Rental Housing Journal Valley November 2015 by Professional Publishing, Inc

Rental Housing Journal Valley

November 2015

2. Americans Think Homeownership is a Sound Investment

5. Selecting a Contractor

3. 9 Tips for Getting Started in Real Estate Investing

EUGENE · SALEM ·ALBANY · CORVALLIS WWW.RENTALHOUSINGJOURNAL.COM • PROFESSIONAL PUBLISHING, INC

Five Real Estate Investing Fundamentals By – Jeﬀ Watson, The Jeﬀery S. Watson Law Firm LTD, General Counsel National REIA

ne of my favorite movie moments is when Ernest Borgnine, portraying the legendary football coach Vince Lombardi, stood in front of the world champion Green Bay Packers at the beginning of training camp and held aloft an oblong object proclaiming, “Gentlemen, this is a football.” What Vince Lombardi taught the Green Bay Packers then applies to real estate investing today.

Master The Basics Practice them over and over again. Consistently do the fundamental things that make you a successful real estate investor. Repeat Your Successes And Keep Repeating Them The vast majority of “investors” today suffer from what I call “squirrel or shiny-object syndrome.” They have a little success in one area, but then they are suddenly distracted by something else and go to another area, and then another, and then another. The bottom line is they lose their focus and intensity, and they don’t continue to practice the same thing over and over again. Let me remind you, slow and steady wins the race! Establish Your Parameters In addition to becoming good at the basics, I urge real estate investors to establish their investment parameters. • What kind of investments or deals do you want to do? Are you going to do loans? Are you going to use options? Are you going to buy rentals or tax liens? Are you going to invest in commercial properties? Pick two or three (no more than that) of these things and get very good at doing them. Do them over and over again. continued on page 7 Professional Publishing Inc., PO Box 6244 Beaverton, OR 97007

Long-term Hold Investing For Owner/Managers

he rental property investing strategy for a hold time of 15+ years is significantly different, than a short term real estate investment strategy. This is even more critical for owners who plan to do their own property management. Owning and managing a property for 15-20 years is similar to raising a child, from birth through high school. Price is always important when buying any property. If you are planning to own a property for decades, do not consider purchasing a potential “problem child”, because it is cheap. Bad purchases are often made when investors feel they must purchase quickly. Adapt the motto that “I can always spend my money” and keep shopping to you find the “right” deal. Investors need to seriously consider the location, quality of construction, target tenants and financing for a long term hold rental property:

Location Properties should be located within 30 minutes of where you reside. Anything

longer than an hour round trip drive will become cumbersome over time. It is always a wise idea to geographically diversify your rental portfolio. Therefore, owning properties in different neighborhoods. Within 30 minutes of your home, is preferable to owning all your properties, in one neighborhood. Target property purchases in desirable residential neighborhoods with a low percentage of rental properties. Initially, the annual cash and cash return will probably be less, than what could be

bought in less desirable locations. Rental properties in more desirable locations usually are priced at a lower capitalization rate, than rental properties in less desirable areas. Over time, the quality of tenant, ease of leasing, and appreciation potential will compensate for the initial lower return. Buying in a neighborhood, that you feel may decline, is a big mistake. You can change many things about a property, but you cannot change its location. continued on page 6

Are You Leaving Money on the Table? By Cliﬀ Hockley CCIM President, Bluestone & Hockley Real Estate Services

ost real estate investors tend to operate their properties with a simple rule in mind: If money appears in their checking account by the end of the month, their property is healthy. As long as they see the same amount every month they’re happy. However this rule inevitably leaves money on the table. Sophisticated investors know that they need to plan for their properties to be successfully operated. They need to buy the right property and operate it with a vision in mind. That vision should include an annual focus on rent increases and tenant relations. PRSRT STD US Postage PAID Portland, OR Permit #5460

Rent Increases Residential: Multifamily or single family investors have the opportunity to increase rental income at least once a year through the annual budgeting process. This process starts with an annual inspection, followed by a local area renewal rate review (rental comparison survey). Keeping your property well maintained is the key to managing long

term rental increases. Tenants will not be as hesitant to pay more if you treat them with respect and keep the property looking well maintained. A clean property with great looking landscaping, a current paint job without any mold or a refinished roof will net you more rent. Yes, it will cost more to maintain, but in my opinion the payback will be in the continued on page 2

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Rental Housing Journal Valley

