We specialize in properties with great return on investment.

We look for affordable properties that yield a high return on initial investment. In addition most of our properties have a property management team in place. This relieves you of the daily problems associated with rental properties.

Our properties give you the opportunity to learn about managing rental property while getting a good return on your investment.

There are no guarantees with Real Estate investments. However we show past performance on the properties we sell. This eliminates most of the surprises associated with investment Real Estate.

Ugly Investments goal is to show you, the investor, properties that may not look like much, but have great return on investment or have the potential for great appreciation.

TIPS FOR NEW INVESTORS

I can make any property look like a great investment using line items like appreciation, reduction of debt, and depreciation in my spread sheet. Not that these aren't important, but to the small investor, new to investment property, I suggest looking at the investment from the true bottom line.

I choose investment property by one of two criteria. These are cash return on investment and appreciation.

When I say cash return on investment I mean true cash in your hand at the end of the year. This does not include property appreciation or tax benefits you may receive. It is a simple calculation. Divide the net income of the property by how much cash came out of your pocket to purchase the property. This will give you your % return on investment.

You will find you will get a greater return on investment by borrowing most of the money for the property. We include a loan calculator on our spread sheet to help you figure your return, based on the interest rate, and the amount of your loan. However remember the more you borrow, the quicker you will use up your reserve cash, if you have vacancies.

My other criteria, appreciation, is the increased value of the property after it is sold. The key word here is sold. Paper appreciation is worthless. Like the song say's "riding high in April shot down in May"! In real-estate you have booms and busts. The key is to buy in the bust and sell in the boom. Or as a card player would say. Know when to hold them and know when to fold them. Real-estate investing is a form of gambling.

If you don't have rental income from the property you better have deep enough pockets to pay cash or make the monthly payments. Remember if you are making payments you would add this total to your property cost when figuring your property appreciation.

When I buy property based on appreciation I look to flip the property within two years.

One more key item to consider when buying investment real-estate is the property manager. If the property is local you can manage it yourself. We have forms on this site to help you do just that. Just remember there are challenges with being your own manager. I love it when some real-estate people, who are usually trying to sell you a property, tell you all you have do is pick up the rent. If you need anything fixed they know a handy man that will work cheap, and is good. Why this may be true in some cases it is not the norm. It isn't if you're going to have a problem with a renter, it is just a question of when. If you are buying low price properties with high rate of return you tend to have more rental problems. It is the risk you take when trying to get high returns. This makes having a great property manager a necessity.

The large majorities of property managers just collect the rent, calls an attorney when the rent doesn't come in, calls a repairman for maintenance problems, and collects his management fee from you. The problem is when he does these things it cost you a lot of money. Most managers just want the problem to go away. They don't care how much it cost you. A good property manager calls the second day the rent is late. By the third day he drives over to the house. He drives by the property at least once during the month. He will take payments for the rent instead of once a month. He communicates with the tenant. He knows the tenant. A good property manager acts proactively not reactively.

I have a friend who bought a large apartment complex in one of the worse crime neighbor hoods in the city. It was a great deal except he could only collect about half the rent. The remainder of the tenants didn't pay. In fact, they told him they wouldn't pay or leave. He was afraid to confront them anymore. When he told me his story I told him he could sell the building and lose money, get an attorney, lose money and still get no rent, or get my property manager, Monte. Monte was a cop who happened to be 6' 6" and weighed 350 lbs. Monte kept 10% of the rent he collected. Within a month everyone was paid up or on the street. When people in the area found out the undesirable tenants were thrown out, my friend had a waiting list of people wanting to rent. A good property manager makes a big difference.

My goal is not to scare you. There is a lot of money to be made with investment real-estate. However go into any investment with your eyes open. You must be proactive with your investment in order to be successful.

John Kaforski
Ugly Investments