Below are answers to some of our most frequently asked questions.

If you have any additional questions about real estate investing, financing, management, or taxation, please email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Our experts (who have over 200 years of cumulative experience) will have an answer for you.

Why are investors edgy now?
Investors are edgy in this economic climate for a variety of reasons:

• The sub-prime mortgage crisis has created tremendous uncertainty not only for the single-family home and real estate sectors, but also for the global economy.
  • U.S. homes lost $2 trillion in value during 2008
• Housing sales have dropped substantially, housing inventory is increasing, and properties are taking longer to sell.
• There is a gap between seller and buyer expectations. We are seeing more listings expire and buyers who are not chasing properties with intensity.
• Foreclosure properties have skyrocketed, putting more stress on housing prices.
  • 10% of the nation’s homeowners fell behind on their loan payments or were in foreclosure during the third quarter of 2008.
  • 11.7 million Americans are now “underwater” on their mortgage: they owe more on their mortgage balances than their homes are worth.
• Increasing unemployment rates are creating tenant vacancies across all property types.
• For both residential and commercial properties, rent had reached astronomical levels and collections were getting worse. The market, however, is changing rapidly and rent and prices are dropping fast.

We also, however, have good news in the market. Since the Fed announced a plan to purchase $500 billion of mortgage-backed securities, on November 25, 2008, conforming fixed-rate mortgage rates have dropped to levels not seen for a long time. This means that money is cheap to borrow and smart investors have a significant opportunity to make lucrative deals.

How much should I spend on fixing up a house?
Our rule of thumb: for every $1 you spend you should expect to increase the value of the property by at least $2-$3. If this is not realistic, then you could spend your money more wisely elsewhere.

I’ve been thinking about real estate investing for quite some time. However, I think I missed the boat and am afraid prices are going down – I don’t know when is a good time to invest.
Real estate is a cyclical business. Sometimes it's easy to find good deals, and sometimes not. In any economic cycle, however, smart investors always have opportunities to make money in real estate. For example, in a down economy you can find a good deal on a fixer-upper or foreclosed home. Plus, what you add to the building's intrinsic value could be harnessed once the economy improves. So, to answer your question, it’s not about investing in a good or bad market. Rather, it’s about finding the best real estate opportunity, regardless of the market condition.

Where should I make my first investment?
For the first-time real estate investor, we recommend buying a 1-to-4 unit residential property in a low- to middle-income neighborhood within a 30 minute drive from where you live. You want something that is within your budget and that does not require too much initial capital. Moreover, if the property is close to you, it is easy to inspect the property, make repairs, and show it to potential tenants.

How can I make money on a fixer-upper?
The most profitable fixer-uppers need only cosmetic work such as paint, landscaping, new light fixtures, or new carpeting. Avoid properties that need major repairs like a new roof, removal of walls, foundation repairs, or structural work. Once you gain enough experience and are comfortable working with contractors, however, you can explore adding rooms, bathrooms, second stories, and other property features as appropriate.

Once I select the type of property I want and know which area I want to buy in, how do I find a good deal?

Below are a few steps to help you find the best deal in a specific area.

• Drive through the neighborhood and look for distressed or neglected properties; these typically will have dry grass, chipped paint, or broken fences.
• Look in classified ads in local newspapers.
• Consult real estate agents.
• Look for notice of defaults and foreclosures.
• Check with government agencies.
• Search the Internet.

I am ambitious but I don't have any money. I know how to fix and repair houses and am willing to learn and work hard. What is the best way to start building wealth in real estate?
The best way is to leverage the experience and money of other savvy investors by forming partnerships. In these situations, you can offer your expertise, time, and energy while the other investors offer the capital. If you don't have this type of access, Dynamics Capital Group may be able to help match you with an appropriate investor or group.

What is a "FICO" score?
FICO scoring, or credit-risk scoring, is based on a mathematical model developed by Fair, Isaac & Co. and draws on consumer data kept within the nation's three largest credit bureaus: Experian, Equifax, and Trans Union. The higher the score, the more the person is considered to be credit-worthy. Here is a general breakdown of FICO scores:

• 700 and higher means excellent or very good credit.
• 680 to 699 means good credit, which should allow you to get a typical loan.
• 620 to 679 is good, but loan terms may not be very generous.
• 580 to 619 is still loan-worthy, but loan terms can be expensive for the borrower.
• 500 to 580 is considered poor credit and qualifying for a loan may be difficult.
• 499 and below typically requires the borrower to repair his/her credit before they will be able to qualify for a fair loan.

Is now a good time to finance a deal considering the current credit market?
You may have a hard time financing a deal if you are looking to finance it through the bank. Private money is a great alternative and there are many sources that are willing to fund your next deal.

How can I raise investment money from private sources and what are
“hard money” lenders?
There are plenty of private sources that can be used to raise investment money (please see our Mortgages Secured by Real Estate section). Close family and friends are usually the first ones to ask; however, beware that some may not have the positive reaction you hoped for.

Of course, there are other resources that can help you find money. One source is hard money lenders, who often are the fastest way to get private money. Typically, they will loan you money based on the quality of the deal. If the deal is less significant, they might lend you less than you asked or charge you a higher interest rate.

Additionally, you can find many other sources including large national lenders, local banks, conduit lenders, and angel investors.

How can I ensure that  people trust me enough to give me their money?