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get others to join
This is the place to view the past and present contests put on by ActiveRain and its members. Everyone can join the
group and help encourage each other. Current contest will be highlighted posts so it's easy for you all to see. Let it
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AR's community takes the time to leave honest and transparent reviews of their experiences
so you can be a bit wiser about your purchase.
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Leave a review yourself for others to benefit from
Add new products as you use them and gain points for doing so
ActiveRain University (ARU) provides free on-line training. We coach, consult and support real estate professionals about real estate trends, technology and social media.
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Whatever it is you're into and wherever you are, AR surely has a group for you to join.
Brand, off the wall, specific subject matters…whatever it is you're looking for.
Each time you write a post you can syndicate your post to 5 groups.
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Find some that are close to home and close to heart
Each month AR runs numerous contests as a way for our members to engage in activities
that will boost their business and increase their visibility in the community and beyond.
Earn points by partaking in these contest and climb the leaderboard
Do what's good for you and your business by participating
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Stay motivated and on track with new contests popping up each month
Ask a Real Estate Question
Here's another avenue for you to build relationships with others. Share your expertise with someone searching for answers.
Play the teacher role and help someone out today
Your Homepage will alert you of new questions in your state
A wonderful way to open a door to a possible new client
Ask a question yourself to get help
These state pages or hyper-local pages provide content directly related to a specific geographical location.
State, County, City and Neighborhood pages make it easy for consumers to find what they're looking for.
Post your listings, school information, local events, market reports and more
Consumers peruse these pages for information
Farm your niche market and cover all the happenings in your neighborhood
Now that we have narrowed our search down to a specific neighborhood (Part 5), we need to start to look at specific properties. I will be using rental houses in my examples, but the same logic applies to mini-storage, office space, retail, etc.
Finding properties that meet your general criteria is easy enough to do. Simply contact the Realtor in your Mastermind Group (Parts 2 & 3), or do the work yourself by cruising the neighborhoods, searching the local papers, surfing on Realtor.com, etc. The best, and in my opinion, easiest way to eliminate properties is using financial spreadsheets, which I'll cover in Part 7. This eliminates a lot of legwork and wasted time looking at properties that will never meet the criteria necessary to make a good investment property.
That brings up something important. You need to be able to answer a question about your motives and investment philosophy. Why are you investing in real estate? There are two basic ways to create income and wealth through real estate--appreciation and cash flow.
Appreciation is the process of allowing the rising tide of the general market to raise all ships, including your investments. This is a good strategy overall, but can backfire if the market goes south, as it has in several areas across the country. If, however, you can hold your property through the temporary downturn, not to worry. Cash flow is when the monthly income on a property exceeds the monthly outgo. It is difficult in my market to achieve both good appreciation and positive cash flow, so I make my investment decisions based on which avenue I want to pursue.
For appreciation, I buy new or nearly new homes in nice neighborhoods and try to cover all expenses with rental income. In 3-5 years, the market will have grown to the point that I can sell for a profit or re-finance and make money available for other investments. Another way to glean appreciation is by purchasing homes that need work and investing "sweat equity" into them, then flipping the houses when you're done. The best flip markets are in areas that have steady job creation, without much new construction, which creates a supply shortfall. The Cardinal Rule for Appreciation Investing is, "You make money when you buy the property." In other words, you have to be careful not to pay too much on the front end with the expectation that appreciation will overtake your imprudent decision. That false assumption has led many investors into foreclosure in the recent past.
For cash flow I buy low-income, Section 8 housing. Generally, I can buy these properties for about $30,000 and rent them for $600, which covers my principle, interest, taxes, insurance (PITI) and all other expenses and still allows for a net cash flow of between $150-$200 per month per property. It's not much, but it adds up quickly, and because I have an awesome property manager as part of my MMG, I have almost no headaches. It is almost totally passive income with very little cash, read risk, invested in any of my properties. In addition, there are still a lot of loan programs for a small investor. All of my Section 8 properties are on 90%, 30 year fixed mortgages. Be aware, however, that once you have between 8-10 properties, you will not qualify for most of these programs. You will then fall into the commercial loan arena, which has tougher financing requirements, such as 70% Loan-to-Value (LTV), shorter amortization periods and Prime + interest rates.
In the next blog, I'll discuss Cash-onCash, Internal Rate of Return and how to evaluate one investment over another.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.