Real Estate Investing

Real Estate investing can have many faces. Some of them kind and inviting, and some faces are covered by masks. How do you know you are getting into the right investment for you?

Investing can be as simple as buying a duplex. Live in one half and rent out the other half to help pay the mortgage, taxes, maintenance, and other expenses, No matter what type of investment you pursue, there will be expenses. If you are profitable, there will always be taxes.

This is a simple page to introduce the concept of Real Estate Investing. Details for each type and phase of investing are covered in articles listed in the drop down menu. Here is a brief list of steps all Investors need to follow.

  • Determine your price range.
    • Include purchase price
    • Rehab and improvement costs
    • Taxes
    • Listing and closing costs
  • Determine the type of property.
    • Land
    • Rehab and resell
    • Rental property
    • Retail Property
  • Determine location
  • Network
    • Contractors
    • Real Estate Agents
    • Lenders
    • Attorney
    • City Contacts

Look at all the aspects of investing. Develop a plan. Write your plan out. Begin the networking process as soon as possible. Gather information. Information is power.

The drop down menu lists a number of articles for investors. You can also search this website. Share some of your stories, ideas, and suggestions.

Beware!! There are number of scams aimed at Real Estate Investors. We cover the most common scams in some of the articles here.

Ez1 Realty attempts to filter our advertising from known or suspected investment scams, and investment websites selling incomplete and misleading information. If you spot one of those ads, let us know and we will remove that advertisement.

What Lures People Into an Online Scam

So you want to get rich in Real Estate. You don’t have much money, but you heard all the stories of how people broke the system and made it rich in Real Estate. The Internet is full of Real Estate Scams with one intent…. to quickly part a fool and the little money they have. Not only are these scam artists using the Internet, they have enough guts to hold seminars in major cities to collect more money. I can tell you —- beyond any doubt —- the only thing these people know about Real Estate is their scripted plan to suck money out of victims with high hopes and dreams of making it out of this depressed economy we seem stuck in. Let me show you how it works.

How Online Real Estate Scams Work

Charges begin at the very beginning. After a free introduction online or at a local meeting which consists of NO USEFUL information —- ONLY a load of hype, people fall for these plans like an unsuspecting fish goes for a shinny lure. Things look so good, fees seem like a small investment. Let me tell you what you are investing in. There is a scripted system you are investing in. This scripted system is not designed to make any money for you! It is a system to put money in the pockets of this carefully formed network of thieves. The first charge is a set of lessons, either online or a condensed live seminar. They will tell you about some secret list of foreclosed properties. Here is the hook. They tell you only certain Real Estate Agents get this list! Any suggestion of a separate list is against local MLS rules and agreements all Real Estate Agents share. Every licensed Real Estate Agent must sign an agreement to share all their listings with all other Agents on the local MLS. There is no secret foreclosure list. These people are trying to impress you will false information. Some of them are trying to get you to work with agents they hand pick, but this is very rare. It doesn’t take much effort to gather a list of new, inexperienced agents eager to make their first sale. All these people need to do is check public records to find newly licensed Agents, who may not know what they are falling into.

The next step is to provide you with a pre-approval letter or proof of funds letter. Boy — Do these people look like an answer to prayer. After paying a fee, you get a letter and these people promise to give you money to invest in their system without checking your credit. This is too good to be true! That’s because it is not true! There is a world of difference between a letter and cold hard cash. Of course there is a fee for the letter, and a fee for a credit check, another fee for an appraisal, another fee because they feel like sucking more from you. That’s the system you are buying into. All the money flows one way!

