the creed, part i

safety

Determining where to buy and property value after renovations are the first steps in a safe real estate investment. We will only buy in areas that have low DOM (days on market) if we are flipping properties.  If we’re holding properties our strategies change considerably.

We map out all of the recent sales in an area to determine where things are moving.  We further analyze the most active areas to thoroughly understand what has sold, for how much, and how fast.  From this information we can precisely determine our ARV (after repair value.)

A critical number that must be properly ascertained is the repair costs.  Precisely figuring out this number and then getting the repairs done within budget and on time is one of the most challenging components of real estate investing. This is where we exceed all standards and put Riverfalls into position to capitalize on the most challenging of projects.  

The majority of our projects consist of renovating single-family homes. This is a fairly straightforward investment, but if for some reason a project turns into a nightmare, we will put the tool belts on, and the job will get done!

The federal government recently changed the qualifying parameters for FHA mortgages. Regardless of bankruptcy or foreclosure anyone who has had good credit for two straight years now qualifies for an FHA mortgage with 3% down.

This was a blessing to real estate investors because we now have droves of buyers who qualify for a mortgage to purchase our rehabbed properties.

Our investors are everything to our business, and it makes us feel wonderful to be able to put a sizable return on investment check in their hands; and we take every precaution possible to keep everyone safe in our investments:  

• A mortgage deed is recorded in the investor’s name after every closing. This puts our investor in a first lien holder position on the property. Being the lender on the property with a mortgage deed provides excellent protection for all of our investors
• Riverfalls is incorporated and this provides a great deal of protection for everyone involved.
• Every person who works on our projects is an independent contractor who signs a contractor agreement. This thorough agreement is another component of safety for our investments.

In many locations we are now coming up from the bottom of the real estate cycle. Due to how the market corrected itself and the current interest rates, we are now in an incredible situation to jump-in and capitalize.

On February 27, 2012, Warren Buffet was on CNBC’s Squawk Box and said that buying single-family homes was currently a great investment and, if it were practical, he’d buy a couple hundred thousand of them.