How to Get 5 Years of Property Appreciation in Only 1
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Tuesday, May 23, 2006
Message #1736
WEALTHY:
Why some investors HATE condo converters (Dave Lindahl)
HEALTHY:
For your head and heart
WISE:
Napoleon Hill on opportunity
ALSO
IN THIS ISSUE:
Good
manners + good sense = good marketing (Michael
Masterson)
"Help" for
Windows users
Add
the word "putative" to your vocabulary
Living
in a "hot" market, it can be hard to find real
estate deals that make sense from a numbers perspective.
Dave Lindahl is giving a very insightful teleseminar on one
way to overcome this common problem: Condo Conversions.
By
dividing a multifamily property (whether it be a duplex or
50 unit apartment complex) into condos that you can resale
individually, you greatly increase your ultimate sales prices.
It makes it that much easier to find deals where the numbers "work".
Dave says he doesn't settle for anything less than a 40%
cash on cash return – and he gets that in less than three
years.
If
you are a real estate investor, I recommend you take moment
to sign
up for Dave's teleseminar today.
- Will
Bonner
"Your
big opportunity may be right where you are now."
-
Napoleon Hill
How
to Get 5 Years of Property Appreciation in Only 1!
By
Dave Lindahl
As
a multi-family-property investor, your ultimate goal should
be to get the most appreciation in the shortest possible
time.
This
is done by using a variety of techniques.
1.
Buy a property that is below market value due to a burned-out
seller – someone who never learned that successful multi-family
investors always have management companies to deal with their
tenants, while they go out and find more deals. (It's the
fool who wants to be in the tenant business.)
2.
Boost your appreciation by buying a property that has below-market
rents or below- market occupancy. Be sure you buy the property
based on today's cash flow. (Sellers are always trying to
sell based on future cash flow.) When you then raise the
rents and/or the occupancy, you will have increased the value
of your property.
3.
Buy a property in need of repairs. Buy it at a discount,
make the repairs, and sell it at a premium.
4.
Buy in an emerging market. You get to buy at today's prices
and watch the market take off like a rocket. In a very short
period of time, you can become very wealthy. (This is what
I like doing best, and what I've trained thousands of other
people to do.)
These
are four great strategies, and I've used them all with much
success. (I still do.) But the very fastest way to get five
years' worth of appreciation in just one year is to …
…
Do a Condo Conversion!
A
lot of multi-family investors have many a four-letter word
to say about condo converters. Nevertheless, a condo conversion
is often the perfect way to exit an emerging market. It's
also a great way to enter a market that's so far ahead in
the market cycles that properties are selling with little
or no cash flow.
Multi-family
investors get upset with condo converters because they can
afford to buy with extremely low capitalization rates – thus
driving prices through the roof.
Not
only that, but they take apartments off the market when they
convert them to "for sale" units, thus decreasing
the supply. When supply decreases and demand either stays
the same or increases, prices rise. Another thorn in the
multi-family buyer's side.
Well,
if you can't beat 'em … join
'em! To give you some perspective, we typically
look for a 40 percent return before we leave a market for
the next emerging market, and that usually takes three years
to accomplish. Condo
converters are regularly getting those returns and better -
much, much better – in hot markets. Those are the same markets
that we as multi-family investors have turned our backs on.
Here's
another way to look at it: How would you like to sell 50
or more single-family units in less than a year? How would
you like all of those units to be at the same location, and
not spread out all over the place? Then what would you think
if the renovation of those units could be done in cookie-cutter
fashion? No running around meeting contractors … no driving
all over the county to secure your properties … no chasing
of dozens of buyers. (You'll have a sales team.) Everything's
in the same location!
From
someone who's done all that chasing (me), I can only say "Hooray!"
What's
the downside, you ask? Sure, we've all heard of the "Condo
Bubble" that's taking place in Florida, Chicago, and
Southern California. But there are many other good spots
do be doing condo conversions RIGHT NOW. Better yet, these
opportunities are not going to go away. They are only going
to become more abundant.
We
are in the infancy of the "Condo Conversion Era," and
it all has to do with demographics. (My specialty.) Two trends
will only become stronger over time: The rise of non-traditional
families and the aging baby boomer population.
Mark
my words: These two groups will increase the popularity of
– and need for – more and more condominiums as the years
go by. We are at the ground floor of the need level for this
type of housing stock.
You
have a choice: You can sit on the sidelines and watch other
people get rich … or
you can jump in and join in the joy.
Before
you start spending your profits, there is some important
information you need to get your hands on:
Know
the specific condo ordinances in the town you are looking
to do the conversion in. These regulations are mainly
there to protect the tenants. You must follow the ordinances
very closely, or you will be in big trouble.
Invest
in areas where the affordability index (the ability of
the average worker to afford a home) is low.
Be
in the right neighborhood at the right time. That's called "feasibility." You'll
be looking for specific demographic clues to determine
if it's feasible to do a conversion in this city, in
this neighborhood, at this time.
Get
up to snuff on financing. You'll need "interim financing" at
the outset – and a commitment from a good quality lender
for "end loan" financing, so you can cash yourself
out at the end.
Know
all you can about project management.
Then
you should do a conversion that needs only minor repairs.
After you've done a couple and gotten your feet wet, start
taking on larger repairs if you like. Some converters convert
only "easy" properties: "A" and "B" type
properties in "A" and "B" type areas.
You
must discover the proper formula to determine whether a deal
is truly a good deal or a money pit. As a rule of thumb,
you don't want to get into a conversion that has less than
a 30 percent cash-on-cash return. Remember, though: The
returns can be much, much higher.
