Real Estate Investing

While it takes $200 - $500 to get started in those businesses, you can buy rental property with no money down.

Some investors flip properties (buy and sell immediately). My experience is with buying and managing rental properties.

I'm often asked about timing... When is the best time to get into this sort of endeavor? The answer of course, depends on you, more than on the market

That means when you have the time, some investment cash, and the desire.

Buying in a depressed housing market is good... if it coincides with the three criteria above. (After you buy, it will take some time to deal with a vacancy. Repairs and cosmetic tough-ups, advertising, interviewing prospective tenants, investigating the information they put on their application, and executing the walk-through and lease signing all take a little time.)

With rental property, cash flow is the name of the game. Whether you use a significant down payment or creative financing to keep your payments and maintenance costs below the rental income you receive, it matters little once you've bought a rental.

What you want is a property that pays for itself and gains in value and equity every year.

What you don't want is an alligator that takes a large bite out of your family's income every month. For this reason I prefer single-family homes as rentals. They're much easier to rent. Commercial property can stay empty for months at a time, and apartments leave me cold.

Some people find that they do not like dealing with tenants. My advice to them is... get out of the business as soon as practical without taking a financial bath. Other than that...

You should have a pretty good idea about your exit strategy going in.

• Are you going to keep the properties until you die, and pass them along to your kids?

• Are you going to completely retire and sell them someday?

• Do you have a different strategy or time horizon in mind?

It will have a direct impact on how you set up purchase financing.

  How do you get into real estate investing? As with other businesses you ask questions, gather information, make a decision, and set goals.

Some investors buy several properties (that fit their strict criteria) over a few months time. These people usually act strictly in a management role. They tend to put their emphasis on refinancing, bidding out repairs, taking bids on insurance coverage, and similar actions.

Others use the one-a-year, fix-up strategy. These folks often do their own repairs and maintenance.

Either way, cash flow is king!

Some real estate investing businesses partner a money person with an operation person and employ either of the above strategies.

What resources do you need within the first six months?

• Banker
• Insurance agent
• Tax preparer (a good one)
• General maintenance man
• Heating and AC specialist (HVAC)
• Attorney specializing in representing landlords

How do you find this attorney? Ask a clerk at your local court where eviction cases are heard. This attorney will save you time, money, and most importantly... aggravation.

Over time you pick up other resources as needed, such as a carpet layer, roofer, and estate attorney.

How do you find property to buy? Several ways, including:

• Let everyone (especially your banker, insurance agent, and attorney) know that you buy homes (or offices, strip centers, etc)
• Call on newspaper For Rent ads and ask whether they're interested in selling
• Put a message on the door where you see a For Rent sign
• Respond to For Sale ads
• Contact a real estate agent

Someone like your attorney may put you in touch with a tired landlord looking to sell out. These are the people that understand the need for creative financing and cash flow.

You should have a pretty good idea about your exit strategy going in. It will have a direct impact on how you set up purchase financing. If you change your mind later, you can do some finance restructuring.

Here's an Arizona residential rental real estate investing resource. Most other states have a similar resource.

And here are several News Releases related to property taxes and a deed scam...

 

~~~~~ ~~~~~ December 16, 2009 Coconino County   Board of Supervisors Creates Public Health Services District   At their regular meeting today, the Coconino County Board of Supervisors voted unanimously to create a public health services district. The Board has been considering establishing a public health services district since 2007 when the County anticipated a revenue shortfall in the near future resultin.

