Is Creative Financing the Solution You’ve Been Looking For?
BY WHITNEY NICELY ON NOVEMBER 9, 2018
When I first got started in real estate I kind of had no idea what I was doing. I jumped in whole honcho, spent every dime of my life savings, was even able to get my brother to give me his too, bought houses, made sales, and went flat broke. It took that hard knock for me to realize that there had to be another way of doing real estate. I needed a method that let me keep my money (and let my brother keep his…), and did not require for me to take out a mortgage. Enter creative financing….
It was not too long after I hit the wall that a fellow investor took my under his wing. He invited me to come to one of his seminars, which was a real stretch for me with the $75 price tag, but I went anyway. It was there that my eyes were opened. I started learning about all sorts of ways to finance properties that I had never heard before: lease options, seller financing, private money lenders, wholesaling, and on the list goes. I had no idea that this whole other world even existed! Maybe you are in a similar situation. If so, there are three great options to check out to get you started.
#1 Seller Financing: Instead of working the traditional path of finding houses that currently have a mortgage, focus your efforts on the houses that are likely free and clear. Ideally, the current owner pays nothing on the property except for property taxes. This means that there is an excellent opportunity that you can work out a deal with the seller where they act as the lender and you pay them every month to ultimately pay off the agreed upon amount in a predetermined period of time. THIS IS GOLD!!!
#2 Lease Options/Rent-to-Own: This is a technique for your buyer, which is excellent if they are not sure whether or not they really want to buy the house just yet (or are not able to secure a mortgage loan). When worked out in union with seller financing, the buyer’s agreement with you will ultimately pay for your monthly amount to the seller, and then some.
#3 Wholesaling: This option really allows you to remain fairly hands off from the whole transaction. You find the deal (a motivated seller), you make the deal, but then you find another end-buyer investor who wants to close the deal. Then, you get paid a “finder’s fee,” of sorts, for your work and trouble. This can be whatever you decide, but it’s usually a few thousand dollars or more. The best part – you never actually own the property.
When I learned about creative financing, it turned around my entire experience with real estate. I went from flat broke to making over $140,000 in the next 9 months with only 14 sales! This is why I am so passionate about teaching other women all about creative financing with First Deal Done Fast. I LOVE seeing the wheels starting to churn and the light bulbs turning on.
When you’re ready to learn about creative financing keep in mind that there are a whole bunch of other ways to get creative. Start studying and researching what options exist. Make sure you are aware of your states laws and regulations. Get knowledgeable and informed, always. Find seminars, conferences, and courses to teach you what you need to know. Then, get to work. Whichever one you choose and sounds right for you, this is always the path for success. It cannot be skipped, nor glossed over. Learn, learn, learn, and action. Wash, rinse, repeat. Now, get to it!
Whitney Nicely rejected the southern girl path of working at her family’s trucking business and embraced the life of an investor. Her first nine months made her over $140,000, and set her on the path to empowering other women to break into the real estate “good ole boys club” and break down barriers while making some serious cash. If you’d like to get started, or want to find out more about what I teach, click here to set up a time to chat or visit WhitneyNicely.com to learn more.
Ten U.S. Cities Where Home Values Are Skyrocketing
BY BRAD BECKETT ON NOVEMBER 9, 2018
Get ’em while they’re hot…The good folks over at Realtor.com, like everyone else, have been watching shrinking inventory drive up home prices all across the country. To that they, they crunched the numbers and took a “deep dive” into their listings to find those housing markets where home prices are growing at the fastest clip. To come up with their list, they analyzed the increase in median list prices on realtor.com from 9/17 to 9/18 in the largest 300 metros. Then they ranked the places that saw the biggest percentage change in home prices during that span and limited it to just two metros per state to ensure some geographic diversity. Indeed…
“There are a few places where home price growth isn’t just edging up, it’s actually growing at an accelerated rate, putting fat profits into the pockets of sellers. And here’s the thing: They’re not those ultrapricey, usual suspects like New York, San Fransisco, or Seattle.”
Zumper’s National Rent Report for November
BY BRAD BECKETT ON NOVEMBER 9, 2018
Rental information site Zumper recently released their National Rent Report for November showing that the median national rent for 1-bedroom apartment was $1,203 and the median two-bedroom rent was $1,432. Year over year, both one and two bedroom prices are up 2.3% and 2.9%, respectively. Zumper analyzes rental data from over 1 million active listings across the United States. Data is aggregated on a monthly basis to calculate median asking rents for the top 100 metro areas by population, providing a comprehensive view of the current state of the market. The report is based on all data available in the month prior to publication…..be sure to check out their entire list of 100 cities.
