at the courthouse. The first thing you look for is whether or not a Fiduciary Bond has been filed. If there is no Fiduciary Bond, there is no property involved in the estate. So, look for this first or you will be sending letters to estates with no property which is a waste of your time and may upset those receiving the letters. Be prepared to send the letters 6 times. If they see consistent letters from the same investor, chances are they will call you first vs the person who only sends one letter. And, don’t expect a greater than 2 percent return on the letters you send. Like many other direct mail marketing campaigns the return isn’t spectacular. 2 percent is actually high.
Make sure you make an effort to build a relationship with the Attorney involved in the case. If you build a referral relationship with them, they will notify you when they are working a case and their clients want to sell a property in your investing area. Make sure to let them know that you are a cash buyer and have the ability to close quickly.
When you go to the courthouse, be prepared to make friends with the clerks that work at the court. Bring them a snack…I would say donuts, but, be proactively healthy and bring some fresh fruit or something healthy and tasty for them to nibble on. Bring a ream of paper with you. If you give them paper, they will be more willing to let you copy items or print items depending on their system. Realize that the folks at the courthouse are underpaid and often times stressed. Be their ray of sunshine in an otherwise stressful day and they will be much more willing to help you and show you how their system works.
Hopefully this helps you in your pursuit to find properties. If you have a specific area you want me to cover, let me know. If I don’t know, I will find an article that will help you!
Happy Investing!
DESIRE. COMMIT. SUCCEED!
Bernadette Trafton, Chief Connector
Bernadette@BostonAREIA.com
Like us on Facebook to be entered for a contest to win real estate education and more…
I know that sometimes coming to a real estate investment club can be intimidating. Who are these people? How can they help me? Who do they know? Do I just go up and say hello? I don’t want to sound stupid…
Life is short…don’t sweat the small stuff! And, remember, you are the one in control!
I’m a big WHY? person. I feel like to get the most out of any real estate investors club, heck ANYTHING, you have to know why you are going to begin with. What is it that you want to get out of the group? Write a list for yourself:
Now that you know why you are attending and joining the group, you can develop a plan for the meeting. Now, at Boston AREIA, we hold open networking from 5:30pm – 6:30pm. Members and attendees are encouraged to get there early. If you get to the meeting early, you get the lay of the land. You have time to come up and introduce yourself to the Club leader. In the case of Boston AREIA, that’s me! 🙂 . You are going to want to have a good handle on who you want to be connected with because the Club leader will know who would be the best connection for you. The best way to get the most from the club is to get to know the person running the meetings. They are the person in the position to help you the most.
Get there early and network with the vendors. DON’T BE A WALL FLOWER! Find your seat, then walk around and talk to everyone. Make it a goal to solidly connect with at least 5 people at each meeting. Get everyone else’s card, so you can set up followup meetings. But, AT the meeting, connect solidly with 5 investors. If you focus on 5, then you can begin to develop a relationship with people. Take the hour for networking and use it for networking. When the meeting starts, if there is forced networking (you’ll have to come to Boston AREIA to learn what that is), take part!
Any opportunity to get in front of the room- Buy/Sell, forced networking, etc…TAKE IT! Remember, everything you want is outside your comfort zone. Stay until the end after the speaker is done and then stay and network with everyone. Offer to buy a drink for a more seasoned investor in the bar and stick around and listen. You will learn the jargon and you will hear great stores and be presented with opportunities.
Those who stick and stay get paid. This means come to the club consistently, get to know, like and trust people and let them get to know like and trust you. You will form long-lasting, profitable partnerships and the road will bring you places you never knew existed. See you at the next meeting!
DESIRE. COMMIT. SUCCEED!
Bernadette Trafton, Boston AREIA Chief Connector, dette101@gmail.com
Ways to Prosper in 2013 – Tony Youngs
The new year is off and running and most of you have probably set new goals you would like to achieve in real estate investing. The rental market holds strong in most areas around the nation and wall street has their hedge fund investors in some major cities buying everything they can get. They have been to Phoenix AZ, Atlanta GA, Tampa FL, Los Angeles, CA, San Francisco CA, and many areas that you may not even know. They buy hundreds of houses at Foreclosure Auctions and contact realtors to make offers. They are paying upwards of 95 cents on the dollar and it is pushing the smaller local investors out of the market.
Their goal is to rent these properties for a while and they plan to sell sometime in the future. Some suspect they are planning to package all the rents and sell them on wall street. As I attend the foreclosure auctions all over the nation, I talk to many local investors that say they can’t compete with these guys and they don’t know what to do.
Well, my take on it, is you don’t have to compete with them. Ever since the foreclosure crisis of 2007 began, we investors have constantly had to learn to adapt to the market. Things are always changing. This is no different. As I meet these and talk to these hedge fund investors, I have found out what they are looking for. In my area of Atlanta GA, they say they like any house that is $150,000 or less for a good positive cash flow. I have seen them buy 200-400 properties at one auction. They have a certain price range they like in any city. You can use the courthouse records to figure out their strategy if you are afraid to ask them.
There are several things you can do this year that will make you a lot of money. First, go out find deals for these investors in “the Hidden Market”. There are thousands of properties in large and small cities all over the nation that have no for sale signs, no ads in the paper, not on the internet or MLS, and some are vacant and some are occupied. The hedge fund investors can’t find them but you can. I know because I’ve been doing it in every state over the last six years. No matter where I go, I plot a course of 12-15 recently repossessed bank owned properties to go and make offers on. While I’m out looking at those, I find an additional 20-30 “hidden market” properties and find who owns them and offer to buy. I get some fantastic deals that no-one else knows about. Then I wholesale some to the hedge fund investors or the local investors that can’t get any deals because of the big boys.
Sometimes I will fix them up and sell retail as many homebuyers are having trouble finding homes also. You should be really excited for what this year has to offer. The market is showing healthy signs of recovery and it is the best time to be actively working your market. I personally have not seen this many money making opportunities as I’m seeing today.
If you happen to see the hedge fund guys in your town, find deals for them or find your niche in the houses they don’t want. Like in my area, they want $150,000 or less, so local investors should go for the higher price homes and they can do well. Some investors are even taking loans subject to, on underwater houses and still getting a positive cash flow. Even this will payoff in the long run.
In Summary, for 2013, You should be working the “Hidden Market”. The hidden market properties will be probate, bankruptcy, and upside down properties so brush up on those techniques including how to discount liens and second mortgages. With 11 million people that have not made a payment in over two years, I suspect the banks will be offering incentives to homeowners to sell their homes so they don’t have to foreclose and flood the market.
©2013 By Tony Youngs
Tony Youngs has been a real estate investor for 25 years and has been through all the ups and downs of market cycles. He is the author and creator of the “Hidden Market” system and He also teaches many live training events all over America and has several “hands on Training” classes in your state.