Invest with LRE
Lohmiller Enterprises conducts a wide range of real estate investing and can offer assistance to clients in each area. While we invest in real estate in the Greater Cincinnati and South Eastern Indiana areas with emphasis on Hamilton & Dearborn Counties, our tactics will work in virtually every market. Here are some of the aspects of real estate investing that we are engaged in and can help you with:
Private Lending is a way for people to invest in real estate passively and recieve a guaranteed rate of return. In private lending an investor will put up funds for someone to complete a real estate deal. When it's done correctly, this can be one of the safest ways to invest your money with very good returns. The private lender makes the loan on 'equity based financing' (they are investing in a good deal). Their funds should be deposited and disbursed out of an attorney's escrow account and they should be secured by a note and mortgage against the property with title and fire insurance. The terms of private notes can be just as varied as commercial notes and anything can be negotiated. Here at Lohmiller Enterprises we use private lenders often to complete our transactions and rehabs and we are always looking for more individuals who are interested in private lending. Depending on the deal, we will pay the lender anywhere from 8-15% simple interest on their money and note terms can range from 1-5 years.
A contract assignment is where a real estate practioner will obtain a purchase contract on a property and sell the rights of the contract to another buyer. Typically, the terms of the contract make for a very good deal and therefore give the 'equitable interest' created by the contract a substantial amount of value. Someone who is interested in the property will buy the rights to the contract via an assignment clause. This will allow that individual to close the deal as if they were the one who initially wrote the contract. With a bank owned property where there is a non-assignable contract, a trust can be used to transfer interest. A good contract assignment will often net the investor around $3,000.
Property wholesaling is the practice of lining up good deals and then selling them. While very similar to a contract assignment, most wholesale deals require the investor to actually close on the property and take title before they can sell it. Wholesale deals are typically done from one investor to another. They often use cash or transactional financing and are done through double closings. Since the investor owns the property for a very short period of time and usually no improvements are done, full disclosure should be made and the property should be sold 'AS IS'. Wholesale deals will typically net an investor around $5,000.
Retailing is the process of buying houses, fixing them up and then selling them to the 'retail' consumer. This is the most common type of deal that we do at Lohmiller Enterprises. Retailing property can be very challenging, very risky but also very rewarding. Property must be bought correctly with the ARV (after repair value), rehab costs, financing costs, selling costs and holding costs all taken into account. Investors need to be ready to not only manage the deal but also manage the contractors. Anything that can go wrong will and after you do enough deals you will see that first hand. A typical retail deal will take about six months from the time you buy the house until you close with the end buyer. A good deal that's well managed can result in profits of $10,000 to $30,000 in the Cincinnati market. However, one mistake and the whole thing can become a big loss!
Income Producing Property
Income producing property is any property where it produces a regular income. The most common type of income producing property is residential rental, but it also includes commercial strip centers, storage facilities, car washes and other properties that produce a regular income. While other forms of real estate investing may put cash in your pocket now, buying and holding income producing property is one of the sure ways to build wealth. When you buy income producing property you want to be sure to properly calculate effective gross income, expenses, reserves for replacement, net operating income, the desired cap rate and a cash flow analysis. Depending on the location and condition of the building, these can yield anywhere from a 3-20% cap rate or they can be losers! So be sure to do your homework and don't forget you will have to manage your building and your tenants!
Buying property at Sheriff's Sale can be tricky, especially if you do not know the laws and procedures where you are buying. The rules and regulations are varied and differ somewhat from county to county and state to state. For example, in Hamilton County, Ohio the sheriff has an appraisal done on the property and establishes a minimum bid amount at 66% of appraised value. If you win at the sale, you must put down a 10% cash deposit and you have 30 days to provide the remaining funds while the court approves the sale. In Dearborn County, Indiana there is no appraisal and no minimum bid. If you win at the sale, you get ownership and possession that day and the entire price is due the same day in cash. The biggest thing to keep in mind about Sheriff sales is that the sale is "AS IS Where IS, With All Faults". Whether the foundation is falling in or there's a big lien on the title, you are stuck with your purchase so it's good to do some due diligence before bidding.
Similar to Sheriff's sales these are varied and differ somewhat from county to county and state to state. In Hamilton County, Ohio you get ownership the day of the sale and the entire price is due that day in cash. In Dearborn County, Indiana you do not get ownership to the property for over a year! The person who is delinquent on their taxes has a year to redeem their taxes and keep the house. However, if you buy a tax sale property and it gets redeemed you recieve 10-15% statutory interest on your money. Tax sales like sheriff sales are "AS IS Where IS, With All Faults" and come with some level of risk. However, a tax deed is supposed to come with a clean title.
Real Estate Notes
When it comes to the world of notes the options available are vast. Notes against property can be bought and sold just like anything else. Have you ever had your mortgage sold and now you have to make your payment to someone else? Individual real estate investors can buy notes the same way that banks and big institutions do. Often an investor will buy a note that is in default and will be able to purchase it for pennies on the dollar. A financial institution will sell the note in order to avoid the foreclosure process, especially if they know that they would take a loss on it anyways. The note buyer then has many options, they can re-write the note to a payment that the owner in default can afford, re-sell the note before or after it starts performing again, foreclose on the house, offer the owner in default a deed-in-lieu of foreclosure and much more. Notes can offer passive income over periods of time or they result in big capitol gains in the short run. Note buying should be left to seasoned real estate investors who have a thorough understanding of the mortgage and foreclosure process.
We can also transact the following types of deals:
If you are interested in investing in real estate, Lohmiller Enterprises can help you with any of the above strategies and many more. We can offer any of the following services to help you along: