I was invited to speak at the upcoming Think Rich Pinoy Seminar on December 3, 2011 and I want to ask “How may I help you?”.

If you are attending the seminar, I would like to know what is it that you want me to discuss that would be most helpful to you. My talk will only be for 40 minutes and I want to make it count.

Just to give you an idea of what I have shared during some of the past Think Rich Pinoy Seminars, here are just some of the topics I have already covered:

• I have shared some of my experiences and lessons I have learned in buying foreclosed properties, including challenges and success factors.
• I also talked about how and why I decided to quit the rat race to go full-time with real estate investing and internet marketing.
• I also shared in detail how I ended up transitioning from being an I.T. professional to a real estate investor and what questions one should ask (along with some of the answers) when one is just getting started with real estate investing.

This time around, I plan to give a presentation on “how to do the numbers” which attendees can use to analyze potential deals. However, I still want to verify if that is really what you want to learn from me on December 3.

My objective is to help attendees go beyond the learning, and to start with the doing!

Please let me know what you want by leaving a comment below.

Click here to learn more about the Think Rich Pinoy Seminar on December 3, 2011

If you can’t make it to the seminar…

If you are not attending, I still want to hear from you!

What do you want to learn about foreclosed real estate investing?

Please let me know so I can prioritize which articles I should publish first. I have more than 30 articles in draft, excluding listings of foreclosed properties, and yet there are more I want to share about investing in foreclosed properties.

Please go ahead and hit the comments section below, Thanks a lot for your help!

~~~

To our success and financial freedom!

Jay Castillo

Real Estate Investor
PRC Real Estate Broker License No. 3194
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter: http://twitter.com/jay_castillo
Find us in Facebook: Foreclosure Investing Philippines Facebook Page

Text by Jay Castillo and Cherry Castillo. Copyright © 2011 All rights reserved.

Full disclosure: Nothing to disclose.

How may I help you in the next Think Rich Pinoy Seminar on December 3, 2011? is a post from: Foreclosure Investing Philippines

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I visited the Registry of Deeds in Binangonan a couple of weeks ago and on my way there, I noticed something that every real estate investor or anyone buying a property should watch out for as part of due diligence, BEFORE buying a property in any area – floodlines!

Floodlines are the stains that remain on the walls, fences, gates, etc., after an area gets flooded. It can mean an area is flood-prone and can be a sign of things to come, unless something concrete was done to prevent future flooding.

I’ll let the pictures do the talking

How about the graffiti or “art work”? Those are things you should also avoid, but that’s another story!

These may look like ordinary pictures of floodlines. However, these were the same floodlines I saw in the same area in Pasig just after Ondoy. Yes, the floodlines caused by Ondoy exactly 2 years ago as pictured above are still very visible.

Where do you look for floodlines?

Obviously, you won’t see any floodlines if a property’s walls, fences, gates, etc. got repainted or cleaned up already. So you should look for them at the following:

• Concrete walls, fences,  of VACANT LOTS. Those that have rough surfaces that would retain the dirt and mud after a flood has receded would be a good place to start.
• Unoccupied  properties. Since these are unoccupied, it is less likely that they are maintained, hence you will see the floodlines, even after several years have passed.
• Public or private properties that are not well maintained. Just look at the pictures above!

What if you don’t see any floodlines?

If you don’t see any floodlines, you should still ask around the area. For sure you will find people who are more than willing to share their flood-related stories. Check out sari-sari stores, barangay halls, or even the property owners in the same street or area.

While banks will disclose any info they have with regard to flooding, don’t rely solely on them or their caretaker who lives in the foreclosed property as they might not know exactly how high the flood was, if any, or they may simply not know if it was indeed flooded.

For FSBO (for sale by owner) properties, the seller might be hesitant to disclose any information with regard to flooding, as it might make you lose interest on their property. Just ask anyway and confirm by asking others who live in the same area, as mentioned above.

Online resources for flooding in the Philippines

You can also check out the following online resources  with regard to flooding in the Philippines.

• Typhoon Ondoy Maximum Flood Height interactive map

Typhoon Ondoy Maximum Flood Height interactive map(Click to visit)

• Map of Potential Flooding in Philippines - http://globalfloodmap.org/Philippines

• Philippine flood hazard maps - http://www.nababaha.com

A solution to flooding in Metro Manila?

Has the MMDA found the ultimate solution to the flooding problem in Metro Manila? Check out the picture below and tell me what you think!

If you know other resources that can help determine if an area is flood-prone, or if you have more pictures of floodlines here in the Philippines, please share them here by leaving a comment below. Thanks!

~~~

To our success and financial freedom!

Jay Castillo

Real Estate Investor
PRC Real Estate Broker Registration No. 3194
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter: http://twitter.com/jay_castillo
Find us in Facebook: Foreclosure Investing Philippines Facebook Page

Text by Jay Castillo and Cherry Castillo. Copyright © 2008-2011 All rights reserved.

Full disclosure: Nothing to disclose.

P.S. I am helping a fellow real estate investor market a  Quezon City Townhouse for sale located in Kamuning. This is also available through a rent-to-own scheme.  Please call/txt 09157603090/5059259 for more details. A video of the townhouse can be seen below.

