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In chapter 1 we decided that the first step was to have a plan. It is important to have a plan and stick to your plan. It does not matter which plan you have chosen, but the important lesson is to have a plan to follow.

So now that we have the plan it is time for the next step, That next step is to have financing in place so that when you are ready to start investing you have the money in place to execute the plan.

There are a few basics ways to invest in real estate, but they generally fall into one of 3 categories: cash, owner occupied investment, and straight investor financing.

Cash is the easiest way to invest. It normally comes from one of two sources, either you have it in the bank or you have an asset that you can tap for the cash, like your home. If so, it is a simple as getting your bank letter and your approval threshold established and be ready to write a check for a deal.

There is also owner-occupied financing, which is when you are going to live in you investment and rent part of it out. FHA financing is available if you are willing to live in the property for a 2 year minimum, and you can purchase up to a 4 unit building with a down payment as low as 3.5% of the purchase price. You could buy a double or four family, take advantage of the low down payment, live in one unit and rent the others out! A great deal for someone to start their investment career.

Straight investior financing is the toughest to get, and you will need good credit, a good property to buy, and a down payment of 25 to 30% or more down. Not all lenders will finance investment homes any longer, so I would start with a good mortgage broker or a small local bank that wants to invest in the community.

Having the financing in place before you go any further in your quest is my recommendation. It does you no good to spend time finding your investment and then not be able to buy it! Make sure you have a plan for your financing before you look at homes or make offers as the good deals don't last forever and you need to be ready to pounce!

When I teach my real estate investing class at Columbus State Community College we get a lot of students that would like to become a real estate investor, or may already have dabbled in the real estate market. One of the things we always preach to students is that the successful investor has a plan, and just doesn't buy any house in any location for any price.

So to start off this series on investing, the first thing I want to tell anyone about investing in real estate is you need to start with a plan. And the first part of that plan is to determine what goal you want to achieve at a later date.

You need to understand that there are basically 2 ways to invest in real estate, the short term and the long term. Short term is cash now, while long term is appreciation later. Generally properties will fall into 3 categories: Flip and sell, short term cash flow, or long term price growth. It is very difficult to gain both cash flow and long term appreciation on the same property.

Homes that produce cash flow are normally lower priced, multi-family dwellings in areas with mid to high rents. The upside is that you may have a $65,000 double with a $600 mortgage payment that rents for $700 a side-a nice positive cash flow. The bad part is that in about 10 years you could expect to sell that double for right around $65,000.

More expensive single family homes in better areas may run you about $150,000 and have a mortgage payment (PITI) of $1200 and if you are lucky will rent for maybe $1150 a month. You may have to subsidize the payment a bit each month, and you need to save up in case it goes vacant for a month or two. The positive side? That home, in 10 years, may be worth $200,000 to $225,000.

See the difference? So back to square one: to be a successful investor you need to have a plan, and the plan starts with a goal. Do you want to accumulate monthly cash flow now and save that up, or do you want a place that breaks even and you acquire wealth through future appreciation? Or, what if you had a few of each type?

Stay tuned for future articles.....

I had an agent call me last week to set up one of my showings on a Sunday afternoon for 1:00, and was dismayed when the Seller asked if she could do it at 1:30 instead. She said that she had 20 houses to show them and there was no way she could change her route. I thought, Wow! Thats and agent and a buyer that are not going to get a good look at houses. So how many houses should a buyer see?

That is a question that many buyers ask me. How many houses are we going to look at today? Unfortunately, many buyers and many agents think that they need to see everything that is available. I think that is a bad idea!

I think that a buyer reallly can't absorb more than about 5 or 6 homes without forgetting the features of the homes. By the time you get to house 15 there is no way that you will remember the features of the first home, or the second. Trust me, they alll start to blend in after a while. So how many should you see and how do you arrange that?

My thoughts are that a buyer should sit down and come up with a list of wants and needs, and rank those items. Compare all the houses against your list and rank them from top to bottom, taking into consideration location, features, and price. Then pick the best 5 or 6 and let your agent know which ones you want to see. If there happpens to be more than 5 or 6 then I think you need to pick a second day to go look at houses. Then group them by location and scour one area one day, and another area the next time. If you are an agent, this is also what you should tell your clients.

Bottom line, you will be able to spend more time in each of the houses that you have ranked high in your wants/needs list and you will retain a lot more informmation. Buying a house isn't about seeing everything as fast as you can, but about the journey of finding the right home.

