But for my local properties, I collect the rent from my tenants each and every
month - and make the payments on those properties as well.

I
have a client that recently asked me about an investment property that he owns
and manages himself - who was pretty upset about the fact that it was the 5th of
the month already - but his tenants had NOT yet sent him the rent-check.
 

Should he call? Should he email? Should he go over there? What should he do if
he didn't get the rent from this tenant?

I told him not to panic…

Tenants tend to pay their
rent before ANY other bills (cell phones, credit cards, whatever) because most
people are more worried about keeping a roof over their head than if they've got
full cable to watch. And, since I knew that he had a "late fee" clause already
written into his lease, I knew he'd be making a little extra bling anyway!

I usually allow a 3-day
window for payment because sometimes a weekend or holiday just gets in the way,
or a goofy payday can mess someone up - no big deal. If my tenants are more than
3 days late, I charge $25 for being late. Then, if I still don't receive the
check it's an additional $5 per day that they're late as an incentive to pay
sooner than later.

But, even in this guy's
scenario, it turned out the tenants had had a family emergency out of state &
the wife thought the husband paid the rent, and the husband thought the wife
paid the rent.

As
an investor and landlord - this is a reality
that you will face from time to time…

But before you start worrying about this, let me assure you that the occasional
late rent-check is unusual if you've done the appropriate background checks.
And, if you follow the guidelines that I teach, your lease-agreement with your
tenants will require that they pay you late-fees for ANY payments that are sent
late.

In
my years of investing, I have yet to have a
tenant that doesn't make a payment - but slightly late payments are actually
somewhat common near holidays, but usually only a day or two… no big deal.
More often it's a day or two early!

But this is the reason your lender also requires that you have 2 to 6 months
reserve on hand "just in case". You should never be cutting it so close that one
rent check could make or break you. But I also know that when rent-payments are
late - I'm gonna make a little EXTRA money that month!

This is what happened to my client too.

He
did end up getting his rent-check, and although it was about a week late, and
his tenants abided by the least-agreement and sent him a late fee with the rent
- which not only relieved his concerns, but put a smile on his face because he
had an extra 45 bucks
in his
pocket that month!

AA
landlord also has the right to recoup any late-fees from the tenants
damage-deposit, in the event that the tenant doesn't remember to send their late
fees (which covers you either way).

I recently had lunch with a gentleman (I'll call him "Jack") who opted into the MN investment property program on my website. Jack is a 50-something guy who was eager to tell me all about his love for investing, experience and everyone he knows in the investing world…

I asked Jack how long he had been investing, and very proud of himself and his experience, he proclaimed that he'd been investing for more than 20 years now! — "pretty good", I thought - most people who seek me out are more beginner to intermediate (5 years or less, on average). Then I asked him how many properties he currently owned (must be quite a few after 2+ decades, right?). And the answer he had surprised me a bit…

…He said he didn't actually OWN any properties yet!

As it turns out Jack never did ACTUALLY PURCHASE anything… nor did he have a job, or any money to put down. Oh, and I almost forgot… his credit score is trashed and he wanted to know if I was hiring…

Now I'm not gonna insult Jack - God bless his enthusiasm & effort, but I (all too often) get e-mails, voice mails, and "ask a question" forms (submitted on my site) - from many others who have a few issues similar to Jack.

…If you're feeling a little like Jack, and you want to STOP PRETENDING that you are a Minnesota real estate investor and actually BE one -  here is my advise… (remember - I promise you no B.S. - so this is honest-feedback!)

I will NEVER tell you that you cannot invest in real estate - YOU ABSOLUTELY CAN DO IT - but I will tell you that if you are truly committed to making money with real estate - as with most other great things in life (your marriage, relationship with your kids, your health) you won't get somethin' for nothin' - you will have to WORK at it.

If you don't have good credit, any money to put down, and no job for that matter - the EASIEST route I can suggest for you is this simple 3 step plan:

1. Get a job - (maybe even 2 jobs, if that better supports your goals).

2. Repair your credit - get caught up on your credit-cards and bills and raise your credit score.

3. Save some money to start buying real estate with.

The other route you can take is to become a full-time real estate investor. This means you are working at it 50-80+ hours per week - doing EVERYTHING imaginable to find and purchase properties with poor credit and no money down. I won't lie to you, this CAN be done, but it's not easy, so be prepared to work VERY HARD for it!

Like I said, the easiest route is the first one, but no matter what you decide - you must decide to take "massive-action" and do the kind of things that OTHER successful real estate investors are doing, and work hard for it.

I get calls and e-mails every day from all over the world: New Zealand, UK, Germany, Turkey, Guam, Australia, Alaska, Canada - you name it.   People who KNOW they want to invest, people who are committed to starting investing, just don't know where to start.

All these people want one simple formula, one simple answer of what to buy and how to buy it… that's how they find their way to my site. 

