You might think that this phrase originated in a society where people traded cows as currency. Actually the term “cash cow” dates back to the 1960s and is attributed to the late management guru, Peter Drucker. He used it to describe a product that could keep earning money without additional investments—much the way a cow produces milk without needing more from the farmer than a few tugs of an udder. To me, as a real estate investor, I think of mobile homes as “cash cows” because they keep on giving.

As the uncertainty in real estate markets continues, I hear investors asking, “is now the time to buy?” I believe we all have to step back and evaluate the basics of why we consider buying real estate in the first place. There are four main factors: Income, appreciation, cash flow, and tax benefits. Which are most important to you? Once you have assessed this question, you must ask yourself is: Can I afford it? If not, can I find a lender? Can I get the seller to help? What is the real cost in money and effort, and can I really afford it?

Property Insurance, taxes, and maintenance can add 30% to your cost of ownership in a property. It’s true that you make money in real estate when you buy, but even if you buy cheap, ask yourself if you can really afford the money, manpower, sweat equity, and hassles with tenants. The most successful real estate investors I know make unemotional decisions, and have that question in their mind every time they buy or they pass on a deal. Letting your emotions rule you will get you in trouble. Ask yourself if you can really afford the full cost of ownership any time you think you want to buy a great investment property, or I guess it could work with any investment for that matter!

I have noticed that, once again, the late night TV ads (and yes I do have insomnia!) for get-rich-quick schemes are alive and well. As the real estate market stabilizes—which I believe it will and in some markets has already started to—the scam artists are back with outrageous claims about returns, and risk-free, guaranteed, no hassle, no money down pitches.

Being a real estate investor, I know that investing in real estate takes effort and work. It’s not a get rich quick investment. If it were, everyone would be doing it. In this market, you need to remember the basics of real estate investing.

1. Know why you want to invest in real estate.

2. Have the patience to make a lot of offers, do the homework necessary, and do the right deal that makes the most sense for your situation. Also make sure your deal accomplishes at least one of what I like to call the 4 commandments of real estate:

a. Appreciation
b. Income
c. Cash Flow
d. Tax Benefits

3. Stay educated and up to date in your local market. Join or get back involved with your local real estate investor club to know what is happening in your local market, and to keep abreast of any regulatory or law changes both on a local/state and national level. To Find a club near you visit www.nationalreia.com

On a positive note, people will always need a place to live. That is why I buy real estate. How about you? Happy Investing!

With the current spiral in the real estate market, today’s successful investor needs up-to-the-minute information when assessing a potential real estate deal. Check out the following sites to help you buy right!

To assess market value:

1. Fairmarketvalue.com

2. Truila.com

3. Zillow.com

4. Nearbuy.com

For information about a local community:

1. Wikipedia

2. U.S. Census Bureau

3. Local Government website

From local markets to national research, online tools can give you a good starting point. Always remember, “you make money when you buy,” so use these tools to help you buy right!

I always look at this day as the first of many barbecues, and the beginning of summer. I hope all of you are enjoying a day off with family and friends.

Most real estate investors focus on property, whether it’s residential or commercial. In the recent years however, land banking has gained some popularity with investors. If you are thinking of buying land to hold, or are working through a land banking company, do your due diligence before you buy.

Some things you should consider are:

1. Is the land is usable?

2. Is there an abundant water supply?

3. Is the location near a metropolitan area?

4. Are there utilities on the dirt?

If you decide to go through a land banking company, who has the goal of buying undeveloped land in areas of growth with the intention to sell and make a profit, make sure you:

1. Check out their prospectus.

2. Figure out the exact location of the land.

3. Ask questions, so you know exactly what you are investing in.
By doing your homework, you can decide if investing in land is right for you.

P.S. You can do this in your IRA too! Visit www.theentrustgroup.com for more info on how to use a self-directed IRA to invest in land.

