Mike Wong Realtor, GRI

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.