Why is buying a property in a condominium or homeowners association such a bad idea?

Condos, townhomes, and single family homes in associations can seem cheaper than their comparable counterparts that are not subject to associations. There is a good reason for that. They are at least riskier investments at best. They can also be financial traps that really wreck your plans, portfolio, flow, and cash flow.

This is just one of the nuances of investing in real estate which many don’t understand is an issue until they’ve made the expensive mistake, and have gone through the immense pain associated with it.

If you are tempted to invest in these properties anyway, here are five things you need to be prepared for.

Financing Challenges

Many loan programs require condos and HOA projects to be specifically approved in order to qualify for financing. Which includes evaluating the association’s make up of owners and investor ratios, how much the association has in financial reserves, and any legal issues they are involved in.

This means your pool of end buyers can be far smaller than on a similar single family residence in the same area. So, it can take longer to sell as well.

Deed Restrictions

Condo associations have especially become more of a nuisance with a wide variety of creative deed restrictions on units in their communities.

They can make up just about any rule they want, and apply it to governing your unit.

That includes restricting how many years you must own it before you can rent it out, minimum and maximum lease periods, and even how soon you can resell your property.

If you can’t rent it out or resell it for a year, that is a problem for most buyers. At a minimum it puts a serious hole in your returns, and means you are bleeding negative cash flow through that period.

Approval Of Buyers & Tenants

You don’t just get to decide who you can sell or rent your property to either. Even if they are paying all cash, and have perfect credit.

Virtually all associations retain the right to approve tenants and buyers. Sometimes this is a multiple step process, with various master and sub-associations involved.

Those handling these approvals are rarely motivated to move quickly. Their criteria can be very murky and often seems ambiguous.

This again slows you down, and shrinks your end buyer pool.

Constant Headaches

From rogue members, to greedy lawyers, and corrupt board members manipulating budgets and rules for their own personal interests, associations can be non-stop headaches.

If you don’t show up to meetings and vote, then who knows what they will do in your absence. If you do, you can still be drowned out in the vote.

Special Assessments

This is one of the biggest risks of associations. They may apply special assessments to units at any time. This can be to fix urgent damage, such as after a storm. Or it could just be for improvements a few board members want everyone to pay for, for their own personal benefit.

These can be thousands and tens of thousands of dollars. Which becomes a debt on your unit. If you don’t pay it, your new buyer must agree to take on this additional debt at closing. Meaning it is a lot more expensive for them, or you’ll have to discount your asking price.

If You Do…

Of course, you can make money buying and selling these properties. If you do, make sure you read through all of the rules and know them. Read through the financials of the association, have a good lawyer on retainer, and price in this extra risk to your purchase offers, and financial projections.

 

Make the most out of the holiday season by engaging in these games…

This is a VIP time of year for real estate investors. There can be extra real estate investment opportunities, time demands from family and friends, and the pressure to set new goals and plans that will elevate your results in the new year. If you can squeeze in a few of these classic games, you may be able to simultaneously balance more of your work and play, while boosting your brain in a way that can help you set better strategies and tactics for the months ahead.

Chess

Perhaps the ultimate test of strategy and forward thinking. It’s a classic, and one which can definitely help develop your critical thinking for investing in real estate, and making long term financial plans.

Risk

Another great multiplayer strategy game. Perfect for those set on building their own global empire. A great way to also help build strategic thinking among your partners, family members and team mates.

Diplomacy

While probably lesser known than Risk, this strategy game brings together history, thinking, and verbal skills. It reminds us that while we are all making our own plans and strategizing our own moves, so is everyone else. We’ve got to factor that in. Diplomacy also brings in deal making and negotiations, which are skills that are crucial for every real estate investor to develop and keep sharp.

Cash Flow

Rich Dad’s Cash Flow game is a classic in real estate circles. You can play it at home, bring it to the office to give your team some productive downtime, or host a meetup group or networking event around it.

Texas Hold ‘Em

Texas Hold ‘Em poker will teach you that sometimes you just have to work with the cards you're dealt. However, regardless of that hand, you can still pull off big wins if you are bold, and use it well. Like life and real estate, it’s not about luck, but strategy.