Watch out for floodlines when inspecting foreclosed properties! is a post from: Foreclosure Investing Philippines

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I remember how good it felt to be able to help people in our office to do their work more effectively when we had setup an IT Support Helpdesk System way back in 2003. It felt great to be able to empower others. Little did I know that many years later it would also lead to a humbling experience.

For those who have been following Foreclosure Investing Philippines, you already know that before I got into real estate investing and internet marketing, I worked as an IT Manager in a multinational company.

One of the earlier initiatives my team did at the IT department when I took over as the department head was to setup a Helpdesk System that would help our colleagues in the office to do their work more efficiently and effectively by making sure all their IT related problems were addressed in a timely and effective manner.

In other words, we were there to help them finish whatever it was they were doing that encountered any problems related to IT, and that was a lot. It was very rewarding, however, because we were really empowering people. This went smoothly for about three years.

Things however started to change. The number of users, systems, servers, and computers grew in number to about double their original count, while the number of IT staff dwindled up to the point that there was only one left. No, that was not me.

I left the Company but returned (crazy, I know – who would’ve thought that the company I transferred to was worse than my former job) and I became number two, but it was a far cry from the five-man team we had when we were at full strength, while taking care of half the number of IT resources and users.

To alleviate the situation, we systematized what we did through standards, processes, and procedures. In fact, we became ISO 9001 certified, among a number of certifications the company I worked for was able to achieve, and I also became one of the internal auditors. We automated processes so well so much so that in spite of having the lowest budget among offices in the ASEAN region, we were one of the leaders in this area.

However, systems and automation can only go so far, especially if it lacked resources. In other words, we still lacked manpower.

When this all started, I was diagnosed with hypertension. And yet after another three years, the situation still remained the same.

This was the time when a question dawned on me, “As the helpdesk, we helped other people, but when the helpdesk needs help, who can help us?”

That question became a rhetorical question and I often used it to make a point when I discussed with friends my predicament. I simply left it at that, accepting that my problem had no solution that was within my control, except for me to move on and look for another job or another means of earning a living.

Thankfully, through divine providence, I finally mustered enough strength to become a real estate investor and also do internet marketing in my spare time. At that time, being a full-time employee, I really had no spare time. But somehow, I made time! Here’s a tip: If I can do it, so can you!

And as they say, the rest is history, and I am so thankful to have moved on to do what I believe is a higher purpose.

But it all came back to me during a retreat…

Yesterday, during the third and final day of the live-out Holy Week Retreat by Bo Sanchez, the same rhetorical question above suddenly came back to me. This time around however, it was no longer left unanswered.

The answer to my burning question “As the helpdesk, we helped other people, but when the helpdesk needs help, who can help us?” was simple. God is the answer!

Though I have always been thankful to God with the blessings that have been coming our way, it seemed my question above has been left hanging in my mind for the longest time.

But thanks to that wonderful moment yesterday, which was just one among many, the question was answered, and I believe this will finally bring closure to it.

The answer was really there all along, God is the answer!

In whatever difficulties that we may encounter in our lives, help is always there, from God himself, just like how he sent his only Son not just to help us, but also to redeem the world.

All we have to do is ask.

“So I say to you: Ask and it will be given to you; seek and you will find; knock and the door will be opened to you.” – Luke 11:9 NIV

Let us not forget to give thanks to our Almighty God who is always ready to help us no matter what, especially on this most glorious day that we celebrate today.

Have a blessed Easter everyone!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

PRC Real Estate Broker Registration No. 3194
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter: http://twitter.com/jay_castillo
Find us in Facebook: Foreclosure Investing Philippines Facebook Page

Text by Jay Castillo and Cherry Castillo. Copyright © 2011 All rights reserved.

PS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Mailbox getting full? Subscribe through my RSS Feed instead

An Easter Sunday Reflection: Who can really help us? is a post from: Foreclosure Investing Philippines

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This is a guest post by Ronald Cagape of LivingCasflow101.com

The RESA law is a comprehensive law intended to professionalize the ranks of real estate service providers – brokers, agents, appraisers, assessors and consultants.

However, this law has cast some doubt on the practice of buying and selling real estate. Let me share with you some reasons why you should go ahead and continue being a real estate investor.

1. Owners are still allowed to sell their property.

So, be the owner. Learn how to find good deals, raise capital and buy properties cash. Then sell the property as the owner.

2. If you can’t see yourself as an Owner then think of yourself as a Dealer.

Dealers are still allowed to sell property. RESA does not cover the business of being a real estate dealer. It really is a mindset.

You are not a broker or an agent and should not represent yourself as one if you are not. You are a Dealer. Therefore, buy then sell real estate. Use an Option-To-Purchase or a Contract-To-Sell to buy real estate and make sure you can Assign the contract.

Tell everyone that you buy and sell real estate. You’re not a marketer, you’re a dealer. In fact, while attending a review class for the Broker’s licensing exam of a well-known broker, I announced that I buy and sell real estate in front of the class. Even the broker wanted to hear about good deals!

The law is meant to prevent the practice of “colorum” agents and brokers. It’s not meant to discourage dealers. When you get to your 6th deal, just make sure to register your business as a real estate dealer with the HLURB and BIR. The game changes tax-wise on your 6th deal. But worry about your first 5 first.

