| How to Accelerate Makeing Money Using
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| | longer than you had anticipated.
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| Hard Money Loans!
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| | Remember, every day that the property is
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| 03rd April 2007
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| | not sold or rented comes right off your
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| Author: Jim Olivero
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| | bottom line. The interest, taxes,
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| I would likt to talk to you about
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| | insurance, and utility bills compound
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| different standards and strategies that
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| | each day. Buying the property at the
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| real estate investors use when evaluating
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| | right price will protect you from
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| properties.
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| | Murphy's Law.
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| In order for us to get involved with a
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| | Our Funding formula:
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| property, the following standards are
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| | 1) Establish an after repair value for
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| judged for the worthiness of any rehab
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| | your property.(ARV)
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| project:
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| | (Get "area comps" and view each one. Pick
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| "You should look for the worst house on a
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| | out the property that has a street that
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| decent block"
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| | is most similar to your house's street,
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| 1) Whether your strategy is to "flip"
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| | and a structure that is closest to your
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| properties, or to hold them for their
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| | house's structure, then compare the
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| rental cash flow, it's important to be
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| | square footage, amount of bedrooms and
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| able to draw potential buyers, or strong
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| | bathrooms that are all listed on the
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| potential tenants, as quickly as
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| | "comps." This will help establish a real
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| possible. With this in mind, you should
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| | fair market value for your property).
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| look at properties on streets that are
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| | 2) Multiply the ARV x .65 (After Repaire
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| maintained properly. This does not limit
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| | Value)
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| you to higher end homes. There are many
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| | (This will give you 65% of the ARV).
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| "blue collar" areas that properly
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| | Here is a quick example: You are able to
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| maintain the condition of their homes and
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| | purchase a property for $20,000. You run
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| yards. However, a street that has poorly
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| | the comps and find the property will sell
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| maintained properties or many vacancies
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| | for $100,000 this is the after repair
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| do not lend themselves to fast turn
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| | value. In this example you could get a
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| around sales or well suited tenants.
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| | hard money loan for $65,000.
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| Always remember that this is an
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| | 3) Establish a comprehensive and accurate
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| investment. You take on a large risk, and
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| | list of repairs that you plan to do to
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| a lot of work as a rehabber. No matter
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| | the property, and estimate the costs for
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| how much loving care you put into your
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| | each repair.
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| property, you can do nothing about the
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| | (This is important. If you are
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| condition of your neighbor's property.
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| | knowledgeable and experienced in doing
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| 2) Make certain that there is no
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| | repair work, you may not need help. If
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| structural damage to the property. This
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| | you are not experienced or skilled in
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| could be a fatal blow to your investment!
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| | this, find someone who is and have them
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| "You make your money when you buy a
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| | draw up a plan. Even if it costs you a
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| property, not when you sell it!"
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| | little money to get them out there, this
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| Purchasing Formula
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| | could save you thousands of dollars).
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| There are many formulas used for the
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| | 4) Subtract the cost of repairs from the
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| successful purchase of a rehab project.
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| | 65% value of the ARV.(After Repair Value)
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| It's important to use one. There must
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| | This should be the maximum price that you
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| always be a comfortable cushion between
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| | pay for the property! This is a
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| the purchase price and the selling price
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| | conservative formula, and it usually
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| of investment property. This cushion
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| | works well. Remember, anyone can buy a
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| price will help you achieve a successful
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| | property at close to fair market value,
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| investment, even if you have repair cost
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| | but with your costs and risks, you must
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| over-runs, or hold on to the property
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| | do better!
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