Monopoly

Whether you enjoy a throw back to your childhood days, or want a subtle way to start teaching your kids about real estate, and get them excited about it, Monopoly might be a great game to pick up. With so many versions, it can be the ideal gift for just about anyone. There are themed versions, a cheap and mobile card based version, and even a $2M gold and diamond set if you really need to wow someone.

Wii

If your Wii has been collecting dust while family members beg for the trendy gaming system of the year, this is a great time to break it out again. Find a dance or martial arts game, or exercise game that will get you off the couch, and burning those extra holiday calories, while boosting your mind and confidence for the new year.

Does the new housing boom create a miracle second chance for real estate investors that have flopped in the past? Is flipping houses the best chance for the kings of realty to get back on top and regain the reins to their financial futures or is it just too late?

There is No Denying the New Housing Boom

Even the most pessimistic analysts are having a hard time spinning anything negative about the U.S. housing market right now.

Check out the facts &and figures according to the National Association of Realtors (NAR) latest press release on June 20^th:

· Existing home sales rose 4.2% in the 12 months to May 2013

· Median existing home sales price jumps 15.4% year-over-year to $208,000

· Buyer traffic has risen 29% in the last year

· Median days on market dropped to just 41 in May 2013

On June 2th Bloomberg ran coverage of the new Mortgage Credit Availability Index from the Mortgage Bankers Association showing U.S. home loan lenders loosening up access to mortgage loans which will only further fuel home sales.

It isn’t just existing home sales that are performing well either. The real signal that the new housing boom is officially opening its gates is new home builders like KB Homes announcing a 74% increase in revenues as of the 2^nd quarter 2013.

Based on historical real estate cycles we are now entering a new boom era that will last another 10 to 15 years, during which home values will double.

10,000 Donald Trumps Looking to Rebuild an Empire

So is this new era of plenty in the U.S. residential real estate market the signal that real estate investors and investor groups should jump back into the game and flip more houses once again?

There are many, many real estate investors that completely flopped when the bubble burst. Many lost businesses, homes, expensive sports cars and even saw their families fall apart. So why did it really come to this for so many individuals and is this really their chance for a do-over?

The single biggest cause of failure among the real estate investment crowd when the bubble burst was being overleveraged. Many found themselves in negative cash flow and equity situations. Some are still recovering, others have cleared the debt and are seeing their credit scores gradually rising again.

For most the failure experienced wasn’t anything to do with personal ability, talent or a fault in the housing market. Too many just rushed in without investing in their real estate education or kept gambling on the market even though they knew an end to the run was coming.

A large percentage of this group was turned off to real estate investment and never went back, but now are green with envy as they see others banking big on distressed properties and rapidly rising values. One thing that they all recognize is that there are few if any other alternatives for regaining wealth, status and their previous lifestyles as flipping houses or building portfolios of rentals. And no one can deny if there was ever a good time to get in, this is it.

So if you are a member of this group can you bounce back and hit the big time again by investing in real estate a second time, and how can you prevent failing twice?

It’s entirely possible. Just look at Donald Trump. According to his bio on Wikipedia he once sank to a low of being $900 million in personal debt and some $3.5 billion in business debt. He certainly made a significant comeback and now boasts new developments all over the globe in addition to his stint on reality TV with the ‘Apprentice’.

Few of those reading this are anywhere near that deep in debt. So if he could do it, you can too. So how can you get back on you’re a game fast?

The Inside Scoop on the Next Real Estate Hotspot

The one thing that real estate investors who have ridden the recent housing roller coaster certainly respect is knowledge. So how can investors tap into the best data for identifying investment opportunities and targeting their marketing for maximum effective and ROI?

As predicted ‘Big Data’ has become big business in 2013. The government has recently jumped into the game amidst a variety of scandals. Bloomberg has been criticized in the New York Times for journalists’ tactics and on revelation the conglomerate owns more than 30% of the $25 billion plus financial data services market. Now real estate related firms are bulking up on acquisitions too with news of CoreLogic acquiring DataQuick for $661 million and Fidelity buying back Lender Processing Services for $2.9 billion.

