I often check out several other non MLS websites for real estate properties, digging for investments for my clients. I have yet to find one I don't already know about. I often see the same ones over and over again, and that is what caught my eye.

Recently I found an associate's listing being marketed on craigslist by a different broker. Searching around some more revealed this broker was advertising and marketing many listings from other brokers that he did not have permission from.

A quick call to TREC (Texas Real Estate Commission) verified a broker cannot advertise the listings of another broker without an agreement, without permission, or without consent. Only the broker who obtained the Exclusive Right to Sell or Lease Agreement can market the property unless the owner gives another broker permission as well.

Yes I do want maximum exposure for my listings, and for another agent to bring me an ideal offer. However I did the listing presentation and earned the trust to market this listing. That means I am spending my time, energy, and money advertising for my client I earned the right to represent. And here comes along an unethical agent or broker who downloads the agent's information and photos off the MLS and markets the property as thier own listing. 

Some people don't see this as a big deal. My clients may love the extra exposure. To a professional and ethical Realtor this is unacceptable to me or my company. We all follow a standard code of ethics when we recieve our license. I hold myself to a higher level of ethics, professionalism, and integrity that my clients respect and appreciate when they select me as thier representative.

So let me ask you a question: Would you prefer to be represented by someone with no ethics, no integrity, and no respect for industry professionalism on one of the largest financial investments you may make in your lifetime? Would you trust what they wrote on your contract if they violate licensing laws and steal listings from other agents?

In a tough market, some desperate agents will try anything to make a quick buck at the expense of others. Do you trust them to represent your best interests?

Do the right thing, work with the right agent. It's time to trust a professional who is accountable to a higher standard. Call Mike Wong for all your real estate needs in today's market.

Here we go again! I'll get straight to the deal instead of my philosophy because I know my investors are excited to read about this one.

We found a single family property priced at $64,000. Tax value is $109,000. So there is about $45,000 instant equity. The home needs a roof $5,000 and some sheetrock repair and paint $2,000. Property was negotiated down to $55,000. With repairs that puts the total investment to $62,000.

I cant believe this thing was sitting on the market for over 90 days! I kept second guessing this investment deal because of how long it sat on the market, but the numbers kept telling me it was a great deal.

The home is well maintained and upgraded. It's about 1700sf, and the previous owner installed gorgeous laminate wood floors, upgraded tiles, designer paint colors, and took great care of the interior of the home. We put a tenant in place immediately for $1150 per month.

Breaking down the deal:

$55,000 Cost of Property
$ 7,000  Cost of Repairs
----------
$62,000 Total Investment

$109,000 CAD Appraisal Value - $62,000 Investment = $47,000 Instant Equity 

$47,000 Instant Equity = 75% Instant Gain. Wait, wait, wait. Say we can't immediately flip this property in today's current housing market because of the difficulty in lending. Since this price point is attactive to first time buyers lending could be a bigger issue.

So we are of course going to just rent it for 3 years until the housing market recovers to normal.
(3 Years = 36 Months)
36 Months x $1150 = $41,400 total gross rent collected

Simply put we spent $62,000 to make $41,400 in 3 years = 67% Return On Investment (ROI) on just the rent collected.

So looking forward 3 years to 2012 we predict the local housing market will be fully recovered and this home should sell for current tax value $109,000. However being the conservative I am, lets say it can only sell for $95,000 without factoring in any annual compounding appreciation to keep this simple and makes a measley $33,000.

$33,000 Sold Equity
$41,400 Gross Rent Collected
----------
$74,400 Gross Profit 

Ladies and Gentlemen. We spent $62,000 and expect to made $74,400 in 3 years!
Check my math, that is 120% Return on Investment in 3 Years!

Here is my challenge. Im pegging this deal on my board in my office and charting it. In 3 years I will follow up with an updated article with the actual returns. Here is the beauty, this is just one investment.

I can't count how many stock tips and next big hit picks Im told about everyday. Just pick a handful of 5 of those stocks and track them for 3 years. Even more challenging pick only 1, track it for 3 years and hope for a 120% return. I picked only this 1 property. I'll report early if I can get 120% in just 2 years, but Im confident I can make more than that goal in 3 years.  

How many investments have you made 3 years ago that are now double their value?

In my last entry to this series I explained instant equity capture and appreciation based on an actual property available in Sugar Land. In this section I will discuss cash flow and demonstrate the complete profit potential on this property.

REVIEW

I hope you are taking notes and applying this information. "Guru's" and "experts" charge hundreds or thousands of dollars to tell you this information. Here it is for free. Real local properties, real local specialist, real local results.

In the last entry we calculated a $45,000 profit in 3 years on the property from appreciation alone. Let me show you the additional cash flow and true expected profits of the property.

