Choosing Business Advisors: How to Select A Business Advisory Network

Business advisors are so important to running a successful business that few entrepreneurs take on a new project without having a solid business advisory network in place before opening up shop. And having business advisors doesn’t just mean paying a professional for business advice related to one’s entrepreneurial venture, it means actually putting the information to good use as well. What follows is a comprehensive list of the business advice folks needed to get a business off the ground, as well as how to locate these people.

Professional Business Advisors

There are two types of business advisors that most entrepreneurs need. The first are the professionals that most people – business savvy or otherwise – inherently know are required partners: these are the bankers, lawyers, consultants, bookkeepers, insurance agents, accountants, advertising agents and business counselors. Most, if not all, will require a fee for services, although it may be possible to find some free assistance via SCORE or the Small Business Administration.

Informal Business Advisors

The second type of business advice-giver to seek out are those who serve more as independent business advisors than formal ones, such as mentors, other business owners in the same field and even friends. These are the folks that can assist more in the day-to-day operations of the business and usually require little more than someone asking them for help, and then being kept apprised of what’s going on.

Bookkeeper or Accountant?

Depending on how complex the business is will determine whether or not a bookkeeper, accountant, or both are needed. If things are complicated (retail businesses are a prime example), an accountant may be able to not only set up the books for the business as well as maintain them. But for those with simpler financial accounting needs, a bookkeeper might be the least expensive option for the majority of the work needed.

Consultants

Consultants can take on a wide variety of independent advisory roles, and will depend on the type of business being run as to which will be the most helpful. Some entrepreneurs may need the services of a marketing guru, while others will require assistance from a health and safety pro. Make a list of the kinds of folks needed to get things going, and then consult with a local business organization to see if there are consultants in the area that can assist. Trade associations are also excellent resources to find these relatively expensive yet crucial partners.

Choosing The Right Business Advisors

Talk to other business owners in the area for referrals of the professionals they use, especially those in the professional business advisory category. Then, interview the candidates, asking them for references, successes and failures, and take note of their responses. Determine comfort levels and communication clarity as well, as these are important factors that may come into play later on when the stresses of running a business start to take their toll.

But no matter what happens, know that these people will directly affect the success of the business, so take the time to interview and mull over which person fits the bill the best before making a final decision about which business advisors to work with.

What Is a Behavioural Interview? An entrepreneur’s guide to behavioural interviews.

A behavioural interview is essentially a different type of job interview, where the applicant is asked to show his or her skills, knowledge and experience to demonstrate their mastery of a particular competency.

Behavioural interviews, instead of asking a potential staff member if they can do something, are asking if they’ve done it before, and to provide examples. Therefore, the basic premise of behavioural interviews is that past performance is an excellent tool to predict one’s future job performance.

What Are These Competencies You Speak Of?

Competencies are the main focus of a behavioural interview, for several reasons. First and foremost, competencies are taken directly from a job description, making it easier for any entrepreneur to interview. Asking the interviewee questions directly related to the predetermined competencies to determine their empoyment suitability therefore becomes simple and straightforward. As well, competencies help with the narrowing down of candidates, since it’s fairly easy to tell in the end, using a competency chart, who’s the best fit for your organization.

And finally, they’re fun. Entrepreneurs can easily deviate from the boring, same old, “So tell me about yourself?” open-ended questions that really don’t tell anyone anything. Instead, behavioural interview questions provide the applicant an opportunity to shine and show exactly what they can bring along to any entrepreneurial venture.

Sample Behavioural Interview Competencies

To provide a general idea as to what kinds of competencies many entrepreneurs look for in their future employees, review this list (all links point to questions focused specifically on that job competency):

  • Analysis
  • Assertion
  • Communication
  • Delegation
  • Flexibility
  • Judgement
  • Inventiveness
  • Motivation
  • Organization
  • Reliability
  • Resourcefulness
  • Teamwork
  • Technology

Sample Behavioural Interview Questions

Behavioural interview questions differ dramatically from other forms of job interviewing. To demonstrate:

  • Did you supervise anyone at your last job?

… is not a behavioural interview question. However,

  • Tell me about the staff you supervised at your last job. What kind of management style did you use, and how did you come about that process? Be specific.