It may be possible that I have seen it all now! Can you even imagine a world where you wash your hands in the toilet? This idea must have been thought up by a six year old boy, who was caught washing his hands in the back of the toilet!

Now when you are done laughing, ponder this idea for a minute: this is genius! You wash your hands and the water goes into the toilet and you use that for flushing! Genius! I am not sure the dog, who uses the toilet as his personal water fountain, will like it but it is a good way to save water! And because the water in the bowl that is left behind is semi-used, it will prompt me to keep the lid closed.

But why stop there? Why can't we funnel the shower water to a tank in the basement and use that to water the lawn? And run the gutters into the water supply and use that for taking a shower? Or simply move the shower onto the deck and use rainwater captured by the sky to take a shower and then the water can be used to wash the car and then water the yard? Brilliant!

Tonight at happy hour I bet I can (with the help of a few friends) dream up all sort of uses for recycling things!

Interesting year and interesting stats! 43232 is composed of parts of east and southeast Columbus, with most homes serviced by the Columbus schools but some parts are in the Groveport Madison school district. Here is what I found:

In 2009 this area reported 372 sold houses involving real estate agents. While that is not all the solds, it generally gives us good data to work with. This compares with 2008 when there were 409 total sold homes. In 2009, the average home that sold was 3 bedrooms, 1 full bath, and about 1388 square feet of living space, which is almost the same as 2008.

The average sold price in 2009 was $68,665 and it took 80 days to sell. The average homeowner negotiated 4.1% of his asking price. In 2008, the average home sold for $77,423 and took 89 days to sell and home sellers negotiated 5.8% off their asking prices.

In this zip code the average home sold for 11.3% less in 2009 than in 2008, but sold faster and there was less negotiating. My thoughts are that the REO and foreclosures have lowered the overall sales prices for this area.

For 2010? There are still a lot of bank owned homes to be sold and until that clears up there will still be pressure for lower prices, although I feel that the prices will climb a bit in 2010 and that this area has hit bottom. The tax credit will provide a large stimulus for this area as this zip code traditionally has a lot of first time buyers, and the overall low prices will encourage many to buy as it will be less than renting.

If you are thinking of selling, you need to make your home look its best. If a buyer needs to do work on your home if they buy it, they will just buy a bank-owned home and get a much lower price. Make sure your home is freshly painted with no work needed when it hits the market.

OK, we are all guilty of it. Putting things "away" that we think we will use later, store for a friend, or cant bear to let go...but have you noticed that those items seem to just collect dust in their current place of storage?? Well, whether you notice or not Buyers looking at your home notice. They notice things you may never think of! The old books stored in a closet, the pans you have not cooked with in ten years but "may use again" even though the handle fell off. Buyers are turned off by these things even though they won't be there when you leave.

Sellers nationwide are noticing that they are selling their home quicker and for more money when they de-clutter and clean out their homes of any un-needed items.  But what do buyers consider clutter and what items can you live with out? Let's go through it room by room and you can see how simple it is and once you're done what a difference you will see in your home!

First, let's start in the most important room in the house, the Kitchen! When de-cluttering your space you need to look at every item and ask your self "do I use this everyday?" and if the answer is no, or if you only use it once in a while then store it! If you have enough silverware to seat twenty plus people lets get rid of it! You only need enough to feed each member of your family so leave a set of 4 or 6 of each utensil in the drawer. The same rule applies for all your plates, bowls, cups, and saucers. You don't need a plate of every color and style in the cabinet, we need things to look clean and organized, pick one set that matches and put the others away. Now, lets move on to pots and pans. We all store that one pan that has no handle and that we have had since college but now is not the time to show that off! Anything that is not part of a set or that you have two or more of, pack! The less pans the more space it looks like you have in your cabinet. We only want buyers to see what can fit there- not how many can fit there. Let's apply the same rule to the Tupperware, the pantry and that drawer we all consider the "junk" drawer. Once you have made your way through every cabinet you should see a huge difference!!

Look at all that space! You went from a clutter filled kitchen to a nice open and organized space where buyers can imagine their own items and see the room they have to grow into!

Next Room, the bathroom!

This post was courtesy of my licensed assistant, Rachael Collins, and I thank her for this great information and sales tips.

Sales data is in for Pickerington, Ohio for 2009 and it shows some interesting information!

