Jim Scheller - ABR, SRS, e-Pro, GRI

This was suggested by a real estate investor friend of mine. Using rental information, this is a quick way to evaluate whether a property is worth looking at any further. After checking out the idea while doing my own analysis of rental properties for myself and my clients, I found it to be pretty accurate.

Here's what you do: take the amount of monthly rent the property brings in and multiply that by 100. If the price is at or below that number, you might want to take the time to look further into whether the property will cashflow or otherwise meet your investing goals. Usually if the price is much higher than that the property won't make much sense and you don't need to spend the time or energy analyzing it.

Having said that, when interest rates are low, the multiplier should probably change to reflect the lowered cost of money. I haven't thought about it before, and I'm not in a position to run any numbers at the moment, but I would imagine you might safely raise the multiplier to 110 or so and be safe. After all, it is just intended to be a quick rule of thumb, after all.

Hopefully that will be of some value to those of you interested in investing in rental real estate.

"When the Lord gets ready, you gotta move!" You might remember these lyrics from a song by Mississippi Fred McDowell. Or you might remember the way the Mick Jagger and company sang them. As memorable as that song is, if you're an Buyer looking at REOs, you might want to remember them as a reminder about what to do when good bank properties come onto the market.

I just had a call from an investor to whom I've been automatically sending listings for new bank properties. He got this new REO listing notification yesterday, and called me just now to go see it. Well, today is all of day number three on the market, and after getting in touch with the listing agent, I had to call and tell him it was effectively sold already. Ouch.

(I'm sure you can do this with your MLS. If you're not already sending listings to your contacts, or if you know you can but haven't taken the time to figure out how to do it already, then you should sit down right now and take care of it. This single capability has been a godsend to me. I've increased the number of Buyer contacts I'm "working with" exponentially with this tool. You can make it work for you as well.)

The moral of the story is that if you think a house may be a good deal, someone else probably will too, and you better make darn sure you get over there to take a look just as soon as you possibly can. And while you're at it, try to either

•· have an approval letter ready to go or be able to get one immediately from your lender if you'll be financing your purchase with a conventional loan, or

•· have a proof of funds letter from your bank ready to submit with your purchase agreement if you're paying cash.

Sometimes banks will entertain offers for a few days, and ask all interested parties to submit a "highest and best" offer by a certain date and time, but as my story today proves, you certainly can't count on it.

Good luck!

If you've been following my series on Contracts for Deed, you've seen quite a bit of information come your way. Here's a quick summary:

•· A contract for deed is another way of buying a house, but with the seller providing the financing for the buyer instead of a bank or other lender.

•· Because the seller is doing the financing, and because he probably doesn't want to be in that position, you will probably have to pay for the privilege of buying his house.

•· That means a higher price than you might otherwise pay, and a higher interest rate than banks are offering. Sometimes a significantly higher rate.

•· You may have your credit checked before the seller agrees to finance you.

•· You will also have to get the seller out of the deal when the balloon payment is due, or sometime before. You'll most likely do that by refinancing, but you could also do that by selling the house for enough to pay him off.

•· That's one of the main reasons to buy on a contract for deed: it is easier for someone who already owns a home to get it refinanced than it is for that person to get financing to buy the house in the first place.

•· The worst thing from the seller's point of view is to get his house back from you in terrible shape. In order to keep that from happening, you will need to provide a substantial down payment. Part of this will be to pay his Realtor's commission, if he used one, and the rest will be insurance: the more money you have in the deal, the less likely you are to either cut and run or let the house fall into disrepair.

•· You will be responsible for paying for repairs, insurance, taxes, etc. It is your house.

•· If you're thinking of entering a Contract for Deed as a buyer, you should have your attorney review the document. Better would be to have your attorney prepare the contract, but that may be problematic.

There you have it. I probably missed some important and obvious points, but at the moment they are not coming to mind.

Good luck with your new home!

First, a bit of history: after following a high school flame to Minnesota, I ended up living in the Twin Cities for many years before going east to find a wife and a guru before returning to the frigid north. I had the chance to move to Mankato to open the first Barnes & Noble store there as Manager, and I took it.

Two important things I discovered about Mankato:

• there is almost no traffic, and
• you can see the stars.

After living in big cities full of cars and light pollution for a long time, I found these discoveries to be quite refreshing. I hope that when you move to a new location, you find something equally refreshing.

Are you getting ready to sell your house? Or do you already have it on the market? I bet one of the things you expect of your real estate agent is an open house, or maybe even a series of open houses. This is a common expectation, but it may not be the best thing for you or your sales prospects.

Why? Well, according to the National Association of Realtors, the chance of actually selling your house through an open house is very small. I've heard either two or four percent, and the smaller percent was a more recent reference. Whichever is right, the percentage is tiny. If that's the case, who benefits from an open house?

The realtor, usually. Although you spend time cleaning and getting the house ready only to be kicked out of your house for a few hours, the agent is the one who profits by getting the chance to meet new buyer prospects. Granted, he or she has to pay for an ad or two in the local paper to get people to show up (although I've had open houses people came to just following some directional signs), but the benefits seldom go to the homeowner.

I will say, though, that if the realtor does his job well, he or she will make it a point to invite the neighbors so that they will know your house is for sale and have a pretty good idea of what your house is like inside. Neighbors can be the best referrals - they may know someone at work or have family that might want to live close, for example.

So should you expect your agent to have open houses? Maybe, if they're looking for buyers. But don't expect a sale to result.

If I was selling my home, would I have an open house? Nope.