… is a behavioural interview question, because it asks the interviewee to describe specific situations and details related to their performance.

Another behavioural question would be,

  • Have you ever not made a sales target? Tell me what happened, and what you would do differently today if faced with a similar situation.

Whereas a non behavioural question might sound something like this:

  • What were your total sales last year?

Firing Your Staff: How To Let Someone Go Gently, or Employment Termination Notification

Employment termination notification isn’t easy, even for the most experienced entrepreneur. Yet sometimes, there is no other way. Be it from redundancy, poor conduct or performance, employee termination notification policies are the same, and only comprise three rules to stand by: being compassionate, following the law and sticking with the facts.

Have Compassion and Be Fair

This rule is first for a reason: No matter what the situation, level of misconduct or anger at having to let someone go, being compassionate will help a tense situation move from oppositional to understanding. Your staff member may not be thrilled that their job is no longer theirs, but the last thing they need are reasons with which to feel worse about themselves. Plus, all entrepreneurial conduct, should the employment termination notification be contended, will be scrutinized heavily. Save yourself the heartache and remember the person you are interacting with is a feeling human being that has concerns of their own and you’ll be one step closer to as harmonious of an end as possible.

Stick With Quantifiable Facts

When providing an employment termination notification, ensure that all information is quantifiable. If you don’t have your ducks lined up in a row at this stage, its time to start fresh, because nothing looks worse than trying to fire someone when you don’t have the paperwork to prove misdeeds on the job. Look back and review your record keeping: were there client complaints, poor sales performance, fewer transactions to support a position being abolished or massive changes in the industry? Whatever the reason for the employment termination notification, it needs to be cold, hard and clear instead of emotionally-driven hunches.

Follow Employment Termination Notification Law

To avoid future legal frustrations, it pays to review the laws in your jurisdiction. Many require some sort of written proposal with a set time frame for change, as well as escalating disciplinary procedures before the actual employment termination notification can be made. Since employment termination notification law differs greatly from state to state, make sure to investigate your options and rights fully with a lawyer, related government departments, trade unions or other potential legal participants first.

If you, as the entrepreneur in charge, can view the employment termination notification process as a method to part ways amicably instead of as enemies, you reduce the risk of libel, lawsuits, or vengeance – something all of those in a position of power can do without.

Garage Sale Tips for Sellers by Tracy Suttles: Ways to Maximize Profit from Rummage Sales

The following post is a guest post from Houston, Texas area real estate developer and entrepreneur Tracy Suttles. Tracy can be best contacted for questions, comments and concerns on Twitter at @tracydsuttles.

If a person has never put on a garage sale, the task may seem quite intimidating. Some people let their old, unused items pile up simply because they do not think yard sales are worthwhile, or because they think that they are too much work. However, the following tips may help simplify the garage sale mess to make it more manageable, which can help get the cash flowing.

Sorting out Items for a Rummage Sale

Frankly, one of the most difficult tasks when it comes to putting on a garage sale is sorting out the junk to sell from the other junk. One of the most important things to keep in mind is the question “would anyone consider buying this at a yard sale?” If the answer is no, then the item can probably be donated, or thrown out if it is too ragged. If anyone may possibly want the item then it may be worth it to at least try to sell the item. But if space becomes an issue it may be a good idea to try to sort out good sale items from bad ones.

One never knows whether people will be interested in buying in their “junk” or not, but some items are definitely better sellers than others. The following items are examples of items that can be good sellers:

  • antiques and collectibles that were not widely manufactured
  • star wars collectibles, or other collectibles that have a large fan base (like comic books)
  • electronics, like old video game systems
  • musical instruments
  • clothing items
  • kitchen appliances in good condition
  • small items to be sold in bulk, like gems

Just about anything can sell if the price is low enough. However, very cheap or common items are less likely to sell. For instance, Beanie Babies and other fad items seem as if they would sell well, but because so many people have them they will probably not sell as well as other items. Cheap items like plastic rings are also unlikely to sell unless one comes up with a clever marketing idea, like “ten items for ten cents.”

How to Set Up Shop for the Sale

Before starting, it may be a good idea to contact nearby neighbors about the event if one anticipates that any neighbors may have issues with the garage sale. Once any necessary people have been contacted, a set up plan can commence.