Total U.S. Construction Spending Holding Steady
BY BRAD BECKETT ON NOVEMBER 9, 2018
The U.S. government is reporting that total construction spending in September was estimated at $1,329.5 billion, which is nearly identical to August’s revised estimate and 7.2% higher than September, 2017. Residential construction was at a seasonally adjusted annual rate of $556.4 billion in September, 0.6% above August’s revised estimate.
ABODO: Are U.S. Rent Prices Officially Stable?
BY BRAD BECKETT ON NOVEMBER 9, 2018
National apartment listing site ABODO recently reported that the median nationwide rent price for one-bedroom units in November dropped slightly to $1,019 (down 0.8%) with two-bedroom units coming in again at $1,266 (down .24%). ABODO uses over 1 million listings across the United States to calculate the median 1-bedroom rent price by city, state, and nation and then track the month-over-month percentage change. To avoid small sample sizes, they restrict their analysis to cities meeting minimum population and property count thresholds.
S&P CoreLogic Case-Shiller Says Home Prices up 5.8% Year-Over-Year
BY BRAD BECKETT ON NOVEMBER 9, 2018
According to the latest S&P CoreLogic Case-Shiller Indices, covering all nine U.S. census divisions, home prices continued their ascent, with a 5.8% annual gain in August. Their 10-City Composite annual increase came in at 5.1% and their 20-City Composite posted a 5.5% year-over-year increase. The S&P CoreLogic Case-Shiller Home Price Indices are one of the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions.
Click here to read the full report at S&P Dow Jones Indices.
Homeownership & Rental Vacancy Rates Remain Steady
BY BRAD BECKETT ON NOVEMBER 9, 2018
The U.S. government is reporting that the national vacancy rates in Q3 2018 were 7.1% for rental housing and 1.6% for homeowner housing. The rental vacancy rate was virtually the same as Q2 and 0.4% lower than the third quarter of 2017. The homeowner vacancy rate was 1.6%, which is 0.1 percentage points higher than the the second quarter 2018, but is the same as one year ago. The U.S. homeownership rate was 64.4%, which was not statistically different from the second quarter 2018 or one year ago.
Sight-Unseen Homebuyers Down 35% Last Fall
BY BRAD BECKETT ON OCTOBER 25, 2018
Have you ever bought a property, sight-unseen? According to recent data from Redfin, one in five recent homebuyers said they made an offer sight-unseen. That figure is 35% less than a similar survey conducted last November. Redfin obtained their data from a survey in May of 1,463 people across 14 major markets who had bought a home within the last year.
“Now that most homes are staying on the market for longer than a week, there just isn’t as much pressure for buyers to make offers so hastily,” said Jessie Culbert, a Redfin agent in Seattle. “That’s a big change from earlier this year when sellers set offer review deadlines…This meant that whether or not you had time to physically step inside the home, you had to get your offer in on time in order to be considered…”
Single-Family Rents Up 3.1% Year Over Year
BY BRAD BECKETT ON OCTOBER 25, 2018
According to the latest CoreLogic Single-Family Rental Index (SFRI), single-family rents in August 2018 were up 3.1% year over year. CoreLogic’s SFRI index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. In addition, the report shows that single-family rents climbed steadily between 2010 and 2018. However, year-over-year rent growth has slowed since February 2016, when it peaked at 4.1%, and has stabilized over the last year with a monthly average gain of 2.8%.
No Taxation Without Representation and How that Applies to Non-Resident Property Owners
BY JESSE BREWER ON OCTOBER 24, 2018
No taxation without representation’ and how that applies to non-resident property owners
by Jesse Brewer
Being in the rental property business, I am required to pay many property tax bills, and given that I own real estate in neighboring counties, I am forced to pay county, city, and other taxes for these properties. I live in Northern Kentucky, which is also part of the greater Cincinnati, Ohio region.
While I understand that I must pay taxes to these governments for schools, police, fire, and other government services for the properties I own, what I don’t get is that I have absolutely no say in how these properties are assessed, who gets to assess them, and what tax rates I must pay.
