Month: March 2009

Kathy Kennebrook also mentions here that may be times when the tenant/buyer ultimately doesn’t close on the property and you end up repeating the same scenario with a new tenant/buyer on the same property. Kathy Kennebrook would never want you to intentionally set up a tenant/buyer to fail. She has her mortgage broker follow up immediately with her tenant/buyers to start working toward getting the financing in place in order for them to be able to purchase the home.

But sometimes scenarios arise where a tenant/buyer will simply walk away from the deal. Kathy Kennebrook has had this situation occur when the tenant/buyers ended up getting a divorce and never closed on the property. They both just walked away from the property and from the deal. She has also had scenarios arise where she had to evict the tenant/buyer for non-payment of rent.

By the same token, Kathy Kennebrook had another scenario where a doctor moved into one of her properties as a tenant/buyer, paid a significant non-refundable option deposit and then ended up building another house somewhere else and never closed on hers. So there may be times where you end up lease/optioning the same property more than once. This is not necessarily a bad thing. In fact it will just make you even more money.

One of the other advantages to lease/optioning properties is that it can be a good tax strategy for you since you can depreciate these properties for as long as you hold them. When you quick turn properties or wholesale them on a regular basis, you end up paying a lot more to Uncle Sam in taxes. Kathy Kennebrook remembers the point at which her CPA told her “you have to stop selling everything you get your hands on”.

When you hold properties by renting or lease/optioning them, you end up being able to take deductions for the properties and depreciating them. When you hold a number of lease/option properties or rentals, the amount you get to depreciate can become quite large. Of course you will need to check with your CPA as to what strategies tax wise are best for your personal business. A good CPA will make sure you are getting all the benefits you are entitled to. Your CPA is going to be another important part of your dream team. But Kathy Kennebrook will tell you that a call like this can certainly cause you to transition from a position of selling everything you buy to starting to hold onto some properties long term.

Lease optioning properties is also a good way to replace income. If you find you need a certain amount of money to live on each month, you can put together a group of lease/option properties that create that monthly income for you. Once you have a group of lease/option properties in place, this will allow you to create the income you need in order to quit a job you don’t like and do the real estate business full time if that is what you choose to do. Or maybe you want to build a portfolio of properties to supplement a retirement income. Lease/optioning properties allows you to make the choices for yourself and your business that are best for you.

For more information on marketing to find motivated sellers and buyers for your real estate investment properties, visit Kathy Kennebrook’s website at www.marketingmagiclady.com. While you are there, sign up for Kathy’s free monthly newsletter and get 149.00 in FREE real estate investing information!!!

Kathy Kennebrook does invest in commercial real estate to a small degree. The way she does this is by investing in multi-unit properties such as apartment complexes. While it makes a lot of sense to invest in commercial buildings, Kathy Kennebrook does not invest in commercial buildings or lots.

There are several reasons for this. While commercial buildings obviously mean bigger paychecks, in our current economy they also mean a lot more carrying costs and less cash flow unless you are able to turn them quickly. To be really successful in commercial real estate, you really need to be an expert and invest a lot of time in these properties. In fact Kathy Kennebrook knows of several investors who are “stuck” with commercial properties they can’t move in the current market.

Now Kathy does like to invest in storage units and small apartment complexes since these are much easier to manage and the cash flow is greater even in a depressed economy. With storage units the “eviction” process is much easier and with small apartment complexes, even if you have one or two units empty the rest will carry your payments and continue to cash flow. To Kathy’s way of thinking this makes perfect sense.

While Kathy Kennebrook does not currently own any storage units, she has in the past and these buildings create really great cash flow and are very easy to manage, so if you are interested in commercial real estate this might be the way for you to go. Kathy Kennebrook’s greatest love still continues to be single family homes since everyone needs a place to live and these properties offer excellent long term benefits.

For more information on all the resources you need for your real estate investing business, visit Kathy Kennebrook’s website at www.marketingmagiclady.com. While you are there be sure and sign up for Kathy’s free monthly newsletter. When you do you will receive an additional 149.00 in relevant real estate information absolutely FREE!!

Kathy Kennebrook understands that Lease Options have always been a good strategy for marketing properties to potential buyers, especially for the Real Estate Investor who wants to hold properties long term and build multiple profit centers into their deals. In the current market, this is a perfect strategy to make money. Once you have met your short term cash needs, lease/optioning becomes a good long term investment strategy for you to be thinking about.