It is a good idea to make a simple map of one’s garage beforehand. Make sure that all tables will fit, and that the space is not too small for an effective sale. If it happens to be too small, some larger, less valuable, or sun-resistant items can be placed outside the garage if it is not raining or snowing on the day of the sale. Items to go in the garage may be set up the day before to minimize stress the morning of the sale.

Organizing the sale floor by item type may help buyers navigate the sale. If everything is just thrown together people may miss items that they otherwise would buy. For instance, placing all electronics together may attract a potential buyer who is only interested in buying electronics.

It may also be a smart move to price items, and to place similarly priced items near one another on the tables (or on the ground). While many garage sale hunters love to bargain, others do not. However, it may be wise to price items slightly higher than one expects to sell them for at first, so that bargain hunters do not go below one’s acceptable price.

It is very important to have some cash and change on hand in the event that potential buyers come in with big bills. A cash box and a place to record sales can help one to keep track of any transactions. A calculator is a very important element of any yard sale, as are plastic and paper grocery bags for any buyers who purchase multiple items.

Getting People to Come to Yardsales

Personalized signs can be a great way to let people know that one is having a garage sale. However, as mentioned here, it is important to make sure that this is not against any regulations, and that a permit is not required for a sale. Signs and banners are a very important element, because they can attract people who are in the process of hunting for sales, people who shop on a whim, and people who want to plan their garage sale route ahead of time. Because of this, it is best to place signs up a few days ahead of time to alert potential shoppers.

Signs should not be too descriptive or detailed, as people who are driving by may miss all of the important information if that is the case. The most important elements are the name of the event, date, time, and location. An arrow pointing people in the correct direction may also be helpful.

Another marketing method is to advertise one’s sale on a public site like Craigslist. Sites like these allow users to advertise events free of charge. This can allow one to advertise an event to people who do not live within the immediate vicinity of one’s neighborhood.

With these hints in mind, one may be able to throw together a successful garage sale with minimal headaches.

The Case for a Down Real Estate Market

Many lucky sellers saw their fates rise with the brief uptick in the real estate market. The housing tax credit, optimistic economic data, low mortgage rates and reluctant bank foreclosures set the stage for a fleeting rally in housing process.

More importantly, the real estate market re-opened for business with buyers snapping up homes at a faster rate (albeit at a steep discount to the purchased price). Of the factors listed above, the only enduring attribute of that market rise is the low mortgage rate.

Short-Term Real Estate Market Expectations

The sellers that missed the market or simply priced themselves too high in hopes of eking out a slightly larger profit will soon find themselves without a chair in the fast past game of musical chairs that is the real estate market. Many people are surprised at quickly the market turned sideways.

Unfortunately for many sellers, the expiration of the homebuyer tax credit coincided with renewed economic challenges. The job market remains soft; however, many jobless people face the end of their unemployment benefits. Legislation remains stalled that would either extend those benefits or provide outside financial help for jobless homeowners.

To further add to the perfect negative storm, banks finally got the foreclosure message. Listing of bank owned properties continue to increase and the high foreclosure numbers of the past six months have turned into even higher real estate inventory numbers in the market.

In the short-term, the real estate market faces a major supply and demand problem. On the demand side, consumers lost an $8,000 incentive to purchase a new home and they remain weary of the job outlook. On the supply side, bank foreclosures are flooding the market at extremely competitive prices dragging down an already challenged real estate market.

Real Estate Investor Opportunities

Real estate investors that missed the sale window should de-list their property and hunker down. Now would be a great time to lock a tenant in for one or two years until the market regains traction and the broader economy commits to a real recovery.

On the buy side, it is once again the time to go for big price concessions and target foreclosure opportunities. Given the above, the best strategy today is buy and hold. Flip opportunities will be rare in the next six months to a year and now is a great time to lock in great 30-year fixed interest rates. Buying big at deep discounts should pay huge dividends in the coming years.