3. Setup a Corporation and hire a licensed Broker

If you still insist on just selling real estate then setup a Corporation and hire a licensed Broker to represent the company. Your company will now be allowed to practice brokerage as if You were the broker. Your corporation, which is a legal entity of its own, is treated as if it’s a licensed broker as long as you have a licensed broker in your payroll.

4. Get a Broker to accredit you as a Real Estate Salesperson

The broker gets the authority to sell, you get a share of the commission.

As you can see, you don’t need to be a broker to sell real estate. But you do need to recognize the solutions. Have a mindset shift. You are a dealer not a broker/agent.

Why I took the real estate brokers  licensure exam

By the way, you might be wondering why I took the real estate brokers  licensure exam myself if there’s nothing to fear about the RESA. Here are my three reasons:

Ronald Cagape is a real estate investor and president of Cashflow Realty, a real estate brokerage company specializing in office space for sale or rent in Ortigas Center, Pasig.

4 perfectly legal ways to be a real estate investor with the RESA Law is a post from: Foreclosure Investing Philippines

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So you have announced to the world that you are now a real estate investor, and suddenly, everyone has a property they want to show to you. This often happens to me, and can also happen to you as follows.

A friends calls and says “Hey Jay, I found a foreclosed property for sale and I know it’s a bargain!”

“Really?! That’s great, may I ask why it’s a bargain?” I answered with great enthusiasm, expecting something like an ugly multi-door property in a nice neighborhood, at a ridiculously low price.

My friend quickly answers “Its selling price is way below its zonal value, it’s just a fraction of it!”

I cringe and I begin to explain in a nice way that zonal values and market values are worlds apart…

This may shock a lot of you…

BIR Zonal Values are purely for taxation purposes only! They are not an accurate basis in determining a property’s market value.

Paraphrasing what  Engineer Enrico Cruz said to our class during one of his lectures; “From this point onwards, we should forget about zonal values when appraising a property!”.

Simply put, If you’ve found a property with a  selling price that is below the BIR zonal value for that property’s location, it does not follow that the property is a bargain.

On the other hand, if a property’s selling price is higher than the BIR Zonal value for that property’s location, it also does not follow that it is overpriced.

Sometimes, you may find a property with a market value that is equal to its zonal value, but this is very rare.

Remember this if you are a real estate investor

Here’s what real estate investors should always remember: We should use the real market value in determining if a property is a bargain or not. One fairly accurate way of determining market values is by finding comparable properties or comps. To learn more about this, refer to the article on How I estimate the Market Values of foreclosed properties.

Maybe in the future, if the BIR is able to adjust the zonal values to match current market values (yes, the BIR is revising zonal values now), and if they can do this fast enough (yes, property market values change with time), then maybe we can use it to determine the market value of a property.

The question is, will the revised zonal values be the same as current market values?

Should we totally forget about BIR zonal values?

Of course not! BIR zonal values are still important as you will use them when you compute for the real estate taxes that you either as a buyer or a seller will pay, when you buy or sell a property, foreclosed or otherwise, or even as you own a property in the form of real property taxes.

This is part of due diligence and aims to mitigate just one of the risks of real estate investing, paying too much for a property by not considering expenses like real estate taxes.

In parting, let me just say it one last time. Do not use BIR zonal values to determine a property’s market value as they are not the same!

To our financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter: http://twitter.com/jay_castillo
Find us in Facebook: Foreclosure Investing Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2011 All rights reserved.

PS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Mailbox getting full? Subscribe through my RSS Feed instead!

What you need to know about BIR Zonal values is a post from: Foreclosure Investing Philippines

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I would like to share this update dated June 2, 2011 – After much thought, I have decided to leave Trace Trajano‘s local coaching program and my role as one of the local coaches. I would also like to inform everyone that I am not part of Trace’s other programs.

For those who don’t know, I was once a student of Trace, and I was also part of the team that won his first apprentice challenge, although I decided to leave the RYP team last September 2010. I became one of the local coaches as part of the now defunct Terrific Trio University. I also helped promote his seminars in the past including TRQ 1.0, TRQ 2.0, TRQ Cebu, his quick cash seminars, and the last one was TRQ 3.0.

It has also come to my attention that some materials that Trace used in marketing some of his seminars might make it appear that I am one of his partners. I would like to make it clear that I am not a business partner of Trace Trajano.

Things did not turn out as planned, but lessons have been learned, and I feel it is time for me to move on.  ~ end of update ~

Here’s good news for those who missed the webinar on “How a secretary can invest in real estate with just Php2,000“. Not only was Trace able to successfully record the whole webinar, he just gave me permission to post it here for everyone to view. You can watch the entire webinar below. Enjoy!

I look forward to Jane’s completion of this real estate deal. Acquiring or controlling a property is just the first part for this kind of deal, now she has to implement whatever exit strategy she decides to do, which could be retailing (she can partner with another real estate investor to renovate the property and sell the property to an end-user) or wholesaling (she can just sell the deal to another investor for a wholesale fee) or some other exit strategy.