Some of these firms provide valuable information to the real estate investment community, but can also drip out misinformation via faulty calculations, stale figures that do not reflect current trends or data designed to move money to their clients benefit.

So while the news can be a good barometer to keep an eye on, savvier investors will zoom in on more local data using sources like RealEstate.com’s Local Info and Market Analysis tools, as well as conducting their own market research via social media and word of mouth.

When it comes real estate marketing investors have never before been so spoilt with in depth insights for targeting and maximizing ROI on cultivating buyer and seller leads. Information giants like Verizon and Google now open the door to masses of information on consumers for enhancing marketing performance, while other companies cut to the chase and provide direct access to exclusive real estate leads.

Tips for Building Momentum Fast

While many would no doubt love to jump into investing in real estate again most can’t afford to go months without a paycheck today. So how can you get back into the game and see results fast?

5 steps to investing successfully the second time around:

1. Recognize the mistakes of the past (and put them behind you)

2. Get wired into blogs like this and other sources of good data and emerging trends

3. Start networking to build contacts and lead sources

4. Set up effective, proven systems that help avoid pitfalls and improve time management

5. Make the leap of faith and go for it

A new entrepreneur publication featured on Yahoo Finance and Reuters, G-Code Magazine, suggests that some of the best growth hacking moves small business owners and independent real estate entrepreneurs can make include taking the time to understand their customer, then engaging in guest blogging, building affiliate networks, becoming a member of local coworking office spaces and even paid search for immediate results.

Excellence = Rewards

Finally, commit to doing it right this time around; no shady short cuts, keeping eyes on the main objective and doing it for the right reasons. Real estate investment may be the fastest path to a handsome income and great wealth but it comes with so many other benefits too.

 

Commit to excellence in every area of you new venture and the rewards will come. You will build and hold a substantial legacy for your loved ones, help to improve the economy and have a direct positive impact on revitalizing communities and bringing new hope to others too.

Have we really hit the bottom of the housing market or is there some truth in the pessimists’ claims that we still have a little way to go and there could be some fluctuations still to come?

How the Doubters Prove the Real Estate Recovery is here

Almost all experts in all areas of expertise agree that we have already passed the bottom of the housing market. Yes, there could be some pockets of the country still coming around as others are already pushing double digit growth and there could even be some minor dips in some places as the flow of foreclosures is tweaked and the mortgage market and economy are fixed. However, any negativity in the real estate market today is pretty clearly the work of a small group of individuals attempting to get their name in the news and a few media outlets desperately trying to keep up readership with attention grabbing headlines.

In fact historical housing cycles show it is at these times when property prices are improving, homes are selling faster, home vacancies are dropping and the few question the sustainability of the rebound that we have officially entered the recovery phase.

It’s Not a Boom yet…

It is important to differentiate the recovery phase from a boom. We are still working through foreclosures and lending issues, while the economy waits for the real estate industry to bring it around. This is still the ground floor opportunity to get in.

What about the claims that traditional real estate cycles don’t apply to this roller coaster ride?

Despite different players, slightly different tactics and the internet the fact is this is just a part of the normal housing loop we have been going around for hundreds of years.

All of the indicators from the swelling of the bubble to the foreclosures, tightening of lending, falling values and increase in rentals and cash flow from the slump are exactly repeating history.

What Happens When the Real Estate Boom Really Kicks in?

Once we really start kicking we can easily expect a good 10 to 20 year run up in home values which will continue to snowball until the bubble bursts again.

This doesn’t make real estate a bad investment; in fact it should give investors and the average home buyer confidence.

Just don’t get caught short later. When it starts really getting hot look for the areas which will hold out the longest and demand bigger discounts on homes you are flipping.

If you can hold a couple of properties and cash them out before the next bubble to reload on cash and take advantage right when hits bottom this time you’ll be even better off and positioned to create even more wealth. Know your cycles and use them to your advantage.