If you happen to have funds, you can elevate to their next level of scams. You get the gold script!!! This is what they will tell you. They will tell you how to bid. Of course you have to get an offer accepted. They will tell you about their plan that never fails —- and it sounds good. But of course will never work in the end. Here is their plan. Over bid on the property. The way they explain it makes sense. After all they are trusting you with their money…. all they are asking for is your trust in return. WHAT A SCAM! You have not seen a dime from them and they are pulling the TRUST ME CARD. By this point you paid them thousands and received nothing but promises. And now you are paying for some of the worst advice I have ever heard. Of course the best properties receive multiple bids and you have to find a way of getting your offer accepted. They tell you once you over bid and get the contact, which they tell you is a legal binding contract…. which is about the only truthful matter they will tell you, the Seller and you are bound by the contract. What they fail to tell you is, asset managers seldom negotiate price after you sign a contract. There is nothing in the contract saying the Seller has to deal on the price. When you fall for this scam, you missed one very important point! The Seller has a group of cash buyers waiting in the wings who can close in a hurry. The Seller can tell you to take a walk. In the mean time, you lost more money on the scam. They tell you they have a network of inspectors to look over the property, give you a report and instruct you on how to use their report to negotiate. Two problems here. Number one, you pay them for the inspection. More money for them. Number 2 – they DO NOT use state licensed inspectors. The contracts I use in Wisconsin states: A State Licensed Inspector must be used. You just wasted your money. Any Listing Agent with a year of experience will take one look at that report and know it is a fake. When I see this, I call the so called inspector and ask for his state license number. Guess, what… the house of cards immediately folds. Next on the scripted plan to part you from your money is the fake contractors. More money out of your pocket, more in theirs. Now here is the real heart break for innocent buyers like yourself. According to the contract you have 10 days or so for an inspection. If you don’t have a good agent, that time disappears. You lost that contingency to back out of the contract and get your earnest money deposit back. The worst part of this scam is the time it takes. Before you know it, time runs out, you fail to close and find yourself in a position to loose your earnest money deposit. Notice how you are the one putting up all the money…. and they are the ones making the money? When time runs out, you are in what is known as breach of contract. You failed to fulfill your part of the agreement. Some Sellers are insisting they keep the earnest money. At this time it appears to be the only way to combat this scam. Most of the time Buyers will get their earnest money returned but when Sellers see this scam, they may not be so lenient. Collecting earnest money is a long process most Sellers will not want to go through, but one Seller instructed me to go through the long drawn out process. In the end the Buyer lost the earnest money. The whole process is nothing but a waste of time for everyone involved and a waste of money for the Buyer.

Beware the Bite

There are other details the scam artists share to appear they are looking out for you. They show you how to alter standard contracts. They want to create the appearance they have your interests at heart, but make no mistake, these scam artists are looking out for themselves. Here is a short list for you to copy and paste. If you ever attend any of these scam artist’s meetings, you can go down this list with a smile on your face and your money in your pocket.

Unexpected Fees

  • They charge fees. Every experienced Real Estate Agent has worked with successful investors and is willing to share information for free.
  • Look out for useless hype.
  • Look out for facts and figures from outside the market area you want to invest in.
  • Look out for a system insisting one size fits all.
  • Look out for secret lists and inside information only a few people have.
  • Look out for networks they may claim to have.
  • If you did pay fees for training…. get out the first time you see a fee they forgot to mention.
  • Shy away from advice on how to alter state approved contracts.
  • Avoid systems which suggest negotiations after signing a legal binding contract.
  • Avoid systems telling you to over bid without providing you with current market conditions.
  • Avoid systems based on national statistics.
  • Avoid systems which teach you how to use an inspection to renegotiate purchase price.
  • Run from all inspectors, contractors, and LENDERS who cannot produce proof of a state license. 

The only system that works involves a few simple steps.

  1. Invest in an area you know and are comfortable with.
  2. Get a list of market reports for the area and know the current trend.
  3. Know market prices for both REO purchases and resale prices for turn key properties.
  4. Work with a reliable, licensed general contractor if you are not capable of doing all the repairs yourself.
  5. Get a little background on local ordinances for vacant properties and building codes
  6. Have your own team in place including a licensed Real Estate Agent, Lender, Inspector, and contractors. Form your organization.
  7. Keep expectations realistic…. the current market will do more to determine your success than any other detail.