The average home that sold in Pickerington for 2009 was a 3 bedroom 2 bath home that was 2,305 square feet. The average home sold for $184,365 in 102 days and was listed at a starting price of $ 191,000. This translates that the average home seller negotiated 3.5% from their original listing price.

How does that compare to the previous year? Well, the average home in 2008 was also a 3 bedroom 2 bath home of about the same size. It was listed for $199,300 and sold for $191,597 in about 108 days.

So, to sum this up, the average Pickerington home sold for 3.8% less in 2009 than in 2008, but it sold in less days and the list prices held their value better. That means the market has probably reached the bottom as the price decrease seems to be lessening, homes are selling quicker, and commanding more price stability for sellers.

2010 should be strong, especially this spring, when the first time homebuyer tax credit is available and also other primary buyers who have been in their home for more than 5 years are also provided an incentive to buy a home. My advice? I would target February 1 as the date to have your home ready to market to take advantage of the market, the tax credit, and the breaks in the weather. Got 2 weeks, so let's go! 

2009 sales stats for Reynoldsburg, Ohio have been calculated, and there was some surprising stats to report. I compared all the homes that sold with a real estate agent for 2009 and compared them with 2008 and there was some interesting statistics that you can use.

In 2009 there were a total of 322 sold homes (not including condos) in Reynoldsburg school district, as compared with 356 solds in 2008-a slight decrease but not bad. The average sold price in 2009 was $ 126,585-down from $137,190 in 2008. This means that the average home in Reynoldburg actually declined in value 7.7% from 2008.

In 2009 it took an average of 85 days to sell a home in Reynoldsburg, which is shorter than 2008 when it took 97 days. The average home seller in 2009 negotiated 3.5% off their asking price, which was slightly higher that the 3.2% they took in 2008. The average home sold for approx. $ 73 per square foot in 2009.

So , to sum all this up, the average home seller in Reynoldsburg in 2009 sold their home faster, for less money, and negotiated a bit more as compared to 2008.

What does my crystal ball say for 2010? I predict, based on experience and trends, that we will have a hot market for the first 4 months of this year during the tax credit period then the market will cool a bit over the hot months, and heat up again in the fall as people start to get back to work. I think we will see a slight increase in prices in the lower end of the market among the first time buyers and a leveling of prices in the upper end as we have hit pretty close to the bottom already.

If you have been holding off buying a home waiting for the prices to go lower, I think you have seen the bottom. If you are thinking of selling, I think right now would be a good time to sell during the tax credit period as we are seeing an increase in buyer activity. So, either buying or selling-2010 may be the best year we have seen for a few years!

Did you know that you can attend college classes at Columbus State Community College for as low as $79 per credit hour for Ohio Residents? Did you know that if your are over 65 you can attend for FREE?

Why mess around with paying high fees at other places of learning when you can get 11 weeks of learning in pretty much any subject you can think about for around $237.00, free if you are over 65? Whether you want to learn a new language, learn computer skills, maybe learn photography-its all available. The instructors are normally experts in their fields, and the price is dirt cheap! In addition to main campus they have classes online and regionally in many suburbs. Most classes transfer towards a degree at most 4 year schools.

Real estate agents: get a degree in real estate! Like history or art-they have that! They own a golf course, so they have golf! Music-got it! Computer classes-you name it, they have it! Accounting? Got it! Law classes? Yep. Automotive, electrical, welding, dental assistant? Yes to all!

Most classes are hands on, most meet once a week for 11 weeks, most cost $237, most count towards a degree! I challenge you to find a better value! Find out more at www.cscc.edu

I have a class that starts Tuesday in Real Estate Investing, so if you have thought of buying an investment property or foreclosed home, enroll today and we will see you Tuesday evening!

I think during the holiday season people get so caught up in the season that there is almost a sigh of relief when Christmas is over. So now what? Maybe you should think about buying a home.

I am not sure if there will be a better time in many of our lives to buy a house than the first 4 months of 2010. Interest rates are down to incredible lows, and there are a lot of homes on the market at bargain prices. I have not seen prices this low in years! And to top this off, there is a tax credit for both first time buyers and now for move up buyers who purchase before April 30, 2010.

So know that you have finished with all the Christmas gifts, all the holiday parties, and made out your New Years' resolutions-add a new one for 2010. Make this the year that you purchase a home for yourself!

The boat will sail by summer, hope you catch it!