Real Estate Investing Links for December 9, 2009

6 Financial Moves that Sound Good but Aren’t

financialThis article from Robert Kiyosaki’s Wisdom of Rich Dad blog assesses the advantages and disadvantages of common financial decisions. He advises against a line of credit’s tendency to limit borrowing power and the avoidance of “good debt,” like mortgages, that can serve as valuable investments for the future. Evaluating risk based on age, he suggests that “the younger you are, the riskier you can afford to be.”

How Does the Real Estate Investor Approach Rent Increases?

When evaluating whether or not to raise rent, Bawld Guy advocates paying attention to the “micro-market” for your property, as opposed to overall market value. He names various factors, such as vicinity to great schools, as elements that may make it appropriate to raise rents. Once you’ve made the decision to increase pricing, Bawld Guy provides tips on how to do it right, including giving plenty of notice to current tenants.

The Falling Dollar and Real Estate Investors

depreciationThere has been a lot of talk recently about foreign investors entering the housing market. The Bigger Pockets Blog explains that because of the falling value of the dollar relative to other currencies, to them, real estate is essentially half off. Other good news about the falling dollar is that Americans will be more inclined to buy domestically at the same time that foreigners are willing to invest abroad. This will hopefully lead to the stabilization of real estate prices, as well as the overall economy.

Falling Unemployment Rate Leads to Higher Mortgage Rates Today

The unemployment rate is falling and the government contends that we are out of the recession. Although the unemployment rate is still high, it is seen as a “lagging indicator” of overall economic health, says Jack Sternberg of the Bryan Ellis blog. This is because companies focus on how the economy has been and not on how it will be when making employment decisions. For further proof of a stabilizing economy, Sternberg notes the recession in 2001, when maximum job losses were followed with the end of the recession one month later. Why is this bad news for real estate investors? “Better than expected data is pushing mortgage rates higher,” claims Sternberg.

Commercial Property Negotiation Tactics- “Move the Middle”

middleDike Drummond of Multifamily Insiders explains a negotiating technique he has used for commercial property termed “moving the middle.” He claims that this technique will always cause the course of negotiation to advance in your favor. The basic concept is to make sure your offer is less than half way between your original offers and to “negotiate in smaller increments than your counterpart.” For further clarification refer to a personal example he provides in which he received a $45,000 increase over what was necessary for repairs by employing this method.

67 and Bankrupt: Are the Kids to Blame?

Frugal Dad provides a guest post from the Wealth Pilgrim blog, in which the story of an elderly couple is told to illustrate the importance of having a financial plan. Their experience with becoming an “ATM” for their son’s failing auto repair business serves as a cautionary tale against financing things you can’t afford- even if it is for your family.

Stress the Importance of On Time Rent from Tenants

Jeffrey E. Taylor of CRE Online provides a full proof plan to collect on time rent from tenants. The first step is to assert your policy before move in and to follow up by having your tenants sign the agreement in writing; reminding them that failure to comply may affect their credit scores. He advises against grace periods as many tenants have grown accustomed to these and will take advantage. The worst thing you can do is to threaten late charges but not administer them. Most importantly, Taylor stresses acting immediately on delinquency and being understanding of late tenants while upholding your right to both the rent and any consequent late charges.

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