Normally, you get to have a say in these types of things when you vote for leaders in that particular community; however, since I don’t live in these municipalities, I don’t get to vote for the city council persons, county leaders, school board representatives, or other persons who determine these issues. The problem with this issue is one of the basic principles upon which our beloved United States was founded and for which we went to war to gain our independence — Taxation without Representation.
“Taxation without Representation” is defined in Dictionary.com as this: “A slogan of the Revolutionary War and the years before. The Colonists were not allowed to choose representatives to parliament in London, which passed the laws under which they were taxed. To be taxed only with the consent of one’s representatives in Parliament was a particularly cherished right of the people under English law, a right dating back to Magna Carta in the 13th century. Each additional tax caused fresh resentment among the colonists. Taxation without representation is one of the principal offenses of Britain listed in the Declaration of Independence.”
Wow. Take a moment and let that sink in. Read it again if you need too.
Being taxed without representative government to hear your voice (i.e., someone for which you vote) is a cherished right dating back to Magna Carta, but yet here we are today, being taxed six ways to Sunday with zero say about it.
I know what you may be thinking, this is all sounds good in theory but how much really can you be paying without having a say. For the purpose of trying to better explain this issue, I’m happy to share with you some of my personal numbers in this matter. I live in Boone County, Kentucky. While I own property in the county, the majority of my rental property is in Kenton County.
For the 2017 tax year, I will pay a total of $38,758.32 in property taxes to various government agencies. Now, $2,100 of that amount is paid to the state of Kentucky, and I do have a representative at the state level, so I cannot count that as not being represented. The problem becomes the other $36,658 of it.
I own property in Covington, Kentucly; therefore, I have the privilege of paying Covington public schools more than $1700 per year. I get to pay the City of Covington itself $5,189.18 and the Kenton County Fiscal Court $2,668 annually. The Kenton County Library gets $1,945.76 and another $6,625 in 911 dwelling fees also goes to Kenton County. In Newport, I have the privilege of paying that city $6,443.84 a year, plus other 911 fees, taxes to the Campbell County Library, and a slew of other taxes.
Officials elected in these areas set these tax rates. The Covington school board members are all Covington residents. The Covington Board of City Commissioners also is elected by Covington residents. Of course, Kenton County residents elect members of the Kenton County Fiscal Court. All of these elected officials get to dictate how much I get to pay, yet I have ZERO voice in their “parliament,” or in this case, their city hall, city school board, or county government. Now, I’m not a historian, but to me, the situation I just described fits the meaning of “Taxation without Representation” to a tee.
I understand that some elected officials who represent me in Boone County also represent residents in Kenton County as well. For example, we have the same Congressman, same U.S. Senators, same Governor, same state officials, such as secretary of state and others who serve in Frankfort, and I can accept that I shouldn’t get to vote for these persons multiple times.
However, wouldn’t it be fair to let people who have a vested equitable interest (real estate) in the community – taxpayers — have a right to vote on the local elected officials who can levy taxes and fees on them? No matter where they live give the only one vote for a congressman, even if the property they own is in a different congressional district, they are still being represented, give them one vote for Governor, give them one vote for US Senator and all the other federal, state and judicial offices. The only things maybe allow them to vote for are elected officials that are with the city or county, that can levy higher taxes, special fees and other related items that are attached to properties. It can even be simplified by restricting the person to their only “one vote” type offices to their home address, much like it is now.
After all, isn’t that one of the basic principles this country was created upon and one of the essential freedoms many of our ancestors died trying to obtain?
Yet, year after year this violation of our constitutional rights goes on and nobody mentions it or seems to care. I suspect that this would never happen. Not because it seems “drastic” or draconian, but because politicians would lose their ability to tax those that cannot be represented all while trying to minimize the tax burden they put on the few that can vote for them and keep them in office.
Jesse Brewer purchased his first rental property in 2003, a single family house in Newport, Kentucky that he still owns to this very day. Since then Jesse has acquired several more investment properties in his portfolio that consist of single family homes, multi-unit buildings and commercial use spaces. In 2005 Jesse earned real estate licenses in both Kentucky and Ohio so that he could begin helping others build their own cash flow real estate portfolios. He is a member of Queen City REIA, in Cincinnati, Ohio and is a Boone County, Kentucky, Commissioner (District 3–elect). Jesse was also featured in the Member Spotlight of the Spring, 2018 issue of the RE Journal.
