Rule of 72

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It’s one of the most basic investing principles and might have been the first one you learned – it’s the “Rule of 72.”  The “rule” is the classic shortcut that estimates how long it takes to double your money.  Today’s graphic from the Visual Capitalist takes the rule of 72 shortcut and uses the more precise logarithmic formula to show how long it takes to grow your money at different annualized returns.  Indeed….Stay safe have have a Happy Friday!!!

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Yes, Interest Rates are having a huge effect on Price…

Minnesota Real Estate Investors Association, Inc.

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Everyone knows that as interest rates rise, real estate prices drop.  It is only natural.  If the current interest rate is 4% on a $300,000 loan, the monthly PI (Principle & Interest) payment is $1,432.25.  If the interest rate goes up to 7% and the average buyer can only afford a monthly payment of $1,432.25, then the maximum amount they can borrow goes down to $215,277.40.

This is affectively what has happened over the past year and a half, so why have prices continued to climb?  That’s a great question and can be explained by the extremely low inventory levels.  The level of inventory has been so low for so long that the principles of supply and demand have caused prices to increase dramatically. 

In other words, if interest rates hadn’t risen so much so fast, the average loan balance may have risen to $565,000.  That is what the borrowers could afford based on the current average monthly PI payment of $2,700 and an interest rate of only 4%.

The following chart shows the affect interest rates have on a borrowers ability to pay over the past 18 months.

Loan Balance Interest Rate Monthly PI Payment  
$300,000.0
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The Science of Rehabbing: Unlocking Success with Bulletproof Rehab Projects

Community of Real Estate Entrepreneurs

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In the dynamic world of real estate investing, successful rehab projects require a meticulous approach that minimizes risks and maximizes returns. The key to achieving this lies in "bulletproofing" your rehabs – implementing strategies that ensure your projects are completed on time, within budget, and with maximum profitability. In this article, we will explore the six essential keys to success in rehabbing properties. By incorporating these principles into your projects, you can increase your chances of achieving guaranteed success.

Key 1: Understanding the Main Elements in Every Rehab

A thorough understanding of the main elements involved in a rehab project is crucial. From assessing structural integrity to identifying potential issues, this key emphasizes the importance of comprehensive property evaluation. By conducting detailed inspections and accurately identifying necessary repairs, you can establish a solid foundation for your rehab projects. Having a checklist is a must. Just like a pilot relies on a checklist before takeoff, investors should embrace this practice to ensure every crucial element is addressed.

A checklist serves as a valuable tool, helping you stay organized, minimize errors, and maximize efficiency throughout the rehab process.  

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Are You Working on the Wrong Things

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 Are You Working on the Wrong Things

By Barney Zick (Ron LeGrand)

There’s a common mistake I see students making repeatedly and it doesn’t seem to matter if they are new or been around awhile. That mistake is:

Doing Everything They Can to Feel Busy Except the Critical Things Required to Stay in Business.

It’s so easy to be busy. Anyone can do it and most people would say they’re very busy almost all the time.

“If I only had more time.”
“The days just aren’t long enough.”
“So much to do and so little time.”

A rat in a circular cage is busy running in circles but getting nowhere. Pretty soon he has a heart attack and dies. Being busy will not make you rich. In fact, it can have the opposite affect and prevent you from ever achieving wealth. Don’t get me wrong. Rich people are busy too. I’m very busy most of the time. Always something chasing my attention. An endless supply of things to work on that sucks up my time. 

The difference is I constantly and consciously work on…only those items I can’t delegate and are worthy of my attention.

Minutia is a deadly disease that steals away the most productive time of
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Learn the Secrets to Creating A Wildly Profitable Business You Love That Runs On Autopilot, Tuesday April 25th 6pm-9pm

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Learn the Secrets to Creating A Wildly Profitable Business You Love That Runs On Autopilot

A Proven, 4-Step Formula to Working Less and Making More In Your Business

(A formula that’s the result of 27 years of education, experience, and experimentation!)

Here’s just a tiny taste of what you’re going to get when you attend:

  • *How to run your business like Elon Musk in a mere fraction of the time you’re working now, and how to stop lett
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3/28/23 Recap of our Meeting: Lincoln's RE Market Update, How much Rent to Charge? Buying guide DSR & State Building Codes.

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There's a fine line between what you'd Like to Charge for Rent and When a Tenant will move. So we began with a SF in Swampscott, then a SF in Marblehead and Finally with a 3 Family in Salem. Using software that relies on GPS and MLS Comparables:
We found that Swampscott had plenty of room to get to Market rate, especially since the same Tenants had been been there 20 years:-0

The Marblehead SF was closer to Market since there had been changes in Tenants every couple of years but still had room for $100/month increase.
However there had been overuse of water, paid by the Landlord, about $250/quarter overuse and when asked they had said "Of we heard the Toilet running but didn't want to bother you. And yes the kitchen sink is leaking:-(" How to handle this after a Plumber had been called and scheduled ASAP to rectify the problem. So One time charge or include it in the Rent from now on. Folks had different ideas but I'd just as soon have the Tenants decide!

Salem MF had room for Rent increases, Tenants had been there over 6 years and rents could almost double. You picking up a common theme here? Good, Long Term, Tenants tend to have smaller Rent increases.

Rules of Thumb:
DSR - Debt Service Ratio anyone? This is what I use to quickly evaluate a Property to see whether I'm interested or not.
How about you? Cap Rate?
Whatever you use be consistent, otherwise you'll manipulate your numbers so the Rules of Thumb come up favorably, ok so you want it and lean towards it However what happens when you uncover something else like Ground Water, environmental issues, Tough Tenants, hidden water damage. Then you may wish you stu,k to your guidelines Including Reserves and Repairs.

Lincoln's Market Update - On another Blog go  65752348621486

I brought my copy of the State Building Code, (didn't include the International Codes now included) which I'm required to keep with me at all times when I pull a permit with my Builders License. My point was there's a lot to it! I'll have all the Codes (and up to date versions at the next meeting.

March Winds bring April Showers! My Property has Sustained Water Damage; Now What? by Martha Teears

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My Property has Sustained Water Damage, so the question is:
"Now what do I do?"
The First thing to do is answer these questions:
*Where did the water come from?
*What caused the water damage?
*Is the water damage covered?
*Do I have the right coverage?
*Do I have enough coverage?
These are the questions that hit us when water damage has occurred. It pays to be prepared!
*Did the water come from the outside into the property or did the water start inside the house and mover out of the stricture?
There are many avenues for water to sneak through, so let's examine some of them. The question of what constitutes  a water claim and what constitutes a flood claim creates a great deal of confusion among insureds. Water claims are submitted as flood claims and flood claims are submitted as water claims. Insureds may think "What's the difference and why should I be concerned?" There's a big difference between the two losses. Flood claims require their own policy, whereas water claims are covered under your hazard policy. 

"Wind caused a tree limb to break, which in turn broke my window or punctured a hole ij the roof. It was raining and water entered in through the window and soaked my flooring, ceiling and walls. Framing around the windows had been damaged by the tree limb and water" Read More...