Hopefully, Jane would be able to complete the deal on time so she can share the details of whatever exit strategy she will implement during the upcoming Think Rich Quick seminar, which Trace also announced during the webinar.

This time around, the Think Rich Quick 2.0 (TRQ 2.0)  seminar will be a 2 day seminar/workshop for beginning real estate investors and it will be on October 23-24, 2010. Venue will be somewhere in Makati City, Philippines, exact details of which will be announced soon. According to Trace, the venue they have chosen can only accommodate 300 seats.

*September 26, 2010 update – The seminar will definitely be held in Makati City, Philippines, although the exact venue is still being finalized. Once the venue is final, I will post it here. If you have not registered yet, do keep in mind that only 249 of the 300 seats are left.

Disclosure: I am an affiliate by virtue of being a student of Trace Trajano and for being part of the team that won the Apprentice Challenge 1.0, and I will earn affiliate commissions if you register for the TRQ 2.0 seminar using my links above. However, I would have featured this seminar here even if I were not an affiliate as I will also be attending the said event, so I might as well be an affiliate right?!

I hope to see you there!

Happy learning!

To our success and financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2010 All rights reserved.

PS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

Watch the webinar replay on "How a secretary can invest in real estate with just Php2,000" is a post from: Foreclosure Investing Philippines

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It depends! Obviously not all foreclosed properties are good deals.

It’s common sense that not all properties are good investments, foreclosed or otherwise, you don’t need to be a real estate investing guru to know this. However, based on the number of times I’ve either heard people ask or get asked this very same question, I feel that a significant number of people out there either have a misconception about foreclosed properties, or they are simply clueless.

Let me make it clear, NOT all foreclosed properties are good deals, and it would be foolish to think all of them are.

Don’t ever expect all foreclosed properties to be good deals because if you do, you are setting yourself up for frustration, disappointment, and failure, especially when you start finding foreclosed properties that turn out to be horrible deals. More on this later.

“Hey Jay, are you saying foreclosed properties are no good?”, you might be asking.

As I said, it depends. No, I’m not discouraging you, I’m just trying to help with managing expectations. Admittedly there are more bad deals out there than good deals, but there are still more than enough hidden gems out there that can make worthy real estate investments, and the key is finding them. One needs to look at a lot, and when I say a lot, I mean a lot of properties, to find those hidden gems, after all, investing in foreclosed properties is a numbers game.

Investing in foreclosed properties is a numbers game

I’ve said it before and I’ll say it again, investing in foreclosed properties is a numbers game.

The greater the number of foreclosed properties you look at, the greater the chance that you will find those good enough deals, and even some great deals. However, you will find a lot of bad deals in the process, but that’s just part of the game. It’s okay to find horrible deals, as long as you find out before you bought the property, and move on.

Keep in mind that one cannot just give up after looking at a few properties. I often hear people get frustrated with foreclosed properties after looking at just one or a couple of properties, or even with just one listing that really did not have many properties to begin with. And then they give up and say things like “I’ll never find any good deals…” or “The numbers will never work…” or “This is too hard…” or “I’m just wasting my time…”. Sorry, nobody said foreclosed real estate investing is easy! It may sound simple, but it isn’t easy.

The 100-10-3-1 Rule

You basically need to look at a significant number of properties to find those properties that are worth a second look.

How many would that be? The general recommendation would be to find about 100 properties worth a second look, after doing initial shortlisting. Out of those 100 properties, you will probably find 10 worth inspecting. Out of those 10 worth inspecting, you might find 3 properties that are worth giving offers for or bidding for, if they were for sale through a public auction. Out of the 3, you may end up buying 1.

That’s a brief overview of the 100-10-3-1 rule. I’ve read many variants of this rule from books and also from some of my mentors but they are basically the same. You analyze 100 properties, inspect 10, submit offers on 3, and end up buying 1. These are just average numbers, but you’d be surprised how accurate this average can be in real life. Been there, done that!

Other numbers to consider

Of course there are other numbers to consider when applying the 100-10-3-1 rule and when “doing the numbers”.

Numbers like After Repair Value (ARV), projected repair costs, target profit, Maximum Allowable Offer(MAO), Cash on Cash Return (CCR), Return-On-Investment or Return Of Investment(ROI), Net Operation Income(NOI), Cashflow, etc., to name a few, also need to be considered. For each of these numbers, you as the real estate investor will ultimately have to decide what is acceptable for you. These numbers will determine if a foreclosed property is a good deal or not.

If this sounds too daunting and tedious for you, I would be the first to say that this might not be for you. But there’s no harm in trying right?! Imagine what could happen if you consistently did this until doing the numbers became a habit and you actually became good at it!

No, I won’t have time to explain all of these numbers now, but one by one, they will be covered here soon.

Sometimes it’s all in the mind

I still remember during the early part of 2008 when I found myself unable to find any good deals in any of the listings of foreclosed properties that came my way.

I was still recovering from feelings of being betrayed after how Dinna Revilla, a former real estate mentor, got arrested and became a “fallen real estate guru”, and in disgust of what she allegedly did to those who trusted her(as far as I know, the case is still pending), I just decided to invest in mutual funds instead of real estate.

