7.5 Reasons Cash is Power in Real Estate

OPM- Other people's money. One of the first things you learn about real estate- use Other People's Money. That's all fine and good, but have you every learned that Cash is King? And that when you are the King (or Queen), then you have power? So, Cash = King = POWER. How?

Let me tell you how CASH is POWER:

1. Cash Buys You TIme- Want to do more transactions? Use cash. Instead of waiting 2, 3, 4 weeks or more to wait for a bank to approve you for a loan, pay with cash today. How many more deals can you do if you are not waiting an extra 2-4 weeks per deal?

2. Cash Gives You Influence- Send out an e-mail (or tweet) letting your bird dogs and business associates know that you have $250,000 in the bank and that you are looking for great deals. Be ready to take action as the offers roll in.

3. Cash- Private Sellers Love It! Do you think a seller would prefer an offer contingent on financing, or cash? Duh. Will they take less for cash tomorrow than financing in a month or more that may or may not come through? YES!

4. Cash Towards Hard Money Loans- Hard money is expensive, right? Try coming in with a chunk of your own cash and negotiate terms. Clear Day Capital borrowers who drop from 75% LTV to 60% LTV reduce their costs of a loan by 1/3!

5. Cash Discounts from Vendors: EVERYONE takes cash discounts. Don't want to pay up front for incomplete work? Work with the title company that closes your transactions and have them hold the funds so the vendor knows that they're available. When the work is done, have the title company cut the check and have the vendor sign a lien waver.

6. Cash- Banks Want It! You'd think that banks would have enough cash, but they will cut deals for REO properties and short sales if they know there is cash to close immediately. Good luck trying to time a conventional loan with a short sale.

7. Cash Keeps You Out of Trouble: There will ALWAYS be unexpected expenses and unexpected delays in income. When you have cash reserves, your business can "whether the storm." Author Charles Givens, who wrote "Wealth Without Risk" put it simply: "A prolbem that you can solve by writing a check isn't a problem."

7.5 Cash Makes You Feel Good: Don't believe me? Try a couple of experiments:

Experiment 1. You have and extra $25,000 in your bank account. Close your eyes and think about how it makes you feel.

Experiment 2. Go to the bank and cash a check for $1,000 in $20 bills. Hold them, count them, feel them in your hands. How does it make you fell?

What If You Don't Have Cash?

Go find someone who does. Get a cash partner. Work with a hard money lender who can provide money fast. Set aside reserves from profits of each project. Keep building reserves until you get all the benefits of a cash buyer.

Do you have an expample of when cash got you a great deal? Post it and share.

Real Estate Social Networks- Preview the Next Wave

Want to see the next wave in social networking? Take at preview look at Clear Day Connect, the social network for people who are investing in Northern Utah real estate. Even if you are not targeting Utah, you need to take a look! Why? Here's 7.5 reasons:

1. Social Networking is here to stay and this is a new twist- target social networks.

2. Clear Day Connect is built on the SocialSam.com platform. Starting at $7.95 a month, anyone can start a social network.

3. The SocialSam.com platform allows you to monetize (get payed for!) social networking!

4. Clear Day Connect will have professional real estate investors, property managers, attorneys, and accountants ready to answer questions when in launches in the next 1-2 weeks.

5. You can provide valuable feedback about what you wouuld want to see in a real estate social network from the ground floor up.

6. Don't you wish you had been at the ground floor with Facebook or Twiiter? Here is the next potential platform.

7. There are at least two good articles to download for free right now and a half a dozen proffesionals to meet. YOU could even lead a forum if you ask nicely!

7.5 Visit Clear Day Connect because I'm asking nicely!! You can do me that favor, right???

5.5 Reasons That Auguts 2009 is a Bad Time to Invest in Real Estate

I have been avoiding this topic for a long time. After all, this is a blog that supports a company that provides bridge loans to real estate investors and it's in Clear Day Capital's best interest to make sure that people keep investing. But the truth of the matter is that this is a bad time to invest in real estate. Here are the facts:

1. Everyone is getting out of real estate, so you should too. That's right, in a democracy where every vote counts, the majority rules. So as realtors, loan officers, title officers, investors, and everyone else is dropping like flys, you should get out or stay out!

2. Real estate prices are down. You need to wait until prices are up a lot to make sure that you are following the upward trend. Even though property values are low and on sale, wait until prices go up quite a bit. Real estate isn't like stocks or cars or other things that you buy. Buying high is what most people do, so you should follow the majority (see reason #1.)

3. Real estate volume is down even further. Again, if no one is buying, why should you? Whait until volume goes up and it becomes more of a seller's market and then you can feel good about making offers near the asking price. Better yet, you'll be able to make lot's of low-ball offers that get rejected because people have more confidence that they'll be able to sell their house.

4. Unemployment is up. This means that everone has stopped buying houses and no one can afford to pay rent. After all, going from 3.0% unemployment to 5.7% unemployment (in Utah) means that everyone is out of work and no one has a paycheck coming in. We know that the government lies and unemployment MUST be so high that the American way of life has ceased to exist. I am not sure where people are living, but it must not be in houses or apartments. Has anyone checked on RV park occupancy rates lately?

5.5 Home foreclosures are ready for the "second wave." Home prices are going down even further. Forget about buying for cash flow long term, forget about negotiating a good deal now, forget about amortization, forget about owner financing that will allow you to own dozens of houses without qualifying at the bank. Just focus on equity and remember housing prices never bounce back.

5.5 Leave more for me & my friends! This is the best reason of all to stay out of the real estate market. We are having too much fun and I don't want competition for houses to go back up to were it was two years ago!

My suggestion is that you wait for the nightly news to tell you that it's a good time to invest in real estate. They allways seem to have their pulse on the market. Look at the great job of investigative reporting they did to warn us about the housing bubble.

There are lots of other other good reasons to not invest. Can you think of some and share them?