 WHAT IS CASH FLOW?

CASH FLOW is the net income generated from the rent collected after expenses. Expenses include the loan Principle, Interest, Taxes, and Insurance. To be profitable cash flow must exceed your expenses.

Back to our case study property. Calculating in rent, taxes, expenses, and a vacancy factor should net about $8,200 annually x 3 years = $24,600 in net rent collected. This is CASH FLOW which is Key #3.

+ $120,000 investment purchase price
 - $   5,000 repairs and improvement
+ $ 25,000 instant equity capture
+ $ 23,000 appreciation over 3 years at 5% annually
+ $ 24,600 net rent collected over 3 years after expenses

$125,000 investment = $187,600 value in 3 years. Potential profit = $62,200
Profit of $62,200 on $125,000 in 3 years is a 50% return on the initial investment.

THE RESULT = 50% RETURN ON INITIAL INVESTMENT

What other investment in today's market will give you a 50% return on your initial investment in 3 years?

Ladies and gentleman, I learned how to invest in the stock market in 8th grade. I got started with actual saved money in high school. I've seen REITS (Real Estate Investment Trusts) create phenomenal returns and then collapse. I've seen the international markets and funds such as India and China return as much as 300%, then collapse with the world wide recession. I lost when the tech bubble busted, and I lost in our current recession just like everyone else including Donald Trump, Bill Gates, and Warren Buffet.

I get emails and stock tips everyday. Since I'm not running the stock company I can't analyze the deal and thier numbers and products from within. Do you trust anyone who claims they can predict when the economy will actually recover?

I am however running a real estate business with access to 100s of millions of dollars of properties to analyze.  I'm an investor with a track record and have the tools to make money in this market when every other investment available out there right now is losing. Im quietly investing myself into real estate, and creating future millionaires. I've negotiated deals that created millionaires, and I plan to do more of those this year.

So ladies and gentlemen, if I check back with you in 3 years on May 17, 2012 will you have 50% more on your current investments?

Give me a call, it's time for a new strategy.

Here it is! We finally closed a deal that has been in the works over the past couple of months on a spectacular property in the master planned community of Greatwood in Sugar Land, Texas. I'm so excited that I finally get to reveal what has been in the works now that its completed. I feel like Ive been keeping this huge secret until it was a done deal!   

Residents have known this building as the Greatwood Sales Center. Agents have known this building for being for sale on the market for way too long. I knew this was the perfect building for my client, and I could negotiate a great deal on it. In today's market, selling requires an innovative strategy.

Coordinating and managing this complex commercial deal in today's financial environment was definitely a challenge. Completing a complex commercial deal in 60 days was very satisfying to say the least. I cant describe how rewarding it is to have coordinated this WIN - WIN transaction.

The WIN-WIN Transaction:

1) My client the buyer got the perfect building at a great price to fit his future needs.
2) The seller finally sold a property that has been on the market for years.
3) The seller's agent looks good for selling the property and bringing his client to the closing table.
4) As the buyer's agent, I got to demonstrate my complete skills and services to complete the transaction.
5) We sold a landmark property in one of the largest master planned communities in Sugar Land.

This is the second entry of a series of articles I will be contributing to my blog to help educate the consumers and clients who contact me for my services. I will cover the basic steps to get started and help new investors with basic concepts on thier first deals to be successful.

In the first article I covered selecting a qualified Realtor and team to get started, and looking for instant equity in properties that are priced below market value.

KEY #2: APPRECIATION

One of the most basic and most attractive reasons to invest in real estate is the fact that it appreciates over time. Each market has a different rate of appreciation, and there are a variety of factors that will influence the rate of appreciation. There is a general consensus that real estate values double about every 20 years.

We can actually chart appreciation rates in neighborhoods and cities. In my market area I like to calculate the appreciation rate at a very conservative 4% per year. Actually most residential properties I analyze average about a 5% to 6% appreciation rate annually.  

Unlike the stock market, we can predict the annual appreciation of a real estate investment. The stock market prediction is based on speculation and company results. Real estate is also some speculation, but in our market there is very little risk.

EQUITY CAPTURE + APPRECIATION =

Equity Capture + Appreciation = Just the Beginning! Combine both of these key qualifications we identify in investment properties and you have the formula for creating personal wealth and a sound investment. Do not consider properties that do not meet both of these criteria.

CASE STUDY SAMPLE IN SUGAR LAND

For example today I ran a search on the MLS for homes in my market area. I came across a property that is selling for $25,000 below market value. According to tax records and neighborhood trends I will calcuate in the average 5% appreciation rate in this neighborhood.