~~~~~ ~~~~~ October 17, 2008 Coconino County   Board of Supervisors Chairman Deb Hill Responds to Recent Property Tax Bill Increases   Dear Coconino County Citizens, Over the past few weeks, Coconino County officials have spent a lot of time answering questions about the property tax bills that were recently mailed to property owners countywide.  Taxpayers have expressed surprise and frustration at the increase in their property taxes, particularly in this uncertain economy.  Many people we have talked to initially felt the County is solely responsible for this sharp increase in their taxes.  Our challenge has been to break down a complicated process in understandable terms, with the goal of educating our taxpayers about how tax rates are set, where the money goes, and why taxes went up in a down economy.   As the designated tax collector agency, the County is, by law, responsible for collecting the taxes and distributing them proportionately to County schools, cities and towns, libraries, community colleges, and special districts, such as fire and flood control districts.  Education receives the biggest piece of our tax dollar (approximately 65�) and the County�s share is approximately 6� out of every dollar to help fund our programs and services�including our court system, jail, law enforcement, flu shots, building inspections, medical examiner, road maintenance, elections, and so on. When it comes to setting tax rates, each taxing entity is responsible for setting their own rates.  For example, school taxes are determined by the elected school board of each individual school district; fire district governing boards set their rates for the taxpayers who live within their boundaries and receive their services; and city and town councils set their rates through their budgeting process.  Once the rates are adopted by these agencies, they are forwarded to Coconino County to be used in calculating the property tax bill of each property owner.  The County must, by law, accept the rates as adopted. County property taxes are subject to limits imposed by law.  These limits were approved by the voters as an amendment to the State Constitution, so there is no danger of the Board of Supervisors ever exceeding them.  The County cannot increase the tax levy (total County property tax dollars billed) by more than the value of all new construction plus a 2% inflation factor.  Also, Coconino County �s tax rate has not increased and is the lowest property tax rate in the State�43� per $100 of assessed valuation�as compared with rates of $4.00 or more in Pima, Pinal, Gila and La Paz Counties .  To put this in perspective, a Coconino County property owner with a property valued at $300,000 would pay approximately $130 to the County for their programs and services.  A property owner with a property valued at $300,000 in one of the other counties listed would pay approximately $1,200.  So, if the County portion of the tax bill has not gone up, why would the overall bill increase?  One reason could be a rise in the tax rates of the other taxing entities. Another confusing component of your property tax bill is seen when you compare your tax bill with your neighbor�s bill.  You are probably paying different amounts.  It is important to look at the Assessed Value of your property to understand the differences, since the Assessed Value is multiplied by the tax rate to calculate your property tax bill.   The County Assessor determines the Assessed Value of your property, using Full Cash Value (a reflection of the market value), the Limited Property Value (calculated according to a formula as defined by law), and assessment ratios also defined by law.  The Full Cash Values are reviewed by the Arizona Department of Revenue for compliance and consistency.  The entire property tax process is long�18 to 24 months�and includes the review process, land value determination, the mailing of the Notice of Value, property tax appeals, taxing entities setting their budgets, public hearings on these budgets, the County setting the tax rates, and the printing and delivery of the bills.  As a result, the most recent property tax bills are based on housing market activity that took place 18 to 24 months ago.  During that time, housing prices were at a record high.  Unfortunately, since that time, housing prices have declined significantly and our national economy has experienced some record lows.  Our 2009 property tax bills will reflect the state of the overall economy 18 to 24 months ago, and so on.  We are currently working on property taxes for the year 2010. I hope this information sheds some light on the property tax process and Coconino County �s role in ensuring that property tax revenues are collected and distributed to our County, cities, towns, schools, libraries and fire districts.  If you have questions on a specific taxing entity�s tax rate, please contact that public agency directly.  If you have questions regarding County taxes or the property tax process, please give us a call at 779-6693; toll-free (800) 559-9189.  For more detailed information on assessed valuations and the property tax process, visit www.coconino.az.gov, (front page, under News).  Deb Hill, Chairman Coconino County Board of Supervisors

~~~~~ ~~~~~ September 26, 2008 Coconino County   Property Owners Beware!   Flagstaff , Az. – Coconino County Recorder Candace Owens wants to inform citizens about a letter that is being sent to property owners throughout the County offering certified copies of their deeds for a fee.  The letter has resulted in a number of calls from concerned property owners to the Recorder’s Office. The letter from National Deed Services, Inc. is addressed to the property owner and lists the document number and date of recording of their deed.  The letter informs the property owner that the U.S. Government Federal Citizen Information Center website highly recommends that a property owner obtain a certified copy of their deed to show that the property was transferred to them. It goes on to instruct the property owner on how to obtain a certified copy for a fee of $49.50. With the current national economic situation, and all the media attention regarding subprime rates and the high number of mortgage foreclosures, this type of letter has caused concern for many property owners who, in turn, are contacting the Recorder’s Office.  For these reasons, Owens feels the need to clarify to all citizens what is outlined in the letter.  First, as is noted at the bottom of the letter, “National Deed Service Inc. is NOT affiliated with any governmental agency.”  In addition, as written in large type, “Many government records are available FREE or at a nominal cost from government agencies.”  If a property owner does not have the original or a copy of their deed, and would like to purchase one for their records, this can be done easily through the Recorder’s Office.  The cost for a certified copy of a deed is $3.00 per document and the copy cost is $1.00 per page.  These fees are set by Arizona State Statute.  Depending on the number of pages, the average cost to obtain a certified copy of your deed is $5.00.   This type of service and fee, while not illegal, includes in the $49.50 fee “location, retrieval, postage and handling costs”.  The Recorder’s Office is a governmental agency and will gladly help any property owner obtain a certified copy of their deed at a nominal cost. For more information, call the Recorder’s Office at (928) 779-6585; toll-free (800) 793-6181.

Will you want to sell out and retire eventually? Or will you keep the properties, and pass them on to your kids? There are many tax and estate planning issues involved.

Real estate investing can provide current income and long term equity build up.

If yours is a short-term real estate investing strategy (10 years, or so) you'll probably sell out and take your equity earnings.

If you're into real estate investing as a long-term venture, you may eventually want to pay off each property. You can do it with excess cash flow. Start with the smallest mortgage, pay it off first, then work on the others one by one.

Over time your investments should do very well. If you buy 5 homes at 20% below the current market (very do-able) and keep them twenty years, you should have a million dollar portfolio. And over those years you can enjoy positive cash flow and depreciation.

Real estate investing is serious business that most anyone can do successfully.

Here are links to the other South of Flagstaff Arizona real estate pages...

Forest Highlands Real Estate

Kachina Village Real Estate

Mormon Lake Real Estate

Mountainaire Real Estate

Pinewood and Munds Park Real Estate

Sedona Real Estate

House Plans on the Internet

Do You Love Log Homes?

Timber Frame Homes Are Unique and Elegant

A Cedar Home May Be Your Preferred Real Estate

Go to an Expert for Mortgage Information

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