Buyers should also avoid the hassle of short sales. There are too many opportunities in the market (read high inventory levels) to waste time, energy and money pursuing a short sale that could take six months or more. Recent foreclosures offer better discounts and can be purchased quickly. Now is the time to buy low

Success as a Landlord- Leadership: Owners of Residential Rental Properties Must Be Assertive

Investors in apartment buildings, single-family homes, duplexes, and other residential properties are landlords. The aim of most landlords is simple: to have tenants who will treat their units like homes they cherish, pay their rent on time, and not be a nuisance to others. That simple goal eludes many novice landlords because they fail to establish their authority over their properties.

Selecting Tenants: Avoid Cash-Flow Erosion, Landlord Burnout

The proper selection of tenants is one of the most important responsibilities of a landlord. To carry out this duty, a landlord must have clear selection criteria and a legal and effective screening process. Shortcuts in this process can result in future problems and misunderstandings with the tenant. This may include expensive and time-consuming court proceedings, which in turn can erode cash flow and contribute to landlord burnout.

Informing Tenants: Strong Lease, Clear Rules

Landlords should use well-drafted leases and rules (the rules may separate or included in the lease) that put the tenants on notice of the course of conduct that is expected of them. For example, the lease should state when the rent is due and how it is to be paid. The rules may specify that the use of illegal narcotics on the premises by anyone or that loud music or noises after a specific hour can lead to eviction procedures.

Notifying Tenants: Following Landlord/Tenant Laws

Landlord/tenant statutes in the United States are written with the view that landlords enjoy a stronger bargaining position than their tenants and, therefore, that leases favor the landlord over the tenants. To level the playing field, the laws of each state specify, among other things, the types and timing of written notices that landlords must give their tenants about lease infractions and eviction proceedings. Landlords who fail to follow these specifications needlessly surrender their legal standing and risk seeing their cases thrown out of court.

In many states, after buying a rental property, a landlord is obliged to advise existing tenants in writing that the ownership has changed. This type of letter also should inform the tenants how to contact the landlord (or property manager), where to send or make the monthly rental payment, where the security deposits are being held, and how to request repairs.

Sometimes, a tenant may test a new owner by not paying rent, paying it late, or making unreasonable demands for upgrades. Perhaps the previous owner had been too timid to confront the tenant about such conduct. To avoid becoming the tenant’s “doormat,” the new landlord must swiftly and unequivocally show that he or she does not tolerate unreasonable demands and the lease being breached.

By applying the lease terms and rules to all of the tenants and by using a system of written notices, landlords demonstrate that they are in control and that no one receives special treatment. This is an effective business practice because it encourages good tenants to stay and bad ones to move.

Landlords Lead by Managing Tenants

Smart investors manage their investments; they do not allow investments to manage them. This is equally true for investors who are landlords: smart landlords do not allow their tenants to dictate how to run their properties.

Demonstrating control of a rental property does not mean being authoritarian, offensive, or uncompromising. It does mean acting like a leader, setting the tone of a tenancy, and enforcing lease terms and property rules in a consistent, even-handed manner.

Begin With Single-Family or Multi-Unit Rentals? Investors Must Weigh Pros, Cons of Various Residential Properties

Owning fully-rented, residential rental properties is a surefire way to receive income every month. Not only do these properties generate cash flow, they also offer a good return on equity, both as the mortgage debt used to finance the properties goes down with each monthly payment and the value of the properties rises over time.

Nonetheless, an inexperienced real estate investor must carefully consider what type of rental property to buy. There are many types from which to choose:

  • single-family homes
  • two-family homes (also known as duplexes)
  • three-family homes (triplexes)
  • four-family homes (fourplexes or quadplexes)
  • large buildings with five or more apartments
  • buildings with one or more apartments and a commercial unit

Single Family Homes as a Start

“It is a great time, right now, to invest in residential real estate,” Rhonda Duffy, broker of Duffy Realty of Atlanta, wrote recently in an e-mail response to questions. She added, “The easiest property to buy, prepare, and flip is by far the single family home, and it should be the choice of the novice investor.”

In fact, many investors start off with a single-family house as a way to get their feet wet as landlords. Not only do these investors learn what it takes to maintain and even improve the physical features of the property, they start to understand how to select tenants, what to cover in a lease, how to set the parameters of the landlord/tenant relationship (for example, how each of them will handle emergency repairs, how late to accept non-emergency calls), and how to keep good tenants and oust bad ones. A variation on buying a single-family home as an investment is buying a duplex to live in one unit while renting out the other unit.