Leaving Money on the Table ...continued from page 1 form of higher rent, longer tenancies and lower turnover costs. Don’t forget, tenants want to be appreciated just like you do. If you have a property manager you work with, have them help you draft an annual budget and forecast the annual increases. Think into the future; plan your rent increases and capital expenses two to three years ahead so you can better control your long term destiny. Commercial: Owners of oﬃce, retail or industrial buildings need to think through the same process. They need to develop a plan that lasts through the initial lease term and includes details regarding the tenant’s options to renew, (since commercial tenants tends to stay for 3-10 years, even more planning is involved in controlling the costs and the rental increases). Annually, property owners need to review the comparative position of their property. They need to be realistic regarding the value of their real estate. Just as with residential investments, they must consider the condition and location of their investment. Commercial landlords need to have a long term plan in place that keeps rent increasing on an annual basis If you make a concession regarding a starting rent to get a tenant in, plan to step it up to market value within three years. Aim for a minimum of 21/2

% to 3% in annual increases based off the pre-negotiated step increase or percentages that increase on the basis of a business’ success (typically used by retail businesses). I am not a huge fan of CPI (consumer price index) increases because the government has too much control of those numbers. Don’t permit expense caps unless you can stay ahead of the expenses, regardless of the caps. Landlords and their property managers should not automatically cave into very low or zero rent increases at lease renewal time, even if the tenant threatens to move out. Run realistic scenarios regarding the cost of re-tenanting. Include vacancy rates, leasing commissions and tenant improvements in these

calculated scenarios. Consider also, the moving costs an existing tenant will face. Understand their business and business goals, their staﬃng and their success at your location. Most importantly while they are renting from you, fi x repairs that are required by your lease, and fi x them quickly. Show your tenants you appreciate them by treating them how you would want to be treated, otherwise they will blame you and possibly hold back rental payments, do the repairs themselves or, worse yet, move out. We once had a client who took two months to repair the air conditioning units on a newly leased space. It was wintertime and it was raining; the tenant

was livid and hired an attorney to preserve their rights under their lease. The landlord wanted absolutely the lowest price for the repairs and getting the lowest price took over 30 days of negotiating with vendors. The tenant almost moved out because it took so long, and alternative cooling systems needed to be provided. The experience drove them to become a hostile tenant. These bad feelings could have been prevented and we could have agreed on rent increases and lease renewals with this tenant if the landlord would have allowed the property manager to be more proactive. Note: Typically property managers have vendors they work with that are reasonably priced who respond quickly, but they may not be the absolute – lowest, period.

Conclusion Inevitably, attention to detail, future planning, a current understanding of the marketplace, and a fair and realistic approach to taking care of your properties will yield higher returns for real estate investors. A key component to profitability is a focus on current and future rental incomes. Sticking to the basics with an annual planning process and taking care of your tenants will increase your annual yield and keep reliable tenants in your properties.

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Rental Housing Journal Valley · November 2015

Rental Housing Journal Valley

By JC Underwood, Crown Properties

9 Tips for Getting Started in Real Estate Investing ON-SITE-NW SEATTLE

reat This As A Business One of the biggest mistakes I see new investors make is to treat real estate investing as a hobby instead of a profession. If you’re counting on real estate investing to provide income now and retirement income later you must treat it like a business. Real estate investing is now your profession. Treat it like one. By that I mean you have to advertise, devote time to it, show up for appointments on time, act professionally, do your paperwork properly and treat your clients professionally. Most real estate investing isn’t passive. Unless you are a private lender most investing takes real work. Even a landlord using a property manager has work at the outset and should continue to remain active in oversight. This is not a get-rich-quick scheme. It takes time to build client lists, credibility, partnerships and associations. A well-grounded business is built over time unlike “overnight sensations.” It will take you 3 to 5 years to become a real success in this field.

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There Are Many Profitable Strategies In Real Estate Most new investors get into real estate investing after hearing about one specifAPT. NEWS ic strategy. They have a friend or family member that has participated in real estate, they saw a TV show or infomercial or they went to their first REIA meeting and heard a charismatic speaker that made them want to pursue a specific investing strategy. They begin to invest using that strategy because they are drawn to the certainty and proven success of the individual that is in front of them. After the new investor has any success

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with one strategy they often develop the idea that other strategies are less profitable, more diﬃcult to execute, and generally inferior to the one they are using. Suddenly they develop a certainty that their particular strategy is the supreme strategy so there is no earthly reason to even consider anything else. Following a one particular strategy as a beginning investor can be extremely valuable for the overwhelmed new investor since it allows him to really, really learn how a particular technique works. The downside of being so narrowly focused is that it limits the new investor’s opportunities. If you believe that your investing strategy is the only strategy worth pursing, to the exclusion of all others, you will have a narrow viewpoint of what a “good” deal is, and pass up a lot of opportunities to profit with another strategy. Don’t get so stuck in a mindset that you can’t even see good deals if they are out of your comfort zone. That being said. You can’t try to participate in a dozen strategies at once…see number 4.

