Entrepreneur of the Week #Post4 In the previous post we talked about the five important things to know before investing…
Entrepreneur this week #
Post 4
In a previous post we talked about the five important things to know before investing in real estate. If you remember, one of the tips was to focus on a specific niche. So this time we will talk about one of the niches:
To date, I have developed several types of niches for myself, one of them, and perhaps my most favorite was buying properties that were put up for auction by the HOA. For those who are not familiar with the term HOA - Home Owner Association is used as a type of "home committee" it is a non-profit organization whose purpose The main one is to take care of the community's inertness as a whole. For example, to collect the house committee and use the funds for purposes such as: managing funds, hiring property management companies, and making comprehensive decisions for all members of the community, and everything related to joint operation of the property that is usually shared with other tenants. They actually have legal and equitable interests in the property itself, what does that mean?
In order to understand the meaning and power of the HOA in Taboo, you need to order and understand in general What is the real meaning of being a property owner? More importantly They are the obligations that property owners must fulfill:
In the US when purchasing a property there are several parties who have an interest in your property. Yes even if you bought it in cash, Don't think for a moment that if you bought a cash property there are no more guarantees or parties that have equitable interest against your property, and why am I a recipe? It's very, very simple.
Unlike gold, money or anything that can be kept in a safe place, assets can be taken from you if you don't meet your obligations:
Do you really own your property?
Even if you bought a cash property, if you do not pay the taxes to its municipalities (ie property taxes) they will displace you home. It's called TAX DEED SALE. The municipality is a government body and its power in a taboo during a foreclosure process can even wipe out mortgages, in other words you bought a cash house and didn't pay taxes? City Hall Will Take You Home So Are You Really OWN ANYTHING? Gold and silver you can put in the safe, unlike the property owners' assets is what will determine the final return.
The point I want to make clear here is that there are some entities that have interest in your property, which are a mortgage if you take out a mortgage, a municipality if you didn't pay taxes, if you didn't take care of your property, and leaving it neglected, the municipality will run the bond on the property and then it can also foreclose on the debt and actually take you the House. For example, in some counties we work with there are municipalities that give $ 1000 fine On a day with things like "you didn't cut the grass" or you didn't meet other standards, in this action the municipality literally "eats" your EQUITY from the property!, at the same time there are properties that have a Homeowner association and master home association. Each of them has the power to register a LIEN against the house and then foreclose on it and thus get a registration in the tabu.
Therefore, buying the property itself is not the most important thing But make sure you are able to fulfill the various obligations towards different parties with an interest in the property. This is exactly how value can also be produced. In other words, if you have a basic understanding of how a return works and to which you add good asset management capabilities, you can generate value. This is precisely the relative advantage that allows you to flourish in a niche that seems not very attractive.
Time is the one that doubles your money, Not the deal. what do I mean? It doesn't matter if the deal you offer is 6% percent a year or 10% a year, what matters is how quickly you get into the deal and how many deals you can make in a big way, for example:
What is better? Earn 10% on a $ 40 property? Or 6% percent of a million dollar asset?
On the face of it, 10% sounds tempting, right? But how long will you have to work for it? In order to earn 10% on a million dollars you need to purchase, renovate, and rent 25 properties separately. At best if you have a smart system you can make a deal or two a month, and that's only after two years of hard work. And what about your time?
Remember: easy Earn a high percentage for a little money and more And hard Make a high percentage on a lot of money.
As you become more and more expert in a specific niche, you will also know how to perform such calculations, which seem complex from the side, simply and quickly. STRATEGY AND HOW MUCH MONEY CAN BE MADE FROM PURCHASING HOA FORECLOSURE? More on that in the next post.
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