Most of these people are very well studied, and very well read.  They know all the best authors for investing, they've gone to the seminars, and they've bought the CDs. They've spent all kinds of money, and all kinds of time on everything about investing… just not yet an investment.

And these people are so well educated, they've spent so much time and money learning not only the positive aspects of investing, but the pitfalls to avoid.  And sometimes having learned so much about the pitfalls, in fact, that they have their own personal overeducated version of analysis paralysis (I call these folks the "Yeah-buts"…).

I've had many many first-time investors take the time to view dozens of properties, study the market tirelessly, even write offers before this version of analysis paralysis hits.  And then what stops them?  The details…  

The many hundreds and thousands of details.  For some it is the paperwork, the process of writing the numbers on paper, signing their name, and the pages of legalese that often accompany a purchase agreement. And for others, it is writing the earnest money check… the prospect of parting with (usually) a couple thousand dollars at least, and the risk they won't ever get that back. For others still, they get past the paperwork no problem, but get stopped by the inspection.

Often would-be investors forget that it's an inspector's job to find issues and write a report on them.  And, they WILL find things (remember, that's their JOB!). They will take photos to include with their report. Whether issues are large or small, the would-be investor receives this lengthy report with a dozen or more photos and immediately panics (because, after all, they just received a report on how terrible the place is!).

Even a brand-new or newly remodeled home will not ever be perfect. And for those that make it past the inspection, perhaps it is the financing at the would-be investor gets caught up on.  Many potential investors are strong and act with conviction until the point they see all the numbers on paper and become overwhelmed.

This is why, and you'll read it again and again on my websites and blog posts, that only approximately 1 in 100 potential investors ever actually make it to that first purchase. That's one person out of every hundred at least as interested as you are now, and that makes it to the finish line.  In fact, I think it's actually slightly less than 1%.

My advice to you? Be the 1%.  Be that 1 in 100. Do whatever it takes to be the master of your own wealth!!!

When you forget, remind yourself. When you get scared, just breathe. When you get confronted, just remember.  That's part of the process anytime you're doing something new.  Allow yourself to move through the space of the unknown to emerge out the other side triumphant.

And, if all else fails, come back and read this blog. Pinch yourself. Remind yourself what you're truly committed to. Use Post-It's if you have to. Just do whatever it is you have to do to begin using your most valuable asset investing - your time.

Don't delay any longer.  I (like most investors) kick themselves for waiting as long as they did.  I've never ever met someone who said "boy, I'm sure glad I waited"…

Start Here

Listen Here (6:35 min)

Here is a recent audio-post of Alex featured on the "Minnesota Real Estate Show" - talking about the great cash-flowing opportunities that she is making available to MN real estate investors!

• Indiana Investment Properties

• Minnesota Iron Range Investment Properties

ROI stands for Return on Investment. Very simply put, it is the percentage of money that you get back versus the amount of money that you put down to acquire property. Here is a very simple chart to illustrate how ROI and leverage works: (bear in mind that no matter how much you put down, the value the property appreciates will always be the same.

The great part about buying investment property in Minnesota is, he smaller your down-payment - the BIGGER your our ROI.

In this game, the game of real estate investing, most of us prefer to use other people's money (OPM). This is something you typically cannot do with any other investment. Just try walking into your local bank or credit union and asking for a loan to buy stocks and bonds.

No, I take that back. Don't try that. They would likely laugh at you and then I'd feel bad…

The truth of the matter is they don't give loans for those things. If you go to the same bank or credit union and ask for a mortgage on the house, you will be treated like royalty and cater to so that they can get your business. They, like we investors, know that real estate only appreciates in value in most cases.

For real estate not to appreciate it would have to either be sorely neglected, or be purchased in an area about to experience significant economic decline. Because most metro areas are so diversified with a variety of different company headquarters, most metro economies would not be affected unless the major two or three "big guns" sustaining the economy were to suddenly collapse,

And, if you were to browse some of my other blog posts, you'll know another way to leverage our cash on hand is to balance the amount of cash you take out of your pocket for a down payment with the prospect of monthly negative cash flow. What does that look like? Well, for starters, you'll want to pay a visit (or a phone call) to your favorite lender.

If your favorite lender does not normally work with investors, however nice here she is, you may want to shop around. Just like in the medical profession, lenders each have different specialties. And, just like in the medical industry, if your vision were blurry you would not go to a plastic surgeon. Conversely, you wouldn't see an ophthalmologist (a physician, usually a surgeon for eyes) for a nip and a tuck.

Similarly, lenders have specialties as well. If you are a first-time home buyer, you should visit a loan officer specializing in first time buyer products. If you, like myself, are in investor, you will choose someone who specializes in financing investments. Use that person's knowledge and experience to make recommendations of lending products. If they are experienced, they will know to show you several mortgage options.

Usually foreign investor, the terms will be 30 years or greater than the percentage of down payment between 0% and 20%. Remember, the more money (cash) you take out of your pocket, the less money you have available for your next investment. This is how leverage works: use a little money to buy a lot of property.