Have A Plan All businesses need a game plan. You can’t just wander aimlessly hoping to find a deal. You also can’t rent an office, decorate it and then sit behind your desk waiting for the phone to ring. It just ...continued on page 4

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9 Tips for Getting Started ...continued from page 1 doesn’t happen that way. You need to decide upon a strategy, learn what you need to do, set your goals and make it happen! Have a plan. Pass out 50 business card a week (or whatever goal you decide is appropriate for the amount of business you want to generate). Talk to 50 people by phone. Make 10 offers a week, spend $100 a month on advertising – whatever your goal is, make it happen every single week – day in and day out – work the market. Eventually you will start to see results.

Surround Yourself With Like-Minded People Real estate investing can be “creative” and a bit non-traditional, which means that this profession won’t appear on the Forbes top 100 professions. Because those participating in real estate often do so by working for a corporation or as a realtor, investing as an independent isn’t a main stream career choice. Thus, most people you speak with will tell you it won’t work. Some of your friends might even ask if you bought a course from a late-night television “guru.” They may even laugh and call you “gullible.” Attorneys and other professionals may denounce it because it sounds unusual. Keep in mind that these people are either threatened by their own lack of success or are looking to protect their own butts. The first thing you should do is join a local real estate association connected to National REIA. These associations will help you keep your thoughts in the right place and prove to you that investing with a plan really does work. You will be connected to investors that have had great successes, those that can share what they learned from their not so successful deals, and to those who are just starting in the business just like you. Be Persistent Anyone who’s ever been in sales will tell you that being persistent is the key to success. Just because a person says “No” to an offer the first time doesn’t mean that’s the final answer. Waiting a couple of weeks and checking back to see if the situation has changed can make all the difference, or changing the terms of the offer slightly to accommodate the seller can jump start negotiations. Have a good follow-up system for tracking contacts, leads and conversations you’ve had with both buyers and sellers. You’ll get to the point where you’re so busy you can’t possibly remember all the conversations you’ve had with everyone – it’s important to be able to pull up that information so you know where you are in the negotiation process. Anyone who has ever been in sales will tell you that few deals are ever made on the first try. Use a system that allows you to schedule follow ups and keep a running history of calls and conversations. One of the National REIA benefits is a huge discount on Realeflow, but you could also use ACT by Sage, an Outlook or Gmail plug-in or one of hundreds of apps for your phone or iPad. It doesn’t matter what software you use as long as you actually use it. Have a Team On Your Side Don’t wait until you have a big deal pending and need to ask questions before assembling a team you can turn to. You need to go out and cultivate relationships with reliable professionals you can depend on. Here’s who you need on your team: 4

• Attorney – preferably someone who’s familiar with the needs of a real estate professional. Make sure they understand the specific real estate strategy that you are using and that they’ve had some experience in that specific strategy. You don’t need to know all of the real estate laws that will affect your business but you need an advisor who does. • Insurance Agent – you need one that also understands your strategy and investors in general. Make sure the insurance products they sell are right for investors. We have needs that are far different than your average home owner.

• CPA or Accountant – find one that’s a real estate investor – they’ll know the ins and outs of the business and when to be aggressive. You can lose $1,000s in deductions and tax breaks without a professional that knows the most up to date tax law as it applies specifically for investors. • Contractor – you need a reliable professional that shows up on time, completes the job within budget and knows how to make suggestions that will save you money. Free estimates don’t hurt either. • Mortgage broker, private money lender, hard money lender or other money professional – find one that’s

experienced with investors, knowledgeable and creative. You can never have too many people who are willing to fund your deals. • Mentor – someone who’s been there and done that. • Title or Escrow Company – find one that caters to investors. Make sure they understand double closings, land contracts, etc. Your local REIA group has local and national providers to use to build your team. These professionals work daily with investors and understand their special needs and requirements. It is a ...continued on page 6

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Selecting a Contractor

Tia Politi, is the Lead Property Manager for Acorn Property Management, ROA Board Member, and the co-owner of five rental properties.