From there, investors may go on to buy additional single family houses to gain experience as landlords of more than one rental unit. Alternatively, investors may buy multi-unit properties.

Rental Property Considerations

Here are a few things to consider when deciding how large a rental property to take on:

Per-unit cost. The more units a building has, the lower the price of its individual units. Some investors find it more profitable, manageable, and efficient to own one building of five or more apartments than to own and manage several smaller rental properties.

Building control. In some ways, a landlord loses more and more control the larger a rental property is. In many states, tenant protection laws apply to buildings with three or more apartments and dictate how and when tenants get notices of rent increases and evictions. Local rent-control or rent-stabilization ordinances may limit the amount of annual rental increases, even if the landlord has made extensive repairs or improvements at the property. Tenants in a multi-unit building also may organize a rent strike over perceived failings by the landlord.

Financing programs. Most lenders define their residential-loan category to include properties of one to four units. Even with today’s stricter eligibility requirements, this category presents good opportunities for buyers. For example, there are loan guarantee programs for first-time homebuyers through mortgage lenders and the Federal Housing Authority (FHA) that allow as little as a 3.5 percent down payment as long as the buyer lives in one of the units; most of the closing costs and fees can be included in the loan.

Bright Rental Market

According to a recent e-mail from Alan Brymer, a Utah-based real estate investor and blogger, “It is easy to rent houses now that few people can qualify for a loan.” Brymer noted that the demand for rental units allows investors the choice to sell their rental properties when the real estate market picks up or to hold the properties “for the long haul.”

Midwest Real Estate Analysis of Residential Prices in a Recession

The Midwest real estate markets have been doing exceptionally well, as compared to much of the rest of the country. Homes have foreclosed and properties have been sold at auction, but when one looks at the numbers they can’t deny the Midwest residential real estate markets, namely Wisconsin, Iowa, and Illinois, have done well.

Wisconsin’s Residential Real Estate Wins Big

A recent report published by neighborhoodscouts.com, states, the percentage of Wisconsin residents who are currently home owners is an astounding 61.46 percent. Renters in Wisconsin reached, 28.34%, leaving just over 10 percent of the Wisconsin homes vacant. The most common type of real estate in Wisconsin, is the single family detached homes, with 65.99 percent of the real estate falling into that category. Apartment complexes, otherwise known as high rise apartments, are the next best bet for the real estate investor in Wisconsin, consuming 14.03 percent of the total real estate owned in Wisconsin.

Wisconsin’s apartment real estate markets are on fire, the high rise apartment properties are a large chunk of Wisconsin’s real estate industry. That becomes more apparent, with the next revelation of Wisconsin’s real estate numbers. The amount of real estate being consumed by small apartment buildings in the state are nearly the same as the high rise apartments. Mobile homes sales in the state also makes an impact on the real estate markets, and the economy of Wisconsin, small as it may be. The amount of real estate being owned by mobile home owners and sellers rests at a small, 4.37 percent.

The median home value in the state averages out to be just under, $186,000. The price paid by most homeowners. Some paid a bit more, about 43.75 percent, paid between $170,000 and $339,000. The majority of the rest of the real estate sold in the state of Wisconsin, 33.83 percent, rests below the median home value range at the $84,000 to $169,000 range.

The average rental rate for a Wisconsin apartment crunches out to be $696.00, per month. After reflecting on these numbers, any agent can see that the largest and most profitable, despite the losses, is the residential home market. Over 30% of the real estate sales comes from privately owned homes, by far the largest chunk of the pie in Wisconsin.

Iowa Real Estate

The state of Iowa has been one of the best real estate markets in the country. Since 1990, the appreciation rate of Iowa real estate has risen 6.37 percent, and in the last 12 months, it has risen 0.82 percent. Residential real estate prices in Iowa fling from the bottom rung, all the way up to the top shelf.

The cost of residential real estate in central Iowa is much heavier than that of the western and northern regions of the state, though, making a median value hard to determine. In Des Moines, residential homes can range from $129,000 all the way up to $168,400, for the average single family home. In the northern cities, such as Dubuque, the housing costs are fairly low, in the range of $35,000 to $79,000.