Then
you should know the most effective techniques for marketing
your complex, so you can achieve "sell out" in
the fastest amount of time. You'll have certain strategies
for selling to existing tenants and other strategies for
selling to outside buyers. You need to decide between an "in-house" sales
team vs. hiring a real estate company to handle it. If you're
going to use an in-house team, you must decide how to compensate
them: Will
you give them salary, salary plus commission, or straight commission?
I
know it sounds like a ton to find out, but condo conversions
are a lot easier than you might think. With the proper guidance,
you can easily add this skill to your real estate repertoire.
That will allow you to do bigger
deals, in shorter amounts of time, for bigger profits.
Remember: The faster you go big, the faster you become wealthy!
(Ed.
Note: David Lindahl, also known as the "Apartment King" successfully
invests in single-family properties, apartment complexes,
and condo conversions.)
Today's
Action Plan
Dave
Lindahl will be our special guest speaker during a teleseminar
presentation on how to invest in condo conversions. Sound
interesting? Learn
More Now.
Be
Your Own Boss
In
6 hours and 35 minutes, you can be in business well on your
way to making upwards of $100,000 per year! That's how long
it takes to create what is without question the world's easiest, most
profitable and infinitely rewarding business.
What
to Do After Your Next Seminar
By
Michael Masterson
When
my friend Harry throws a party, he does it right. Great food,
a kicking band, good whiskey, and hand-rolled cigars. Several
days after the party, he sends out a thank-you note, along
with a few photos to remind you what a good time you had.
It's
good manners to send follow-up notes to guests, thanking
them for their visit and inviting them to come again. Including
photos makes the message stronger and more personal. When
you produce a business event – and it doesn't matter whether
it's a trade show, conference, seminar, symposium, or brainstorming
session – it makes sense to do the same. By communicating
with your attendees after an event, you show them that, days
or weeks later, you are still thinking about it … and them.
That's
what Clayton Makepeace and Matt Furey do. Recently, I received
photos from each of them that documented the speakers, special
events, and after-hours fun that attendees at their seminars
enjoyed.
Including
photos with your message increases the likelihood that your
communication will be opened and your copy read. Selecting
images that depict the benefits your attendees enjoyed -
from informative product presentations to entertaining speeches
to conga lines – allows them to relive those good experiences.
Just
as importantly, this is an excellent way to reestablish the
intimate relationship that was started at the conference.
By continuing to send out little messages and postcards to
your attendee list, you can develop a very solid marketing
platform for selling other products and/or the next conference
to them.
By
the way, this technique can be effective from either direction.
That is, as an attendee you can create valuable business
relationships with VIP speakers and conference sponsors by
sending them photos of the event, along with handwritten
messages.
The
Effect of the "Mediterranean Diet" on Alzheimer's
By
Jon Herring
The
so-called "Mediterranean diet" has been shown to
reduce the risk of heart disease. Now there's evidence it
can prevent Alzheimer's too.
Researchers
followed 2,258 people over the age of 65 and recorded their
diets during a four-year period. The results – published
in the Annals of Neurology – showed that those who were most
faithful to the Mediterranean diet were 40 percent less likely
to develop Alzheimer's. Even those who only moderately followed
the diet lowered their risk by 15 percent.
If
you want to try this diet, make sure you're eating its key
ingredients, including olive oil, fresh fish, whole fruits
and vegetables, and assorted nuts and legumes. Consume alcohol
in moderation and limit saturated fat from meat and dairy
products.
It's
Good to Know: Computer Basics Getting Help
When
you don't know how to do something in Windows or a Windows-based
program, don't despair. Most of these programs come with
a built-in "Help" feature, which is one of their
greatest – and, sadly, least used – features.
There
is often more information about how to use a program under
the Help feature than there is in the program manual! Many
people actually learn how to use entire programs by simply
using the Help feature when they don't know how to do something.
For
Help in any Microsoft program, press the F1 key (in the
top line of keys on the keyboard) or Help on your menu
bar.
Let's
assume you are working in Microsoft Word and would like
to adjust the line spacing of your document … but you
don't know how. Press the F1 key. The assistance menu will
appear. In the "search for" field, type "adjust
line spacing." You will get detailed instructions
on how to do it.
(Ed.
Note: This tip comes to us from AWAI's new special report, Computer
Basics: A Step-by-Step Guide to Learning Computer Basics
the Fun and Easy Way )
The
Fed has gone too far!
History
shows that after the Fed raises the Discount rate to 6% –
as happened last Wednesday, for the ninth time — equity
markets have not only never rallied, but have collapsed by
an average of 30%.
The sell-off over the past few days is the first warning shot
of the approaching bear cycle. Over the next week or two, there
should be a "second chance" rally to let you out
of bullish positions gracefully. But this could be your last
opportunity! Find out more in the Fractal
Market Report.
Something
that is "putative" (PYOO-tuh-tiv)
is commonly thought or deemed. It has the same Latin root
("putare") as "compute" and "reputation."
Example
(as used by Frances Spalding in Duncan
Grant: A Biography:
"Certainly, to have even a putative ancestor commemorated
by Shakespeare is something about which to boast."
Michael
Masterson
Copyright ETR, LLC, 2006
Have
a Question for Michael Masterson?
Want
to know the secrets to his success? Have a perplexing
business problem? ETR welcomes your thoughts. Post
them online at http://speakoutforum.com/forum/
or
send questions directly to Support@EarlyToRise.Com
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