My respite from real estate investing however was short-lived because I eventually met another mentor, Doctor Jon Abaquin, who was also featured in Larry Gamboa’s book “Think Rich Pinoy”(see page 155), who later challenged me and a couple of my friends to each buy a property within 90 days.

Lo and behold, from the same listings lying on the table in my bedroom where I could not find any suitable properties, all of a sudden I was able to pinpoint at least 3 very promising foreclosed properties from 3 banks and I ended up submitting an offer for the most promising one. Later, that one offer got accepted. That experience opened my eyes and from that point onwards, I truly believed that there were good, and great deals out there, I just had to look a little bit harder!

But what if I do find a good deal but have no money to invest?

My take on this: Financial literacy is a prerequisite to real estate investing.  Being financially literate leads to proper management of one’s money and finances, which should then help one save enough capital for investing. When that right deal comes, you will be ready. If you think that would take too long, then another option would be to find investors for your deal, although personally, I would recommend that beginning investors do it by themselves, especially on the first few deals.

I believe you should build your track record with your own money first before risking other investors’ money. If you can’t even handle your own money, how do you expect to be able to handle the money of investors?! Sorry if I may sound harsh, but hey, this is just my opinion.

So how many properties have you looked at?

Have you looked at 1, 2, 3… and have given up already? Are you looking hard enough?

Remember, the more you look and do the numbers, the greater the chance that you’ll find that real estate investment for you.

Next time someone asks you, “Are foreclosed properties good deals?”

I’m pretty sure most of you out there will eventually encounter this question once you decide to invest in foreclosed properties and people learn what you do. Well, I hope to help save you the trouble of coming up with your own answer, which can turn out to be a very long one, just like mine. If you want, you can just send them over here, and I hope my answer above will be of help.

Next question please!

Good luck and happy investing!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

Real Estate Broker License #: 20056

Blog: http://www.foreclosurephilippines.com

Follow me in Twitter:http://twitter.com/jay_castillo

Find us in Facebook:Foreclosure Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2010 All rights reserved.

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

PPS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

Are foreclosed properties good deals? is a post from: Foreclosure Investing Philippines

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I suppose all of us have an idea on being proactive, unless you have been living under a rock. We often hear it, but do we really know what it means to be proactive? How can we apply this to real estate investing? Read on to find out just some of my ideas on how we can all be proactive real estate investors.

Definition of proactive

Wikipedia defines proactive behavior as follows:

“Proactive behavior (or proactivity) by individuals refers to anticipatory, change-oriented and self-initiated behavior in the work place. Proactive behavior involves acting in advance of a future situation, rather than just reacting. It means taking control and making things happen rather than just adjusting to a situation or waiting for something to happen. Proactive employees generally do not need to be asked to act, nor do they require detailed instructions.”

In his book “The Seven Habits of Highly Effective People”, Doctor Stephen R. Covey defines it as something more than just taking initiative, as it means that we are ultimately responsible for our own lives. We behave based on our decisions, not based on the conditions around us, where we take the initiative and the responsibility, and make things happen.

For me, it simply means we always have a choice, and through the choices we make, we are giving ourselves the ability to respond accordingly to whatever comes our way, and that includes the challenges that we face as real estate investors.

We cannot blame others because everything is a matter of choice and these choices dictate our ability to respond, and not just react.

Rich Dad was proactive

In the book “Rich Dad Poor dad” by Robert Kiyosaki, Rich Dad’s way of thinking where he forbade words like “I cannot afford it…”, and encouraged words like “How can I afford it?” was really a perfect example of being proactive. He wanted Robert and Mike to make a choice to find ways and the means, rather than just blame the lack of money.

Proactively investing in real estate

In real esate investing, there are countless ways of being proactive. I would even look at being proactive as a prerequisite as I believe that it is needed at the very start of one’s real estate investing career.

The mindset of believing that real estate investing can really be done here in the Philippines and taking the initiative to do what needs to be done to turn this into reality is being proactive. Deciding and taking action is being proactive. If you want to start, I encourage you to first learn the habit of being proactive.

Examples of being a proactive real estate investor

Here are just a few examples of being proactive when it comes to real estate investing

When looking for suitable foreclosed properties

Instead of saying “If only there were really cheap properties that can produce positive cashflow…” why not ask “How can I find properties that can produce positive cashflow?” Why not take charge and analyze more properties instead of giving up after looking at just a few listings of foreclosed properties?

Instead of saying that “If only ejecting tenants was easy and not costly…”, why not avoid properties that are occupied to begin with? There are just too many unoccupied properties out there and the proactive thing to do would be to decide to focus only on unoccupied properties.

We should take the initiative and set the criteria for properties that we would be looking for, along with the options that we can take.

When buying a foreclosed property

When we intend to buy a property using our own money, we can take proactive steps like making sure that the numbers work, checking the physical and legal condition of the property, finding out what we can or what we can’t do, with regards to our contract with the bank, finding out if we can we assign the contract, finding out exactly what taxes do we need to pay, what expenses are for the account of the bank and for the buyer, etc. This is part of due diligence and doing due diligence is really being proactive.