I recently read a great article in Sunday’s Parade, which talked about real estate prices and purchasing power in certain markets. I was amazed at what one could purchase today. From a 2-bedroom in Boise, Idaho for $112,500; to a 2,300 square-foot 4-bedroom home in Knoxville, Tennessee for $175,000; it made my brain go into overdrive. I am not suggesting investors pick up and buy out of state at what they perceive are cheap prices, however, now maybe the time to start looking in your backyard at real property values. I discovered a cool iPhone app, called Near Buy, where you can type an address or click your location and it provides statistics on properties for sale, right in your area.

Though I have invested in markets out of state in the past, I am really looking more to my backyard these days than to the unknown property management, fees, and other issues that can be related with buying outside my area. If this sounds like you, take the time and put together a plan, start farming communities you would want to own real estate in, and get your financing in place!

Happy Mother’s Day! To all mother’s world wide!

Caroline Hegarty was born in Ireland and grew up in an entrepreneurial family. She moved to the United States in 1993, where she became CFO and stockholder of a small moving and storage company first in Oakland and then in Vallejo, following the relocation of the business. In 2003, Caroline left the corporate world and started her own business offering business consulting and accounting services to small businesses. During that time, she was introduced to the world of real estate which she has now pursued on a full time basis since 2005. Her passion is utilizing her real estate investment experience and financial skills to help benefit both homebuyers and investors by creating win/win deals.

Investing in Main Street, Not Wall Street

With continuing turmoil in the financial markets, this is a great time for investors to really concentrate on the many creative ways of leveraging the current conditions in addition to helping local communities. As many of you are probably aware, getting financing on a home purchase these days is challenging to say the least. As a result, we have seen a huge demand by individuals who would love to buy a home, especially at these prices and interest rates, but cannot meet the banks current requirements.

As a real estate investor based in the North Bay Area of California, I have collaborated with several other women investors, all of whom bring a variety of different and complimentary skills to the table. Together we have formed Solano Community Investors Group, with the intention of providing solutions by offering seller financing to these individuals. Seller financing can offer a solution for investors who wish to receive better-than-average returns on their capital, and for those homebuyers who could not otherwise own a home with the current lending guidelines.

The current benefits of investing in real estate, in select Bay Area markets, are that the price to buy is below the cost to rebuild, and properties can be fixed up and sold with seller financing to families at a profit to the investor. This simultaneously creates a monthly payment that is less than the equivalent rental rate for the family.

The process at SCIG consists of borrowing funds from private lenders at a pre-negotiated interest rate to acquire properties. Then we offer seller financing to home buyers who have been pre-qualified by us before purchase. The definition of a private lender in this case is an individual who negotiates directly, on a personal basis, terms to loan money for real estate investments. These are individuals from all walks of life. They do not lend money as a business, but have some form of capital which they wish to invest.

There are lots of regular people who are possibly making a 2% to 4% return on their investments (i.e. CD or IRA) and want to earn a higher return. Investors can securitize their investment by giving them a first lien on a house, which is a tangible asset. The private lender receives the benefit of a good return on their money while helping someone get into a home. It’s a win/win.

A potential buyer interested in seller financing, lease options, or rent to own terms would need to complete a Uniform Residential Loan Application (Form 1003), provide proof of income, tax returns, job stability, and a down payment. Combining private money borrowing with seller financing can create innovative and socially responsible investment opportunities. At SCIG, we strive to remain at the forefront of thinking outside the box, constantly seeking to create and provide the best infrastructure for our model. We ARE investing in Main Street, not Wall Street!

Many owners, despite being up to date on their mortgage payments, are walking away from their homes, according to a recent article published in The New York Times. New research shows that when a home’s value falls below 75% of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying.

The government has yet to find a solution to this bleak picture and is worried, as figures released last week show the numbers are now projected to climb to a peak of 5.1 million by June. This number is about 10% of all Americans with mortgages. The banks aren’t helping either. They have tightened credit guidelines to the point that it is very difficult to refinance a property or do a loan modification.

Why do I write this on the investor blog? Because, if you have your financing in place or the cash to buy property in good markets where people want to live, now may be your opportunity.

This market cannot last forever, at least not in my opinion. When I read articles like this I like to pass them on!