Tools you need as Real Estate Investor

In this series of posts this week, my goal is to help the new investor get started. Or maybe an experienced investor reinvent a part of his business. Today I wanted to discuss some of the tools you need as an investor. In this series of posts this week, my goal is to help the new investor get
started.  Or maybe an experienced investor reinvent a part of his business. 
Today I wanted to discuss some of the tools you need as an investor.
1.  Good Support Network: 
As a new investor getting started I found that getting involved with a good
support network was the most valuable tool.  Having a resource to go ask
questions, find educational materials, find folks to be on my investment team,
and just to go to for support helped me get to the next level. 
2.  Real Estate Investment Team
This one is so important that I want to focus an enitre post on this
tomorrow.
3.  Evaluation Tools
Some people need a simple formula that you can further take into spread
sheets. 
One spreadsheet would be a commercial property analyzer if you are going to
be buying and selling commercial property and can also be helpful with rental
property.  This can be used to determine cash flow, projected cash flow,
debt service, expenses, and value.    If you google cash flow
analyzer you will find several ready to go tools that you can use for free or
buy and be able to save on your own computer.  If you are good with excel,
you could even create your own spreadsheet.
And if you are going for the chunks of cash, you will need a fix and flip
analyzer or formula.  Our basic formula is that the average real estate
investor will pay 70% of the After Repaired Value less the cost of repairs, less
the cost of money, and less holding costs.  This will tell you what you
should be able to pay if you are rehabbing and what you can sell a wholesale
property for if you are buying and selling to other investors.  This can be
put into a spreadsheet as well.
3.  Evaluation Checklists
As you look at properties you need to have a way to evaluat the property. 
If you have a checklist of every conceivable thing that could be wrong with a
house, the costs of each repair, it is just a matter of walking through a house
anda checking off everything that needs fixed, the add up all the costs and you
have a rough estimate of repair costs.
3.  Valuation Tools
You really need to know what properties are worth and there are a lot of
online tools like zillow that you could utilize.  But as a full time
investor who is also a realtor I can tell you that having access to the local
MLS (multiple listing service) will be invaluable.  There is absolutely
nothing that can substitute for actual sales values.  ( so have a part of
your team be your realtor or get your license so you can have direct access)
4.  Contracts
Having access to good contracts is also very valuable.  You can get
access to just about any form or contract that you need in one of four
ways:
1.  As a local Realtor you will have access
to all the locally approved forms and contracts.  You can also get access
to similar forms from your title company.  Keep in mind that these are
written to protect the Realtor or the Title company.
2.  Google is a good source as well, but
should be reviewed by a local Attorney to make sure they have all the correct
clauses.
3.  From the local REIA and Landlord groups
4.  Buy them.
I personally have a mix of all of the above including contracts that I
purchased through a training program from Lou Brown, an as is addendum that a
local REO company uses, reviews by the attorney at the title company and then
clauses we have added in over the years.
So I would suggest getting the forms and contracts that you utilize in word
form so you can edit as you need to and so that your attorney can easily review
and amend as needed.
5.  Legal Services:  You will need to set up legal entities, have
contracts reviewed, and you will have questions from time to time.  For the
legal entities we have paid a professional to set up the first one, then we have
set some up ourselves on future companies.  And we have several attorneys
that we utilize to review contracts as they are needed.
You will need:  purchase agreements, sale agreements, lease agreements,
options, promisorry notes, deed of trust, authorization to release information,
lead based paint disclosures, just to get started.
6.  Tenant Screening
If you are going to have tenants and you will eventually, you need to have a
way to screen them.  There are several online screening services and your
local landlord groups may have access to screening services at a discount.
7.  Foreclosures & REOS
Having access to these list is going to help you find the deals.  The
online sites that have subscriptions are ok, but not the best use of your money. 
Save the subscription fees and go directly to the source.  If you do a
little online research you will be able to come up with a list of all the banks
and lenders that have web sites set up to tell you about thier bank owned
properties and if you contact a local REO realtor at the local REIA they will be
able to get you access to all the REO properties you could ever want to buy. 
And if you are just staring out, working with a buyer’s agent on REO’s can
be very helpful.
If you visit our MAREI web site 
you will find a list of all the Bank web sites in the member’s resources
section.  And if you visit Realty
Resource, you will be able to contact Chris Dawson for access to Kansas City
area REO properties.
Keep in mind that if you are buying REO properties, you need to have a proof
of funds to buy with cash, a preapproval letter to buy with a loan, and you
can’t assign or double close most of these properties.
There are many other tools you will need:  digital camera, phone,
computer, filing system for home, filing system for the car, flash light, clip
board, mailing service (USPS.com is great for this), organizational skills,
accounting software, and more.