When dealing with contractors

Proactively ask for quotations from several contractors before you even consider buying a foreclosed property. Check for their track record by talking with other investors who got their services in the past, and look at their past projects, etc. Make sure everything is itemized and as detailed as possible in a written agreement that gives you more than adequate protection.

When paying for a foreclosed property

Proactive steps to take when paying for a foreclosed property would be through post-dated checks, ensuring the checking account is funded accordingly, and replenishing the post-dated checks before they run out. This prevents surprises that might happen if due dates happen to fall on holidays or if a typhoon has made it impossible for you to pay over the counter.

When investing on other people’s deals

Whether we are looking at partnering with an investor as an equity partner or just funding other people’s deals by loaning them money, we should take the initiative to check if a deal really makes sense, if we can really get the return of our investment(the return of our capital), if it can produce the returns being promised to us(the return on our investment), and making sure all parties are more than adequately protected through a contract that is duly notarized.

We should also take the initiative and check the track record and the credibility of the person asking us to invest in his/her deal. We can ask for feedback from other people, who have invested their money in the past, or you might even consider asking for an NBI clearance, one can never be too careful right?!

Accepting that you made a mistake

Being proactive also means being able to accept that you have made a mistake, accept that one cannot change past mistakes, and move on and just keep moving forward. I suppose the only thing one can do is take action to correct things which are still within your control, learn as much as possible from the mistake, and take steps to avoid such mistakes in the future.

How about you, do you have anything in mind that is a good example of being a proactive real estate investor? Please share them below. Thanks!

Happy investing!

To our success and financial freedom!

Jay Castillo

Real Estate Investor

Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2010 All rights reserved.

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

PPS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

How to be a proactive real estate investor is a post from: Foreclosure Investing Philippines

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The Money Summit and Wealth Expo 2010 promises to be the biggest wealth building and income opportunities conference in the Philippines, featuring 4 proven ways to build wealth and generate passive income. The Money Summit and Wealth Expo will be held on July 2-3, 2010, 8:30AM to 5:30PM, at the Carlos P. Romulo Auditorium, RCBC Plaza, Makati City.

But why should one attend? Let me try to give you 10 reasons…

Top 10 reasons to attend the Money Summit and Wealth Expo 2010

(in no particular order)

money-summit-and-wealth-expo-2010

1. Property Forum founder Noli Alleje – Although Noli “El Subastajero” Alleje is more famous as a real estate auction expert, he himself is also a real estate investor. I am quite used to seeing Noli handle public auctions they conduct and I look forward to hearing him speak for the first time on how to make quick profits through foreclosures.

2. Eden Alemania-Dayrit – Eden will be talking about her real estate investing strategies. Eden is one of the Think Rich Pinoy Franchisees. Although I often see Eden as she is a classmate of mine in a real estate class we are both attending right now, I know I will learn a thing or two each time she speaks.

3. Jomar Hilario – Jomar Hilario is dubbed as the Timothy Ferris (author of the book “The Four Hour Work Week”) of the Philippines who works only four hours per week and yet earns so much more than the monthly salary he used to get working for a big consulting company, and I want to be just like him. For those who don’t know, I created this blog last October 2008 right after I volunteered and helped facilitate one of his internet marketing workshops just over 1 year and 7 months ago. Jomar always has something new to teach and I look forward to learning more from him.

4. I shall sharpen my saw – I believe that the moment a person thinks he knows everything, that person will get left behind. That is the reason why I consistently try to improve myself by attending seminars like this. I look forward to learning a lot of new things which are practical and actionable. Some people might even say that that I am a seminar junkie and they are right. If it were not for my being a seminar junkie, I’d probably be stuck in the rat race up to now.

5. I am really interested with the Business Track – Along with my teammates in the RYP Realty Team, we want to turn real estate investing into a real estate business where we are the business owners. We want to set it up in such a way that it would be like a turnkey business. I believe that the business track will really help us with this and should also help other attendees as well.

6. This is neither a get rich quick scheme nor a scam – The Money Summit & Wealth Expo features 16 real life successful entrepreneurs, top investors, best-selling business authors, sales superstars, and money experts, who walk the talk. They are already rich and successful and have been money experts for a long time.They are not professional speakers who make money through seminars, they are real money experts, real investors, real entrepreneurs, and real millionaires. Need I say more?!

7. I want to rub elbows with like minded people – Those who will be attending will obviously include people who also want to be rich and financially free, those who are already rich and financially free, and everything in between. It is always nice to be with like minded individuals as we can network with one another, synergize, and help each other succeed.

8. This will help enhance the entrepreneur in me – I truly believe that attendees like me will not only be inspired to take the path to entrepreneurship, we will also know how to start, and enhance the entrepreneur within us. With so many successful entrepreneurs sharing their knowledge, it would be hard not to find at least one entrepreneurial path that fits us. I intend to find multiple paths to help provide multiple streams of passive income.

9. Get a lot of free, legally downloadable e-books and audiobooks – By registering  through this link on or before June 12, 2010,  you will be able to get a lot of legally downloadable e-books and audiobooks, at absolutely no additional cost. These tools will help address the seven most common obstacles to success, and a whole lot more.

