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The short answer is YES! You can, and should, borrow money to invest in real estate. However, let me clarify. Investing is where you have a realistic plan to make a strong return on your investment. The return is not based on appreciation of the property. It must provide a return on investment after allowing for costs, expenses, and an allowance for things that might go wrong.

When borrowing money to invest, here are 3 simple rules to follow:

1. If you had the cash, would you loan someone else the money you’re asking to borrow against the same property? If the answer is, “No,” then you don’t have a great investment that you are confident in. Move on.
2. Does the risk justify the reward? Are you making enough money to make it worth it, or are you getting involved because you want to be “in” real estate? The only reason for a business is profit. If there is not enough profit, move on to another deal.
3. Is this a long term investment? If the answer is, “Yes,” then the next question becomes, “How much money are you making monthly?” If you’re not making money monthly, then you are speculating (hoping, not investing) for future profits.

Certainly there are exceptions to these rules depending on your financial position and your investing goals. However, many novice investors get sucked into buying properties. They believe, mistakenly, that real estate always goes up in value. They hope that history will repeat itself and they will become rich in the future from their property.

Smart and profitable real estate investors base investment decisions on instant profitability. You can’t go broke when you are making a profit from the beginning.

Author: Gerald Romine

“Success doesn’t come to you…you go to it.”

Those words were spoken by Marva Collins and I totally agree.

The other day I received the following email:

Gerald’s Response: Listen, if you have a losing attitude things are not going to change. If you are in a bad financial position I would not be buying “cards etc,” I would be driving around neighborhoods (or riding a bike if needed) and making phone calls to MAKE things happen. These are two of the lowest-cost tasks you can do to find bargain real estate.

“Dismiss the costs of promoting?” Huh? I don’t get it. Real estate investing is a business and there are costs associated with all businesses. I haven’t found any other business with the income potential of real estate that can really be built on a shoestring investment. If anybody thinks money can be earned without investing anything to attract it, they are a fool!

“High and mighty when it comes to money and so derisive of poor people?” O.K., I confess that I had to look up “derisive” (means mocking). Anyway, money is nothing more than a tool and can be used or not used, for good or bad. Money doesn’t make the man (or woman); it only brings out what is inside of them. Poor people have poor beliefs that STOP them from achieving success. If that’s “derisive” then I’m guilty. I believe all people are self-made for good or bad, poor or rich. I’ve been there. I once was poor and made a choice/decision to become wealthy.

My favorite one was the closing line, “If it wasn’t for the poor you would be poor.” The writer just doesn’t get it. The best way to make it to the top of the mountain is by helping other people to the top, and then you arrive there by default. Bill Gates didn’t make money from the poor; he made money from people who wanted to buy Microsoft products. Bless him and his success.

How about a few motivational quotes:

“The waste of money cures itself, for soon there is no more to waste.”
-M.W. Harrison

“Do not value money for any more nor any less than it is worth; it is a good servant but a bad master.”
-Alexandre Dumas fils, Camille, 1852

“Empty pockets never held anyone back. Only empty heads and empty hearts can do that.”
-Norman Vincent Peale

Author: Gerald Romine

Are you tired of paying too much for homes with conventional financing?

Would you like a simple formula? How about a formula that 95% of real estate investors do not know, understand or use? A formula that will guide you to your own real estate riches?

Most real estate investors fail in business for a simple reason. Overcoming this common reason can easily turn a starving investor into a financial success. The difference is in understanding and learning:

The 4 F’s of Real Estate Investing

1. Find them
2. Fund them
3. Fix them
4. Flip them (or keep them)

Now the test: your answer to one simple question will tell me a lot about your current real estate investing knowledge.

Question: “Which F is the most difficult?”

1) The Common Answer: Beginners believe funding properties is the hardest part of the process. Beginners struggle to understand the money they want is readily available from others. When you find a great deal, there are people who will make loans secured by real estate. They agree that with your payments they get a set amount of profit, but if you don’t make the payments they take property and make an even larger profit.

2) The Correct Answer: Experienced investors focus their efforts on finding deals. Why? Because if you do not have the right deal then there is nothing to fund, fix, or flip. Spend your time on “Finding.”

The Magic Formula

First, focus 90% of your effort to finding deals.
Then invest 10% of your effort in funding, fixing or flipping after the deal(s).

Ask yourself, “Have you been putting in 90% of your efforts on finding deals?” If the answer is “No,” CHANGE IT.

Gerald Romine

Real estate investing is changing in the United States and throughout the world. A few excerpts from a recent USA Today article:

“10 years ago, eBay changed the world, sort of by accident.”

What’s next?

Where does eBay go from here? (Meg) Whitman shifts into her presentation persona. First, she says, eBay will keep expanding worldwide. Today, in about 15% of transactions, the buyer and seller are in different countries. “I’d be surprised if that’s not 50% to 60% 10 years from now,” Whitman says.

“And think about what that means for eBay and the world - about connecting the Third World with the industrialized world.”

EBay is one massive online garage sale and the news that in about 15% of the transactions buyers and sellers are in different countries is unbelievable. Simply amazing!

So what does this have to do with real estate? EVERYTHING, and that’s the point. Right now the world and how we do business is radically changing before our very eyes. Yet most people do not see the changes. They choose to only see the things directly in front of them.

While the U.S. dollar is losing value, the Euro and other currencies are becoming stronger. That means that U.S. real estate becomes an attractive bargain for European citizens. Combine that with the statistic that 15% of eBay buyers and sellers are in different countries and you might see a different future for American real estate.

We have seen this before. Remember when the Japanese yen was strong, and the “Japanese were buying everything” because U.S. Investments were seen as a steal? We’re likely to see an influx of foreign investors into American real estate and it will start with larger commercial properties and trickle down into residential. Actually, we are seeing that this movement is already in full swing!

Another benefit of a weak U.S. dollar is the increase in tourism. When the currency exchange favors foreigners, they are able to buy goods and services at a discount and this encourages travel and spending. For those in real estate, this translates to increased property values in tourist hotspots. For example, renting flats (condos used as vacation rentals) has long been popular in many parts of Europe and the world and could become common in many popular U.S. tourist locations.

Although I keep my eye on the big picture, I actually run my real estate business much like a fisherman approaches fishing:

“The ocean has a high tide and low tide, but all I really care about is whether the fish are biting.”

-Gerald Romine

The same thought translated to real estate means I take what the market gives me. Keep your investing simple and the profits will follow.

Author: Gerald Romine

Too often real estate investors get stuck in a business mindset and forget there is more to life than real estate investing. There will always be real estate deals to chase but we have to learn to take the time to enjoy family and friends and to enjoy this marvelous journey called life.

I’ve found that one of the best ways for me to get my mind off real estate is to get outside and enjoy mother nature. It is often when I am out hiking and enjoying life that my best business ideas come to me from out of the blue.

Here’s a few pictures of Sunday’s hike on South Mountain in Phoenix with my family. A short 5 mile hike that took in National Trail and Fat Man’s Pass - a foot-wide slot between two granite boulders that you shimmy through for 25 feet.

Author: Gerald Romine

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