CALCULATING APPRECIATION

This home is listed for around $120,000, current market value is about $145,000 if it is in good condition. Looks like it needs new carpet, paint, and countertops to be in great condition. With the 5% appreciation rate with current market value calculates out to be $7,250 the first year of ownership resulting in an estimated market value of $152,250 after year 1.

If my investor leases the property for at least 3 years before selling it and allowing the market to recover, we can predict the 5% appreciation value the property at $167,855. So my investor sells for $165,000 after 3 years of ownership for an estimated profit of $45,000 from just the appreciation alone without factoring in the rent collected or improvements. 

A $45,000 profit isn't bad, BUT I'M NOT FINISHED MAKING MONEY FROM THIS INVESTMENT YET!

In my next entry I will detail the numbers and analysis and show you the real profit potential of this investment with the #3 key. For now I need to get some rest, so I can be up bright and early to check out this case study property in the morning.

This is the first of a series of articles I will be contributing to my blog to help educate the consumers and clients who contact me for my services. I will cover the basic steps to get started and help new investors with basic concepts on thier first deals to be successful.

CHOOSING THE RIGHT TEAM TO WORK WITH IS THE FIRST VITAL STEP:

In my into to investing in real estate I went over how important it is to work with a professional such as myself. Make sure you choose a professional who understands your goals and how to get you there. Goals are important, as well as your risk tolerance, expectations, and experience. Real estate investing is not for everybody. You will not become a millionaire overnight, it will take some time.

Since this is Real Estate Investing 101, I will cover the most basic investing which is usually single family homes. If I continue to get positive response to these articles I hope to continue the series into advanced investing articles covering commercial real estate.

KEY #1: INSTANT EQUITY CAPTURE AND ANALYSIS

One of the first keys we look for in real estate investing is instant equity capture. In the current market and economy we know home prices are slightly lower. If you focus and wait patiently its possible to find a foreclosure for $20,000 to $40,000 under thier appraised value in our local market. Other markets can yield $50,000 to $120,000 under appraised values. That could be instant equity captured if the home is purchased below market value. If that is the case, you better be ready to jump because chances are other investors may have already zero'ed in on the same deal.

The key is understanding appraised value vs market value. Appraised value is the estimated value by the local taxing authority to determine the amount to tax the property. Market value is what the property can sell for in the current market. Market values are affected by many factors such as other foreclosures nearby. Researching an investment property requires researching the neighborhood and competing properties on the market.

Using experience and data provided a qualified Realtor can determine all this information with you. Investment Realtors also use special tools and sofware to further analyze the property and its potential. The analysis requires more steps than I will explain here. I want to keep it simple, and if I teach everyone my secrets and tools, I wouldnt be very useful.

Purchasing a property below market value is like traveling back in time and purchasing a real estate investment before it goes up in value. The fundamentals of our economy causes real estate to increase in value. Real estate prices will not stay down forever. The historic charts prove this. I have clients who can prove this because they became millionaires as a result of real estate investing.  

THIS IS THE TIME OF OPPORTUNITY

What other investment opportunity in the world will allow you to go back in time and purchase something for a lower price that you know will go up? Do you ever daydream and wish you could take a few thousand dollars back in time to buy: Microsoft, IBM, Dell, Walmart, Coca Cola, Intel, and all the story stocks before they skyrocketed?

This is your opportunity to purchase homes for 1990s prices before the market rebounds. What just happened? The real estate market just traveled back in time and gave us the dream opportunity.

Does that put this opportunity into perspective for you?

Many people have been fortunate in real estate and moved on to become very successful, others have not done so well. We have all heard the fairy tale stories of millionaires created, we all have that one uncle that has been in the real estate game, we have all seen the late night infomercials claiming the rags to riches stories. If it were really that easy...

Just as easy as millionaires are made in the real estate market, life savings, fortunes, and investment empires can be lost as well. Someone who can understand the risks and how to avoid them can lead you through a potential mine field in real estate.

REITs (Real Estate investment Trusts) have lost hundreds of millions investing in real estate. Builders and developers have closed shop playing in the real estate game. Projects have stopped mid construction as loans have run out.

The difference in successful real estate investing is understanding the factors that
identify a good investment and having a qualified professional advising you. You need someone to guide you through the process to get you the deal. Then do you hold it as investment? Do you lease it? Do you flip it? When is the big payoff, in 6 months or in 6 years? Are you working with someone you trust to handle one of the largest investments in your lifetime? What is thier personal track record as an investor? It just so happens you are reading one of his articles at this moment.

One of the most critical steps to getting started on successfully investing in real estate is choosing the right professional to work with to evaluate your level as and investor, discuss your goals, and design a personal strategy to fit your needs.