What to consider when investing in Real Estate

This is the most important part of Real Estate Investing. Have a written plan. Write down your target purchase price. Get familiar with actual sale prices in the area. Always do a quick market analysis before submitting an offer. You have to know how much the rehab will cost. If time allows get a written quote. Know all the costs, fees, taxes, everything involved. You can use an inflated figure to estimate. A Real Estate Agent should be able to give you a basic idea on this. On a normal purchase of $60,000 and resale of $100,000 I typically use an estimated cost of $10,000 for commissions and fees. Based on the home and time of year, this may also cover a portion of taxes. Add to this the cost of improvements, loan costs, and any city charges, a targeted profit of $10,000 is about standard. This is why it is so important to write everything down. Create a form or simple spread sheet. Keep records and learn from failures as well as from your success.

Avoid Real Estate Investment Scams

How do you avoid hard money scams? A wise teacher once told me, he never asked a question without first providing the answer. Here is a list of things to look out for.
Up front fees
Bad advice which is designed to appear free.
Charges for lists.
Delays in paperwork.
Delays in returned calls
Avoid high up front fees. This is exactly what Internet scam artists in the hard money market thrive on. A fee for this, that and the other thing. They want you to invest, then they have you hooked. It is the oldest trick in the book. Do they really have a book? You better believe scam artists have a written step by step procedure to get you to send more and more money. Look at the scams where they tell you they will transfer millions of dollars to your bank account. They don’t have any money, just a long list of promises, excuses and fees. This is why it is so important to have your own written plan. Look at it as preparing for battle. Scam artists know you do not want to loose money and target that emotion, reading off a list of promises to get you to send more money. Don’t let them turn this into an emotional mind game. Stick to business facts.
Beware of anyone claiming to be an expert in the field of Real Estate investing using simple terms putting the entire Real Estate market in a single basket. Any experienced Real Estate Agent will tell you investing and investigating is on a block by block basis. In the past three months I have identified areas in Wisconsin which have doubled in value while a few miles away values are still declining and everything in between. Anything outside a 4-6 block radius can be misleading information.
If a company charges for a list, use your head and finger. Leave the site. Especially sites with tiers like basic, expert, elite services. Come on now. If I was standing in front of you as a licensed Real Estate Broker and I asked you what level of service you expected, would you work with me knowing up front I was not going to provide you with the best service I am able to provide? How would that make you feel? Does writing it out and posting it on a web site make it any different? Let me tell you a little secret in the Real Estate industry. Every Agent will tell you 80% of their business depends on return customers and referrals. Why would I give up 80% of my business which is in fact FREE advertising to make a few extra dollars? Get real. Slow down and examine the facts for what they really are.

Experienced Lender

Experienced lenders know their contracts, just like experienced Real Estate Agents know the major questions to write an offer to purchase. A legitimate lender will know the usual fees and conditions of a loan. A scam artist will change the subject, tell you how much you are going to make, do anything to keep you off balance. A nominal application fee is normal, but you need to see something in return. Ask for a standard contract in advance. See what they say. If they cannot explain it, time to begin paying closer attention. E-mail them a list of questions and examine which they prefer to answer and how.
One thing I have seen that is consistent with hard money lenders who never close is their phone etiquette. It does not matter what type of loan you are getting, FHA, conventional, or hard money. If a lender has a difficult time returning calls, it can only get worse. I have seen this happen a few times, the result is always the same, delays in the entire process. Lenders have to complete certain tasks on a particular schedule. With few exceptions, I have seen a direct correlation between lenders success on the phone and the entire loan process. Some of the on line Real Estate hard money lenders I have dwelt with never answered their phone and never came up with the money to close. The result is always the same with you the Buyer holding the bag. And you know what it is filled with.
If you want to invest in the Wisconsin Real Estate, I may be able to help. I’ve worked with hard money lenders, found them properties, listed and sold properties for them and also work with a local lender to arrange loans. If you want to explore this market, feel free to contact me. As with everything else, it does take money to make money. If you are a new investor, 10 to 20% down from your own funds is not out of the ordinary. You also have to show cash funds to complete repairs. Having a written plan will help. It is a simple process that takes a while to build, but can and has been done. Hopes and dreams may be great, but don’t plan on wasting peoples time by not putting in the required effort on your part first. But putting in your time and effort can save you a lot of time, headaches and money in the long run.