10. If you attend and use our link, you will be helping us win the Apprentice challenge – Yes, we are on the last leg of the apprentice challenge, and once again, we need your help. I believe that if we win, everyone wins, as we are committed to share virtually everything we will learn to those who are willing and are also committed to learn real estate investing. We believe being Trace’s partners would really help speed up the learning process not just for us but for everyone else as well. I have said it before and I will say it again, if we win, no one gets left behind!

Full disclosure – Please read!

I would like to disclose that we will be earning 10% of the proceeds if you buy using our link, but we have decided to donate 50% of our net profit to Bo Sanchez’ Anawim and Grace To Be Born.  Anawim is the home of 55 abandoned elderly plus a few orphans and physically and mentally handicapped persons. By signing up with us, you are helping us help the poorest of the poor. Grace to be born provides counseling and a halfway house for pregnant young women who are being forced to have an abortion.

With your registration to the Money Summit and Wealth Expo 2010, you are actually supporting a baby because we are donating part of the ticket proceeds to the Grace to be Born ministry of Bo Sanchez.

We are allocating the rest of our profit to those who may want to refer a friend, and earn 5% of the summit fee. That means if your friend avails of the VIP Pass, you get Php224.75. Refer 10 friends and earn Php2,247.50!

I hope to see you at the summit! Please  forward to your friends and relatives. Thank you!

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2010 All rights reserved.

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

PPS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

Top 10 reasons to attend the Money Summit and Wealth Expo 2010 is a post from: Foreclosure Investing Philippines

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This is the second part of a series on the three types of income one can get through real estate investing. If you missed the first part, please read it before reading this. You can find part one here – How to get portfolio income through real estate investing

Earned income is the type of income that only comes in if you work for it. Sometimes it is also referred to as active income. In real estate, we can get earned income by investing for capital gains, and also through commissions or professional fees by acting as a real estate broker or agent. For beginning real estate investors, earned income is arguably the easiest to earn.

Earned income through capital gains

A common way to get earned income through real estate is by investing for capital gains. We can get capital gains through buying and selling properties quickly for a profit, which is more commonly referred to as flipping. Flipping can be further divided into wholesaling or retailing.

Wholesaling

From what I understand, wholesaling is when one ties-up a property under contract, turns around, and sells it to a buyer who is usually another real estate investor for a small but quick profit. The wholesaler basically buys a property below market value and sells it at a higher price but still below market value, leaving enough room for profit for the next buyer. Sometimes it is also possible to just assign the contract.

Retailing

Retailing on the other hand is when you buy a property, renovate or rehabilitate it (hence the term rehabbing), and  then sell  it for a bigger profit as compared to wholesaling. Although flipping is usually associated with quick deals, retailing is also often described as flipping, even if it obviously takes longer to complete.

Wholesaling and retailing examples

In our previous example on portfolio income, I bought a foreclosed property for Php1Million, renovated it, and sold it for Php1.5 Million. That’s a perfect example of a retail deal.

What if I just tied-up the property by putting an earnest money deposit, and then sold it to another real estate investor by assigning the contract to him for a total contract price of Php1.2Million, leaving him with still enough room for a significant profit if he himself would renovate and sell the property for Php1.5Million afterwards? That’s wholesaling! Your profit of Php200,000 is your earned income.

By the way, if one is investing for capital gains through flipping, one can be greatly affected when market conditions deteriorate and property values go down. One may not be able to sell the property at the desired selling price.

Earned income through commissions

Another way to get earned income through real estate would be through commissions, either as a real estate broker or agent. Take note that I said through real estate, not through real estate investing. In my opinion, when one is after commissions, it is not really investing in real estate but is rather selling time and effort, more on this later.

In the Philippines, the common commission rates for brokers are 3% to 6% while agents usually get 2% to 3%, at least that’s what I often see from other real estate brokers and agents. Remember, I am also a licensed real estate broker.

Advantages of earned income

1. You get quick cash – There is a potential for quick cash because of the quick turnaround time for selling the properties when filliping or acting as a broker. Obviously, there is still a need to actually sell the property and close the deals

2. Requires little capital – When you structure a wholesale deal, one might be able to tie-up or get the property under contract with just a little earnest money which means there is little capital needed. If you act as a broker, there is really no capital needed as you are just selling someone else’s property.

Disadvantages of earned income

1. No sales, no income. Effort driven – If you are unable to consistently (1) find a property to flip or to broker and (2) complete the deal by actually selling it and closing the deal, no income comes in.

2. Need buyers or investors lined up – For flipping to work, you obviously have to have a lot of ready buyers or investors lined up to buy the properties from you.

3. Highest tax rates – If you consistently buy and sell properties and the BIR sees that you are already habitually engaged in the real estate business, your earnings will get taxed at earned income levels, and you pay this through income tax. If you end up at the highest tax bracket, your income will get taxed at a rate of 32%, if I’m not mistaken. Take note however that one can still  lower the taxable income through allowable deductions, thereby lessening the payable income tax.

In our example above where the wholesale deal netted a gross profit of Php200,000, one would have to pay income tax amounting to 32% of Php200,000 or Php64,000. If one is also habitually engaged in real estate (you already have at least 6 real estate transactions in the current year), you also have to consider Creditable Withholding Tax (CWT) and VAT if applicable. Yes, you read that right, CWT should be considered instead of Capital Gains Tax (CGT).