In an uncertain real estate market, lease/optioning properties is an especially good strategy for marketing your property to individuals who would not otherwise be able to purchase a home. This opens up a whole new market of potential buyers for your properties and enables you to sell your properties much more quickly. When the market is overloaded with homes for sale, the willingness to lease/option a property will draw a lot more potential buyers to you. There are a lot of potential buyers who have a significant amount of cash for a down-payment; they just don’t have the credit right now to be able to get a mortgage. Kathy Kennebrook knows that this is where lease/optioning a property can be advantageous to these types of buyers. It gives them the time they need to fix whatever credit problems they may be experiencing, while building their credit by making timely payments to you each month. It becomes a win-win solution for them and for you.

There are actually three profit centers built into a lease/option. Your first profit is realized when you put the tenant/buyer into the property and you receive a non-refundable option deposit or earnest money deposit from them before they move into the property. It is understood by the tenant/buyer that this money is non-refundable if they do not ultimately buy the house. If you have purchased the property correctly by either getting the deed or using private lenders, this earnest money deposit becomes all profit for you and you can spend it however you like.

The second source of income from a lease/option is the monthly cash flow that you receive for as long as the tenant/buyer pays rent to you. The cash flow is the spread between the amount of the mortgage you pay to the bank each month and the amount of rent your tenant/buyer pays to you. This is a profit center for you that is non-refundable, so the spread you make each month is yours to keep. For example, if your payment on a mortgage is 650.00 per month and your tenant/buyer pays you 900.00 per month in rent, your monthly cash flow becomes 250.00 per month on that property. When you have a number of lease/options in place, this can become a nice monthly income for you.

It is also written into Kathy Kennebrook’s lease/option contract that the tenant/buyer is responsible for repairs since they are ultimately going to own the property if they exercise their option, close on the property and pay you off. So there is no maintenance for you to worry about. In addition, they are able to do upgrades to the property such as paint or carpet as long as they get pre-approval from you first. You want to keep your tenant/buyer in the mind frame of ultimately owning the home.

The third source of income for you is ultimately the spread between what you owe on the mortgage you have on the property and the amount your tenant/buyer had agreed to pay you for the property when they exercise their option and close on it. This amount can be substantial if you structured the deal correctly from the onset. Remember; when you priced the property at the beginning of the lease/option with your tenant/buyer, you would have also taken into account the appreciation of the property within the twelve month period of the lease/option. So for example, if the property was worth $150,000 when you purchased it, you would lease/option it for at least 159,900 in order to account for appreciation. This is just another way for you to make money with lease/options.

Once you have a group of lease/options in your portfolio of properties, these properties end up providing continuous pay checks, both on a monthly basis and on a long term basis. Make sure you also take the time to periodically check with the mortgage broker who is working with your tenant/buyers to make sure they continue to follow up and move toward getting your tenant/buyers qualified to purchase the properties. This is another reason you need to have a good mortgage broker on your dream team. This is just another way to automate your business by getting this system in place.

Kathy Kennebrook has a lot of great strategies for building your dream team and creating lease/options on her website at www.marketingmagiclady.com. While you are there be sure and sign up for her free monthly newsletter and get 149.00 in relevant real estate investing information absolutely FREE! Read part 2 of this article next week.

In the current market there are many foreclosures and pre-foreclosures, and many real estate investors are involved in buying and selling houses using short sales as a means to buy houses at steep discounts. While Kathy Kennebrook definitely believes that this strategy should be a part of an investor’s plan, it is not the only way to buy houses at deep discounts in the current market.

For many years Kathy Kennebrook has marketed specifically to many other types of motivated sellers including out of state owners, estates and probate properties, divorce situations, home owners with no mortgages and burned out landlords to name a few. What Kathy Kennebrook has found in this market is that there are just as many of these sellers as there ever were before, except that almost none of the real estate investors are working with them.

It is for this reason that there are so many deals available for the real estate investor with big profits without having to negotiate short sales. Kathy Kennebrook finds that there are many times when she can purchase estates for example at deep discounts and wholesale them for a quick profit. She will also buy properties from homeowners with no mortgages, not only at a discount, but with seller financing as well. These are properties that Kathy will either rent or lease/option depending on what her long-term plan is for a particular property.

Kathy Kennebrook has also discovered that there are a lot of folks who simply need to get rid of a home for whatever reason and these create ideal situations to simply have properties deed to you for the balance of the mortgage. So there are a lot of really good deals out there to be had without having to work the pre-foreclosure market or having to negotiate a short sale.

For more information on all the systems you need to buy and sell houses quickly in the current market, visit Kathy Kennebrook’s website at www.marketingmagiclady.com. Be sure and sign up for her free newsletter and receive over 149.00 in free training.