Risk

I know this is not the kind of advice that I should be giving, but I will give it anyway: Go to work today and quit your job. You are thinking, "What?" You heard me. Go into work and tell your boss you quit.

Have I fallen off my rocker? No, I have not. I think that we should all be self-employed. Not only that, I think you should take the greatest possible risk you can find. People who make a lot of money look for business opportunities with a great amount of risk. Truly the time to start a business is when you are younger; the older you get the less time you have to make up for a big business loss. Here are some tips for what you should do when you start your own business:

• Get married. Studies show that married people are happier.
• Learn to live off of just one income not both of yours and your spouses.
• Work for someone else in the business you are going to start before owning one. For example if you want to start a pizza business, go to work as the manager of a pizza business.
• Cut your living expenses to the bone.
• Rent don't own, try to find a landlord that will agree not to raise the rent or sell the house you are living in
• Find a business that you love to do.
• Build up a cash savings. You will need a down payment for the business.
• Educate yourself about the business. Read everything you can.
• Talk to a lot of people who have done what you are planning to do.
• Develop mentors that you can bounce ideas off of.
• Surround yourself with like-minded people.
• Develop a support group of people that you can go to in confidence with your problems.
• Read the book E Myth.
• Take some accounting classes.
• Hire a really good CPA.

3 Mortgage Mistakes You Can Avoid

The mortgage market in today's world is pretty chaotic, at best. Rates are ridiculously low, and many homes are worth less than the mortgages they secure. People are still losing their homes left and right, but qualified borrowers are being denied loans every day. It's no wonder potential and current home owners alike are confused about mortgages. I found this great article from inmanNEWS titled "3 mortgage mistakes you can avoid," which I thought would be great to share with you all to try and clear things up a bit. The mistakes are:

1. Failing to try to refinance because you're upside down.
At last count, nearly 11 million Americans were upside down on their homes - meaning they owe more in mortgage payments than the home is actually worth - and that's about 23% of all American homes. With interest rates having dropped to historic lows, more than 10 million Americans have refinanced their mortgages since 2009. But there are still many homeowners with negative equity feeling trapped in the 6, 7, or even 8 percent interest rates because they're unable to refinance.

The fact is, there are multiple options for lowering your interest rate and monthly payment if you're upside down. Banks are increasingly amenable to simply modify existing mortgages to render them less prone to default and foreclosure - especially when the homeowner is trying to recover from a financial hardship, and especially with upside-down loans (which are particularly liable to strategic default).

2. Walking into the bank branch to get a mortgage.
Unless your bank happens to be a neighborhood credit union or one of the few large banks that ranks highly in customer satisfaction, you'll likely not be satisfied with the speed, customer service or assertiveness of a mortgage banker you meet just walking into the branch. But if you work with a mortgage broker or a private mortgage banker, chances are good you'll get someone who understands that the long-term health of their business depends on you and clients like you getting a good deal in a timely manner.

Also, if you work with a mortgage broker whose company also has its own bank, you get the best of both worlds: a professional who will shop lots of banks' offerings to find the best options for you, and someone who can coordinate your transaction via a small pool of local, experienced appraisers. Many large banks use appraisers who don't know the area, which can kill your deal in the long run.

3. Thinking you're stuck with it for 30 years.
Some people avoid mortgages simply to avoid a 30 year debt. Others are stuck with a 30-year loan because the 15-year mortgage payments were too steep. But the fact is, you control when you pay off your mortgage, and it doesn't take a lottery or inheritance windfall to pay yours off sooner than later.

Some people pay half their mortgage payments every two weeks, which results in a full extra payment every year and can pay your mortgage off as much as five years early. Others just pay an extra $100 or so whenever they can and apply it to the principal. Some apply paycheck raises over the years or the amount they would use to extinguish a credit card debt in an effort to pay the mortgage off early.

What to take away? As a borrower, you have much more power than you think - from exploring all available options to being aggressive about paying off your home sooner rather than later. Either way, be clear on your personal goals for your mortgage, get educated about your options and get assertive about making them happen -- now.

** Be sure to check out the original article at InmanNEWs.com.

Monthly Financial Reviews

As I prepare the monthly owner statements for e-mailing/mailing this month, I always wonder what percentage of our real estate owners look at their statements. In my opinion, this is one of the crucial items that real estate investors need to take time to do each and every month. By spending 10-15 minutes on the monthly reports, real estate investors can determine the following items:

• The status of tenant rent receipts - what was owed versus what was collected
• Number of units vacant
• Detail of expenses that were paid during the current month, as well as copies of receipts
• Net operating income of property/properties in previous months versus net operating income of property in current month
• Any outstanding expenses that haven't been paid yet due to insufficient funds or project not complete

By spending time each month reviewing the financials on your properties - you might not like the results in this market, but at least you have the knowledge of why. Take the time - it is very important!!

Rental Maintenance Question

Rental maintenance question: If you are an investor with many properties and are not very handy, is it a good idea to purchase a home service warranty to cover certain items in the home should a tenant need maintenance? Is sending say $400.00 a year for the plan and another perhaps $75.00 per service call worth it or not? Do you offer this type of service to your tenant as say a security blanket so they know if any issues come up they would be covered?

I don't know if thats a good idea or not. Looking for some input??

Landmarks Values Engineering

I was having a conversation with an owner today who asked me if I still believe there is money to be made in real estate. "YES!" I answered. "No doubt!" And this is true even with all the foreclosures, bankruptcies and defaults we are seeing - many of which are strategic in nature I might ad. The thing you have to keep reminding yourself to do is look at the broader economic value of owning real estate and decide what it is you want to accomplish from being a landlord.

I do agree it is NOT easy to be successful as a SUPER, as many investors are now finding out. But for those who are willing to be hands on and have the time as well as the money to contribute, there is still much value to be realized from owning real estate in Omaha.

Proper debt and expense management is crucial. This becomes a problem most often for landlords with maintenance expenses.Turnover costs can eat up a year's worth of collected rents. But if you planned well, you have already reinvested that money, building equity, and you will know exactly how to work the property to get it ready for your next tenant.

There are many cash flow and equity models to follow but the one that works best is the one that is tailored to fit your goals, comfort level and ability. By doing this, you assure that you are not worthless because of your real estate choices but actually adding value.

In fact, Omaha is an excellent city in which to own real estate. Kiplingers recently rated Omaha, NE as the #1 City in the Nation for Value rating things like housing cost, cost of living, unemployment rate and per capita income. Here is a link to the article: http://www.kiplinger.com/magazine/archives/best-value-cities-2011-omaha.html .