It does not matter if you are a seasoned investor with a multi-million dollar portfolio or a first time buyer. If you are buying any kind of real estate, you are an investor. A home is one of the largest investments we make in our lifetime. Nobody likes to lose on thier investments.

We all know the current real estate market is down and there are many foreclosures. For my clients and myself, that means real estate buying opportunities and investments are out there ready to snap up and they are going fast. Some deals are done in minutes before they ever hit the open market. Some deals are done within hours after they do go onto the market. A fellow associate told me it was reported there will be up to 800,000 foreclosures expected before the end of the year.

Currently the affordability index of homes in Houston is at an all time high. Interest rates are at historic lows. There are tax credits, housing assitance, and incentives that can save you up to $18,000 off the price of a home. More foreclosures are expected to come onto the market. There are real estate auctions going on across the country. I'm skeptical about buying real estate for pennies on the dollar which is impossible in our local market.

I predict more great deals comming onto the market that will only last for a few hours. I predict as the economy drags on there will be more renters looking for housing to lease rather than to purchase. As mortgage requirements become harder to qualify for, there will be less buyers and more renters. The expected buffet of real estate bargain deals will draw investors out in masses in a feeding frenzy.

So what qualifies a real estate investment as a great deal? Every investment is a degree of speculation. Having the most current data, analysis tools, and resources a professional Realtor can provide is essential to developing the investments potential. Like I said fortunes are made, and fortunes are lost. What is your strategy?

In this series of articles I will go over the basic principles of real estate investing to get started.

I get calls weekly from investors who have either heard about me, been referred to me, or have read my blog and become curious about working with me to grow thier wealth in a stable investment rather than the volitile stock market right now.

I recently participated in an investor discussion panel with my peers this week and was pleased by the attendance and participation. One thing is for certain, investors need more information and training to make the right deals. Investors need a qualified Realtor to handle thier transactions and provide up to the minute data that is critical to making a wise investment.

In the next few days I will be contributing articles geared for new investors and my clients. I will include some case studies and samples of some deals I have done. I look forward to sharing some information to help people create wealth in this market of opportunity.

As reported in a recent article appearing in the Houston Chronicle, statistics show Houston home prices fall for the first time in 14 years. As well all know from the media coverage, home prices have been falling and collapsing in some markets nationally.

Looking at the data Houston is still one of the most stable markets in the country. Our prices and values have not collapsed like other cities. How much of a collapse did we experience? 2%, yes a whole 2% price drop since last year. Where were we last year on our median home prices? Up 1.5%!

The magic number put out by the Houston Chronicle is $72.71 as the median price per square foot in the area. However I would consult with your local Realtor to get the details about your specific neighborhood rather than a general average that encompasses an entire region.

The main factor affecting the median home price falling is the sale of foreclosures in the area. 1 in 4 homes sold in the Houston area was a foreclosure. Some are great investor bargains, others will take a while to appreciate.

How does this apply to you?

Well if you are a buyer as many of my clients are, this means the affordability of a home is at the best rate is has been in years. Combine that with historic low interest rates and the $8,000 tax credit for first time buyers, and potential builder incentives, you could be getting a great deal.

If you are an investor, stop watching those late night informercials and calling me. There are good deals out there and if you want one, you better have your checkbook ready when I call or you just missed it. Great deals pop up and are snapped up in hours. I'll post a few blog articles on investing and a recent deal I just did.

If you are a seller, do not be afraid to put your home on the market because you are afraid of a loss. Lets sit down and take a look at how your home has appreciated over the years and the current market trend in your neighborhood. Would you still sell your home for 2% less this year than you could in 2008?

Lets get real. The real estate market is slow for those who are afraid and scared. There are some of us out there making deals happen and taking advantage of this market. Dont believe the national media or some news anchor who lives in a 1,000 sf closet in New York to tell you about your home in Sugar Land. Call your local Realtor and specialist to find out your true home value and market news 713-935-5800. 

Attention all my fellow KW associates and community members. The first ever RED DAY is comming very soon on May 14, 2009. Every Keller Williams office in our region is coordinating volunteers for a large group effort in Galveston Texas. Be there in your RED DAY t-shirts and lets show the world the spirit of Keller Williams by helping our neighbors in Galveston.

1. Project: PAINTING THE TOWN, we will be assigned to properties for interior and exterior of homes and non profit locations all over the island.
 
2. Time: From 10 AM ~ 4 PM on May 14, 2009. We will meet at Galveston Market Center (1019 16th St., Galveston, TX 77550) at 10 in the morning. We will get our supplies and go to the assigned property for the work. We will finish around 4 PM and then go back to Galveston Market Center and there will be a big celebration.
 
3. The organization that we are working with is www.help4galveston.org Please check it out on line to get more information about the organization.