Iowa’s median income reaches the 60 thousand dollar range, which is needed by Iowans just to maintain the mortgage on a lower priced $70,000, home.

Illinois real Estate

According to that same report, Illinois has been doing a bit better in this respect, than Iowa, but not nearly as strong as Wisconsin. Illinois appreciation rates have climbed over the past 10 years , 6.4 percent, but across the last 12 months, the residential real estate in Illinois has plummeted 2.92 percent, including a loss of 0.16 last quarter. In 2014, the all important median value of a residential piece of real estate, namely a single family home, lists at just below $184,000, making it the 21st in the United States.

The average monthly mortgage in Illinois is $1,455. The median income of Illinois home owners was $61,174, ranking it 14th, but per capita, the state averages a poultry 26,307, making that $1,500 mortgage payment a little harder to fathom.

Most of the Illinois economy is industrial based, that includes farming, soft coal, mining, oil production and refinement. It manufactures everything from iron and steel, and chemicals . If the industry markets of Illinois are crushed by state and national legislations, as many politicians wish to do, the Illinois’ real estate industry will crumble as the legislations grow.

The Overview

After researching and reading all the real estate facts for Iowa, Illinois, and Wisconsin, the only conclusion that can be reached is, the most commonly bought and sold pieces of real estate in the entire Midwest, is residential homes and apartments, specifically large or high rise apartments.

Manage a Vacation Rental Property: Maximize Profits by Managing Your Own VRP

It may seem daunting to manage a vacation rental property from hundreds or even thousands of miles away. It’s tempting simply to turn over the management of the property to a management company. But those companies typically take a large cut (often 35% or more) of any rental money earned by the VRP. Many people rent out their vacation homes as a way to make having a second home affordable; the large cut taken by management properties often changes the math so substantially that it may no longer be financially possible to own that dream vacation property. Luckily, it’s fairly simple to manage a VRP and keep all the profits.

Find a Trusted Cleaner for the Vacation Rental Property

The hardest part of managing your own vacation rental property is finding a cleaner who will not only do basic cleanin, but who will also do the chores that are critical to the success of a vacation rental property. You’ll need a cleaner who will:

  • Clean all surfaces.
  • Launder and change linens.
  • Wash and put away any dirty dishes left out.
  • Keep track of stock of cleaning supplies (like toilet paper, paper towels, soap, and any other amenities provided at the property).
  • Let you know if there’s any damage to the property.

The best place to start looking for such a person is by asking the Realtor used for the purchase of the vacation property. Very often he or she will have a few names to recommend. If that fails, try posting an ad on services like Craigslist. Always interview the candidates, preferably in person, and select a licensed and bonded professional. Be sure that there is good rapport and communication. This person will play a critical role in the success of managing a vacation rental from afar.

Effective Advertising of the VRP

  • Once a suitable cleaning person is found and the property is well furnished and ready to rent, it’s time to advertise. The HomeAway corporation has recently bought many of the vacation rental by owner portals out there. This makes it easier to advertise on their multiple portals, like VRBO.com, Homeaway.com, and CyberRentals.com. Listing on these portals is worth the investment; you’ll make back the cost of the listing with the first rental, and you’ll secure far more business with the listings than without.
  • Another valuable (and free!) source of advertising is Craigslist.org. Post an ad every couple weeks.
  • Be creative. Is the property near a ski resort? Ask to put up a flier on the bulletin board in the ski instructors’ lounge. Have the perfect spring break spot? Advertise on the local college campus.

Regardless of where you advertise, post as many pictures as possible. Renters love pictures, and the better they feel they understand the property, the more likely they are to book.

Respond to Inquiries Promptly

This is critical. Answer the phone. Answer emails. The faster you respond, the more likely you’ll be to secure a booking. Often, the potential renter fires off several emails or phone calls to VRBOs in the area. Responding quickly inspires confidence, so be attentive.