s renovation season approaches, you may be planning projects for your rental properties. How can you know you’re hiring an honest, competent person who is capable of performing an effective repair or upgrade at a reasonable price in a timely manner? Many people hire contractors without fully screening them and pay the price in poor quality work, high prices, and projects that go on far beyond the promised end date. One of the best ways to locate a good contractor is a referral from someone you know and trust. Ask around, and read the endorsements in the ROA bulletin. Of course, you can always ask prospective contractors for referrals from past clients. Even though they will only give you the good ones, you can gain useful information if you ask the right questions. Did the contractor begin the job when promised, or were there excuses? Was their bid accurate, or did costs get added on and if so, were they reasonable? Did they clean up after themselves daily and when the job was complete? Was the job completed to their satisfaction? Did they finish on time? When you seek bids from contractors, the more detailed the bid, the better. This is the preliminary outline of your contract for services and will become very important if there ends up being a dispute about the job. Bids should include everything you can think of, including specifics about exactly what materials will be used, down to the thickness and

brand of plywood, to the size of nails, screws, etc. Remember the Chinese sheetrock used in many construction projects a while back? Turns out it was toxic. These details are very important, and if they aren’t spelled out can result in problems for you with no recourse against them, so get it all in writing. Also, who will actually be doing the work? Who will be supervising? Who will be obtaining permits and paying the costs of those? Timelines are one of the biggest sources of conflict between contractors and their customers. To be a successful contractor requires juggling multiple clients and multiple jobs. You are just one client and while they are trying to keep you happy, they are also working to keep their other clients happy. You will likely maintain a good relationship with your contractor if you accept some flexibility in the timeline, but hold them to their commitment. The squeaky wheel does get the grease. A more positive way to hold contractors accountable (and keep you from having to nag them) is by adding time incentives or penalties. That’s what government agencies do and it can help keep a project on track. For instance, the contractor may get a bonus of X number of dollars for finishing on time, but the bill is reduced by X number of dollars for each day the project runs over the contracted end date. Another useful tool in this regard is to divide their payments into thirds. One third at the beginning

of the job so that they can purchase materials and get going; another third at some specified mid-point of completion; and the final third only when every single part of the entire job is complete. When my daughter accidentally set her bedroom on fire, that’s the deal I struck with the restoration company and it came in very handy when they delayed completion, but still wanted to get paid in full. I received a bill that had late fees on it and I very politely called the contractor to inquire (and then his supervisor, when he failed to return my three phone calls). I reiterated the agreement and made it clear once again, that they would not get any part of the final payment until every last part of the job was done and they had failed to finish the trim work on the siding. Gosh darn, they finished up right away! Always keep that final payment on hold, or you will lose your leverage. A word of caution: While you as an owner are allowed to be an unlicensed individual while performing most repairs on your properties, this is not the case with hired help, nor is it the case when dealing with hazardous materials such as asbestos or lead-based paint. And ignorance of the law is no excuse! Make sure that if you are dealing with hazardous materials that your contractor has the proper certifications, such as lead-based paint certification if they are disturbing more than two square feet of paint on a property built before 1978, or are hiring a qualified company to dis-

pose of asbestos. Because in the end it’s not only the contractor can be held liable, but you as well. Fines can run into the tens of thousands of dollars. Think hiring a contractor with the proper certifications is expensive? Not hiring one can cost even more. Please refer to the Environmental Protection Agency website for more complete information about hazardous materials in renovations. www.epa.gov The Construction Contractors Board is the agency that oversees licensed contractors. On their website, you can find information on all licensed contractors in the state of Oregon, including whether or not they are licensed (Go figure, but some folks actually lie about this.); the kind of license they hold; how long they have operated under a specific license; and whether there have ever been complaints lodged against them and/ or any punitive damage awards against their company or their bond. Take a few moments and save yourself a lot of time, trouble, and money.

https://ccbed.ccb.state.or.us/ccb_ frames/consumer_info/ccb_index. htm This column oﬀers general suggestions only and is no substitute for professional legal advice. Please consult an attorney for advice related to your specific situation.