A "Market-Basket" (or "commodity bundle") refers to a fixed list of items used specifically to track the inflation or progress of an economy or specific market. If you have ever taken a class in economics, or have a friend that an economist, you've heard this term before.

For a person, what it refers to is, if you go out into the world and buy one of everything you could consider YOUR markets' basket of goods - take that list and compare it to that same list in another time period. For every person, their market-basket of goods will be different. For an average family, let's say, a market-basket of goods for the week might include several gallons of gasoline, an allotment of assorted groceries, any special medications, haircuts, toilet paper etc.

For a company, their market basket of goods will be very different. It will include such things as costs of maintenance, repairs and operations (MRO).

There are many ways to choose categories of market-basket of goods, or take it as a whole picture of everything we as a nation purchase in a stated period of time. Using this latter definition, our national market-basket of goods, over time has increased an average of 5.5% per year. And given that this takes everything into account, even though the price of T.P. and Ramen-noodles may have gone down, there are other things that will have gone up to compensate.

So, if at your job, your wage increases are less than 5.5% per year, you are actually not getting ahead, but rather falling behind, slowly, one year at a time. Large companies know this and purposefully keep their wage schedules below this number. This gives the company more and more leverage every year it operates. Just one more way to keep the common wage earner down.

This is just one more reason I teach about investing in Minnesota real estate. Most people don't realize this is happening as they get BIGGER houses and cars, a BIGGER TV and more and more debt, they have no idea their buying power is slowly but surely on the decline…

It is my purpose in life, to see that as many people as possible create their own independent-wealth and become self-sustaining by retirement, if not sooner. This also, in effect, takes much of the burden off our ailing Social Security system (okay, time for me to get off of my soapbox  - before I really get started…)

I've read many books on building wealth, and one in particular, had me rolling on the floor laughing. The book opened with the best and easiest paths to wealth…

The author said the best way of all was to be born into it. Boy, if somebody had told me that before conception, I might own my own islands by now! The author continued to say that if you didn't have the good fortune to be born into wealth, the next simplest way would be to marry it. And, I guess I knew that too, but being a little old-fashioned, and not wanting to dump the man I love (LOL), it was too late for me in that department.

One of my favorite phrases (stolen from Timothy Ferriss's book) The Four Hour Work Week - is, "risk only seems like risk until you take it", (I hope I quoted that correctly ).

For real estate it's doubly true. Everything feels and looks very risky until you have done it once, then re-creating the results after that, is a breeze. So do whatever you need to do, to remind yourself to take a risk and to do some things that normally would be outside your comfort zone… way outside your comfort zone! Put up post it notes if you have to, but be that one in a hundred!

In the good old days, actually just a couple years ago, it was easy to purchase investments with little or no money down. But with people over leveraging and going into foreclosure, the banks, the states, and the nation batten down the hatches on more creative lending-solutions.

Now, it is much more difficult. It is tougher to find stated income loans, option ARMS have gone away and the criteria to borrow has gone up.

Don't get discouraged - however, you can still get a good-loan if you qualify. But the loans of today will typically need at least 5% down. There are still zero down mortgages available, however, they are fewer and farther between now and often have terms that make the loan unattractive.

Many people, as first-time investors, confused the down-payment with earnest money or closing costs. Remember it this way, earnest money is a check that those with your offer to show how "earnest" you are in making the purchase. It is still your money and you can use it towards the down payment or towards closing costs, whenever you choose.

Closing costs are the costs associated with making a purchase. Your lender will give you a Good-Faith Estimate (GFE) listing all these costs. There are filing fees with the county and state, there are fees for underwriting, fees for closing company and a title company, etc. etc. etc. Then there is the down payment. This is the amount determined by the loan you select.

If your loan requires 5% down, then 5% of the purchase price is your down payment and will be required on the day of close. Since you have already written your earnest money check, you may choose to put that money towards your down payment. You could also put it towards your closing costs. Or, as many people choose to do, roll your closing costs into your loan. The choices are yours and a good lender will help you with what's right for you.

I would absolutely love to answer this question for you, but the truth is I can only tell you to find a great-lender, who will help you to answer this question for yourself. The real answer to this question, is that each person is unique and different…. Everyone has a different credit-score, a different income-level, a different debt-load, and different-needs.

A lender will look at all these factors, along with how much cash a person has on hand (checking, savings, etc.) for down payment and/or closing costs.

After looking at these factors, a lender can make recommendations as to which loans may fit best in your scenario. If the lender does not automatically do so, ask him or her to see the loans side-by-side. This way you can compare the terms directly.

Look at the interest-rates on the different loans, look at the terms. How many years is each loan and what is your bottom line monthly payment. Consider what works for your budget.

If you have a spouse or partner, ask their opinion as well - because the truth of the matter is, at the end of the day only you can say, which loan is right for you.