Accept Credit Cards

Renters love having the option of being able to pay by credit card over the phone, and it’s the best way for you, as a business owner, to quickly, efficiently, and dependably get payment. It’s also valuable if there’s ever damage to the property; there’s no argument and haggling with the guests, the amount can simply charged to the card on file. Accepting credit cards is one of the best ways to run a vacation rental property smoothly.

How to Invest in Rental Property: Step-By-Step Instructions on Buying Investment Properties

Investing in rental properties can be very easily done with proper knowledge, guidance and a good mortgage broker. With the tips provided in this article, hopefully investing in rental property will be simplified and made easy for all concerned.

How to Invest in Rental Property

There is a vast array of opportunities available today in the rental property business. For every millionaire that gets lucky in the rental field, there will be 100 that are not so lucky. On an average 20 percent will lose money on rental properties due to lack of knowledge and hasty decisions.

Investing in rental property can be very rewarding if done with due diligence and care. It is a buyer’s market and many deals are offered daily. Learning how to proceed will save the investor hardship and possibly lots of money.

First Steps Towards Investing in Rental Property

In order to be well informed, learn to make some smart decisions. Knowledge is the key in learning how to invest in rental property. There are a few ways to obtain knowledge in real estate:

  1. Hire a mentor or guru
  2. Join a real estate investment club
  3. Search for information on the internet

Where Are There Guru’s for Hire?

In order to learn proper procedures in buying rental properties, a mentor is needed or a guru. Someone who will show the investor the “ropes of the trade” so to speak. Guru’s are for hire and may be quite expensive. Many investors will opt to get around this problem by working side by side with a trained Realtor who specializes in selling and listing investment properties.

A mentor will guide the investor in looking for the best deals, how to shop comparables and the art of negotiating. A smart Realtor will not teach everything, because then the service of the Realtor is no longer needed. The term due diligence is used much and this simply means to research a property thoroughly including the title report to look for all liens involved in the property.

A complete and thorough net sheet is needed to show all cost involved in ownership of this particular property also. Do not just look at the mortgage payment minus the rents. Look at the full cost of ownership including maintenance, water, utilities and repairs.

How Does an Investor Join a Real Estate Investment Club?

There are many Real Estate Investment Clubs available all over the world and joining is not the problem at all. The problem is picking the right one to join. Having enough knowledge to choose the correct one is the key.

Social Media Sites or Real Estate Online Websites?

Besides hiring a mentor and joining a Real Estate Investment Club, try searching the internet for thousands and thousands of sites offering free advice. From Twitter to the top real estate web sites, the amount of free information will be staggering. This is why in many cases it is important to be involved in the other two choices stated above.

Twitter has evolved in the last few years as the top place to get free information. Social Media is so popular that it would be literally impossible to read all the free information available in 20 years. Deciding who is legit and who is not would be the main problem.

First time investors should never take out a loan on the Internet as there are too many loopholes and problems dealing with a “supposed” good guy or mortgage broker. Bankrate.com is a good website to search and compare mortgage rates and get the latest news on interest rates.

Use Twitter or other social media sites for what they are meant to be used for. Use them for immediate information for research and guidance and then compare that information with a local mortgage broker or Realtor.

There are many websites offering excellent real estate advice also. The top site is Realtor.com and they have every property currently listed on the MLS and a list of every agent or Broker throughout the US. It is a one stop place for everything the investor could need or want. Many Realtors will be glad to refer the investor to a local Realtor to help in purchasing a rental property.

What is a Seller Financed Mortgage?

Now that the investor has all the knowledge available everywhere, they are prepared to purchase, obtain a mortgage and close the deal. Never ever deal with investment property without a trained individual until thoroughly trained in all aspects.

One piece of creative financing needed by any new investor or seasoned one is how to buy a property with seller financing. So in other words where the seller is the bank. This type of financing avoids most closing cost and that is a huge savings. Traditional closing cost can amount to 3-6% of the cost of the home or rental property.

What is a Lease Option?

The next thing a new investor should learn is how to do a lease option. A lease option is an option to buy a property at a later date for a specified amount of money. It is used by many investors in buying rental properties. The difference between seller financing and a lease option is that in seller financing there is no requirement to refinance the property prior to the end of the term of the loan.

Now with this huge amount of information, anyone can purchase rental property and be a success and hopefully rich in the process.