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Rental Housing Journal Valley

Long-term Hold Investing ...continued from page 1 Quality of Construction Properties that are built in quality materials and workmanship tolerate the abuse of tenants, time and the elements much better, than marginally constructed properties. Tile, metal or shingle roofs last longer and require less maintenance than flat roofs. Copper plumbing is preferred to galvanized plumbing. Tenants damage themselves, rather than interior walls, when they punch a plaster wall. Solid wood cabinets will last decades longer than press-board or veneer cabinets. Even if you intend to remodel a property, choose one that has good “bones”. Target Tenant When you preview properties, form a realistic mental picture of who would be a potential tenant(s) for that property. Is it located near a college or a senior center? Is there a major employer or a hospital nearby? Does the rental have a private outdoor patio? Covered or enclosed parking for a newer car? With the number and size of bedrooms, how many people could realistically live in the space long term? What does the property lack, that the potential tenant might desire? Now that you have formulated a mental picture of your tenant(s), think how it would be interacting with that tenant(s), or a succession or variation of that tenant(s), for the next 18 years. If the mental picture you are formulating is not pleasant, keep shopping for the right property. Financing Investor loans are fi xed rate amortized loans, up to 30 years, for 1-4 family

properties. When you purchase 5 unit or larger properties, it is considered a commercial loan. Institutional lenders fi x the interest rate for 3-10 years, and then it is variable or renegotiable, on commercial loans. Sometimes you can find a fi xed 15 year fully amortized commercial loan. If you are going to hold a property long term with a commercial loan, develop a game plan for dealing with interest rate adjustments or renegotiation, before purchasing. Formulating a long term rental property real estate investment strategy involves more than analyzing the numbers on paper. Location will be a huge factor in future appreciation and convenience of management. Quality of construction will determine long term maintenance and capital expenditures. If you self manage your properties, the tenants you choose and your relationship with those tenants, will contribute or detract from your quality of life, for decades. Securing stable long term financing, while interest rates are historically low, will insure strong cash flows until the properties are paid off. Incorporate the importance of location, quality of construction, target tenants and financing strategy into your long term invest portfolio strategy. Jade Bossert is a licensed Real Estate Broker in Tucson, Arizona that specializes in multifamily property sales. She has been successfully selling real estate in Arizona for over 35 years. She can be contacted at 520-797-6900 or tucsonrealestate@mindspring.com.

9 Tips for Getting Started ...continued from page 1 beautiful day when you realize that you can find people to add to your team that can do all of the things in your business that you hate.

Don’t Waste Time With Unmotivated Sellers This is possibly the most common mistake new investors make. Some beginning investors waste time talking to sellers who are only marginally motivated. Even worse, they drive by the house and look for comps without even talking to the seller first. There’s a difference between being persistent with a seller or buyer who hasn’t yet made up their mind about what they want to do and dealing with a seller who really has no intention of selling anytime in the near future. Don’t waste your time if the seller falls into the latter group. Never Forget That Real Estate Is Really About People In the end real estate isn’t about the land, the house, or even the money. On a practical note and an altruistic note, it really is all about the people. Many people go through their first years of real estate investing making all their offers based on the properties. This is a huge mistake. These investors worry about making really low offers because they are concerned that it will make them a “bad” person to “take advantage” of a seller, especially one in a tough situation. What they don’t understand is that many people will happily forgo profits if other benefits are more important to them. Some people need speed, some need ease of exit, some need someone else to blame. I’ve heard more than one

Publisher Will Johnson – will@propubinc.com Designer/Editor Kristin Flores – kristin@propubinc.com

investor tell a story about a seller who happily sold below market because their son, sister, nephew – pick a relation – wouldn’t pay rent or move and they honestly just wanted to sell the house and let you deal with the situation! There is a scale of client motivations, the Hustead Scale, that concisely describes the level of motivation a seller has. The most motivated sellers will pay to get out of a house. Something in their life makes being out of that property so important that they will pay you to take the property. Many investors make offer after offer, receiving rejection after rejection, never bothering to ask the seller what they want, assuming they already know. Making offers on the properties because you think you understand the value is far less effective and far less profitable than making an offer that provides the seller an option they didn’t know existed, a solution to their problem. The moral of the story here is that if you listen, and I mean REALLY listen, and try to solve the seller’s problem you will always make more money than if you try to just apply your cookie cutter approach. Zig Ziglar used to say “You will get all you want in life, if you help enough other people get what they want.” He’s right. This business, at its core, is about people. We provide housing, we provide solutions, and sometimes most importantly, we provide options they didn’t know were available. There you have it. Follow these nine simple steps and before you know it, you’ll be an outstanding real estate investor.

Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Larry Surratt – larry@propubinc.com

Rental Housing Journal Valley is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Investing & Real Estate Investor Quarterly

www.rentalhousingjournal.com The statements and representations made in advertising and news articles contained in this publication are those of the advertiser and authors and as such do not necessarily reflect the views or opinions of Professional Publishing, Inc. The inclusion of advertising in this publications does not, in any way, comport an endorsement of or support for the products or services offered. To request a reprint or reprint rights contact Professional Publishing Inc. PO Box 6244 Beaverton, OR 97007. (503) 221-1260 - (800) 398-6751 © 2015 All rights reserved.

