But, Karen’s article also touches on the obstacles that lie ahead for someone thinking about buying, rehabilitating and renting distressed property on their own. She sums them up into six mistakes:

 Mistake 1: Confusing a cheap deal for a good deal.

Mistake 2: Overlooking key costs.

Mistake 3: Forgetting that time is money.

Mistake 4: Assuming you will sit back and watch the rent roll in.

Mistake 5: Underestimating repair costs.

Mistake 6: Assuming that owning a rental is the same as owning a home.

See her article, Six Mistakes Housing Investors Make, to learn more. In summary, all of the mistakes originate from inexperience. Without proper experience and know-how, even a stellar investment can turn sour.

We believe that everyone should have the opportunity to benefit from the current real estate market. Not just real estate experts. It will take a lot more than a handful of real estate moguls to clear the vast inventory of foreclosures clogging up the housing market. And, with the ups-and-downs of Wall Street, investors are in need of a reliable alternative.

We created Bay Area Recovery & Reinvestment to provide solid returns for all types of investors while at the same time helping the Bay Area housing market recover. To do so, we handle the purchase, rehabilitation, management, and due diligence necessary to make a distressed property a worthwhile investment. Our investors receive solid returns without having to worry about the litany of challenges that come with real estate investing.

Renovations: Before and After

To add fuel to the fire of concern, it wasn’t so long ago that some of our most respected and successful financial institutions found themselves in bankruptcy, collapse, and in need of bailout.

But before you stash your cash away in the mattress, consider decoupling yourself from the ups-and-downs of Wall Street with a Self-Directed IRA. More than 90% of Americans are unaware that Self-Directed IRAs exist. This may be in part because financial advisors who make a living on the amount of money they manage don’t want you moving your funds away.

Self-Directed IRAs allow you to choose your own investment, including a range of alternative investments which are becoming more and more appealing in the current financial climate, like real estate, precious metals, notes and deeds, and even small businesses. In the case of real estate, you are making an investment that historically has never gone to zero. Unlike a stock, the land will always be there as collateral.

If you are at all interested in Self-Directed IRAs, we encourage you to seek out experts like Tom Anderson,  Founder of Pensco Trust Company (@Anderson_Tom on Twitter), and Lamarr Baxter, Northern California Business Development Manager of Entrust Group (@labaxter1 on Twitter). Having had the pleasure of meeting with both individuals, we assure you that even if you end up staying with a traditional retirement plan, the information you receive will be eye opening.

If you have any questions about setting up a Self-Directed IRA or using a Self-Directed IRA to invest in Real Estate, Bay Area Recovery & Reinvestment will be conducting informational seminars in the near future. To be notified of upcoming seminars, please enter your information below.

When a great deal on an REO (lender owned) or distressed single family home opens up, there isn’t a lot of time to consider before making a bid on the investment. Some potential buyers may find it hard to resist an appealing price tag. If you are one of those buyers, first consider these 5 criteria for what Bay Area Recovery and Reinvestment would deem an “immediate pass.”

1. Nearby Commercial Sites – Noise and the comings and goings of a commercial property will drive renters away and drive down resale value.

2. Square Footage to Number of Bedrooms – A 3 bedroom under 1,000 square feet? That is probably not enough space. Tenants and owners alike prefer to have standing room on both sides of the bed.

A dead end street can really dampen the appeal of a single family home for renters and buyers alike.

3. Dead End Street – Don’t confuse a dead end street with the more desirable cul-de-sac. Dead
end streets can often be dark, inconvenient and an overwhelming nuisance.

4. Apartment Buildings Nearby – Single family neighborhoods provide a sense of stability and community. While rental complexes and duplexes don’t necessarily equate to occupant turnover, their presence can drastically spoil the appeal of a neighborhood.

5. Lack of Curb Appeal – Perhaps the hardest to define but most important consideration for a single family property. If it doesn’t look like a home or lacks character and warmth, buyers and renters may be turned off.

Remember in depth knowledge of the area is a prerequisite for buying property, whether for a flip or rental property. The Bay Area Recovery and Reinvestment team has years of real estate experience in the Bay Area and we always take a conservative approach to purchasing property. Each potential purchase is held up to a strict set of criteria, but any one of the above 5 represents an “immediate pass.”

If you have any questions about buying or investing in distressed properties, feel free to contact us.