If you earn commissions by being a broker or an agent, you also have to pay income tax.

4. Earnings might be inconsistent – Earnings become inconsistent because there will surely be months with no sales or when there are no ideal properties to flip. In case market conditions go bad, one who is investing for capital gains through flipping, one can be greatly affected as market conditions deteriorate and property values go down. One may not be able to sell the property at all.

5. You are actually selling your time, instead of investing in real estate – One drawback is you really have to put in a lot of time and effort into this type of income. I can’t help but say that this sounds like you are back in the rat race.

6. You let go of a property and its fruits – When you flip properties, you let go of the potential cashflow it can generate, along with any appreciation that the property may have as the years go by. How many times have you heard other seasoned investors say that they regret selling a property because of the excellent rental income they could have had up to now, along with the appreciation of the property ? In a way, all the effort in finding a good deal goes to waste.

Is earned income through real estate for you?

I guess it depends on one’s answer to the question “Why are you getting into real estate investing?”

Is it for quick cash? Do you want to get rich quick? Or is it for financial freedom?

Either way, I suppose this is meant to replace the income you would get from a regular 9 to 5 job and right?!

To illustrate, let’s just say your target income is Php100,000 per month. Lets run the numbers and see how we can achieve this through flipping or through commissions.

How many deals would it take to make Php100K per month through flipping?

In my opinion, a wholesale deal worth pursuing should at least make a net profit of 100K so this means you need to complete a deal at least once a month. Again taxes must be considered, the Php100,000 should already be net of all applicable taxes.

If your profit will be taxed at a rate of 32%, then your gross profit should be at least Php100,000/(1-0.32) = Php147,058.82

For retailing, which usually takes 3 months to complete on the average, a decent target would be to earn at least Php300,000 of net profit. This means your gross profit should be equal to Php300,000/ (1-0.32)= Php441,176.47

Do take note that the above should apply when you are already categorized as someone who is habitually engaged in real estate by the BIR.

Again this is on target for the goal of making at least Php100,000 of net income per month.

But there’s a catch. If we apply the 100-10-3-1 rule where for every 100 deals we analyze, we can expect to have 10 worth inspecting, and 3 are worth making offers, to end up buying one, this means we need to have more than enough leads that would lead to 100 deals worthy of being analyzed and we have to do this each and every month, 12 months a year, or else your income won’t come in. And we haven’t even considered marketing which is needed to sell the properties, which is also very labor intensive.

How many deals would it take to make Php100K per month through commissions?

Let’s say you are a licensed broker and are entitled to a 5% commission for each sale of a property worth less than Php10Million. How much worth of properties do you need to sell just to make Php100,000 per month.

Assuming that you will have to pay income tax at the rate of 32%, then the actual commission one needs to earn would be Php100,000/(1-0.32) = Php147,058.82, similar to the example above for flipping. If this amount represents the 5% commission, then the property should be worth Php147,058.82/0.05 = 2,941,176.47. This means I need to sell about Php2,941,176.47 worth of properties per month just to take home Php100,000 of earned income.

Why does it feel like I’m back in the rat race if I focus on earned income generating activities? Is it just me or are you also beginning to feel that getting earned income through real estate is no different from having a job?!

So much work and taxes to pay and income stops when you stop working

If your goal is financial freedom, then earned income in itself might not be able to provide this mainly because of the amount of work to be done, the huge amount of taxes to pay, and the income stops once you stop working actively, unless you find a better way…

My thoughts on earned income

Earned income is okay if it will eventually be used to buy passive income generating assets. Earned income through flipping properties is great for the short term. The long term goal is to use these earnings to eventually buy properties that generate passive income.

I also believe it would be a good source of supplemental income as opportunities arise, where significant and quick profits are hard to ignore. Supplemental in the sense that it can supplement our income while we ultimately build our passive income streams.

Earned income generating activities as explained above like flipping through wholesaling/retailing and earning through commissions are okay if they can be turned into a business where you are the business owner. When I say business owner, I mean the business can thrive even without you. If a business can’t survive without you, then you own a job, not a business, as paraphrased from Michael Gerber’s book “The E-Myth Revisited”.

Let me try to explain these further in the next part of this series.

Coming up next: Passive income – the path to financial freedom

Coming up in the third part of this series, I’m going to tackle how one can build passive income streams through real estate investing, which I believe is the path to financial freedom.

Passive income through real estate investing – the path to financial freedom (Part 1)

To our success and financial freedom!

Jay Castillo

Real Estate Investor
Real Estate Broker License #: 20056
Blog: http://www.foreclosurephilippines.com
Mobile phone (Call/SMS): +639178843882
Follow me in Twitter:http://twitter.com/jay_castillo
Find us in Facebook:Foreclosure Philippines facebook page

Text by Jay Castillo and Cherry Castillo. Copyright © 2010 All rights reserved.

PS. Are you a new visitor? Click here NOW to start learning more about foreclosure investing in the Philippines

PPS. Don’t be the last to know, subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips. Inbox getting full? Subscribe through my RSS Feed instead!

Earned income through real estate investing is a post from: Foreclosure Investing Philippines

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