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Rental Housing Journal Valley · November 2015

Rental Housing Journal Valley

5 Real Estate Investing

...continued from page 1

• Determine what you are looking for in each of your potential investments. • How much capital per investment are you willing to put at risk? • How much time will you put into this investment? • What is the length of time you want your capital to be out working? • What is the projected rate of return you are seeking? • What is the minimum rate of return you want from your cash and/or time in each of your investments? When I say “rate of return,” I’m not just talking about an interest rate. • Do you want your investments to result in your receiving monthly income payments, either interest only or something else, so each investment is generating a monthly cash flow to you? These are just some of the parameters you need to establish for yourself. There is no one book, manual or class where you can learn all this information. No, it requires your spending some time working on what you think is best for you. That means you may have to do one of those activities in which investors should engage on a regular basis but often don’t – think and plan. As you think and plan, you will be able to clearly define your investment parameters in a way that you can clearly communicate with others who may want to do business with you.

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Do Your Essential Due Diligence Another key component of real estate investing involves your due diligence process. There are two very crucial questions to be asked at the beginning: • Who is involved? • How are they involved? Allow me to explain why these questions are so important. It doesn’t matter how papered-up or how careful your lawyer is when drafting the agreements. If the person on the other side is a person of weak or poor character whom you know has a tendency not to honor their word, it will not be a good deal. You want to be in a situation where someone you know who has very high character and is a capable investor is involved in the transaction. You still need to know HOW they are involved. Are they going to be involved in a way that will make sure the deal goes well, or are they just on the periphery and their name is just being “borrowed” for marketing or window-dressing purposes? Once those key questions have been answered and you understand who is involved and how, and you have done some basic due diligence on them, then you are able to determine if you want to proceed with further due diligence on the deal or investment. Even though you may have a long, successful track record of doing multiple deals with individuals, it never hurts to check up on them again to see if things have been going well in other aspects of their lives. Allow me to share a brief story to illustrate this point.

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A client of mine indicated that he had made a series of large-dollar, hard-money loans to a rehabber who always got the properties finished in great condition, and they sold for top dollar. After doing several of these deals, he began to feel very comfortable with this borrower. Unbeknownst to him, this borrower was having marital problems. Once those problems grew to the point where domestic relations court and lawyers became involved, this individual’s rehabbing business fell apart, and one of my client’s loans was put in a great deal of jeopardy. Fortunately, things worked out and full payment was made, but it was late and destroyed my client’s belief that this rehabber could be counted on to perform and pay on time. Make sure you develop the type of relationship with the individual with whom you are doing business that allows you to look them in the eye and ask them how they are doing and what else is going on in their life so you can pick up on what issues may be on the horizon that could affect the way you are doing business with them.

Organize Your Deal Paperwork There is one last fundamental principle that investors need to understand that I want to share with you. You need to organize your paperwork. You need to have all your baseline transactional documents saved in Word format so you can easily do your own word processing and create nearly-completed drafts of your documents to be reviewed by the appropriate outside professionals and other parties to the transaction (yes, get a professional review each time).

By always working from a baseline document, you have a template in place so you aren’t reinventing the wheel every time. You are also able to maintain a greater degree of privacy and security over what you’ve done with other deals. I often see individuals who grab the last document they used (last lease, last trust agreement, last operating agreement, etc.), and they begin making edits to that one for the next deal, not realizing that there may be holdovers, both digitally and facially, in tvhat document. Has that ever happened to me? Embarrassingly, yes. I have taken steps, however, to prevent it from happening again in the future. That’s why I’m sharing this concept with you. Whatever the type of document, whether promissory note, mortgage, deed of trust, option agreement, due diligence checklist, or borrower questionnaire and loan application, have them saved in a baseline format that you can quickly modify it for the particular deal on which you are working. This will allow you to be much more organized as you prepare these documents on your own to be sent to your lawyer or other licensed professional for review and then used in the transaction. Remember, it’s all about getting good at the basics. Make sure you master the basics of real estate investing, establish your parameters, do thorough due diligence regarding those with whom you are working, and work from the same, consistent set of documents so you can continue to repeat your successes.

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Rental Housing Journal Valley · November 2015

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Rental Housing Journal Valley

Rental Housing Journal Valley 路 November 2015