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10 Important Tips To Successful Real Estate Investing!
Be a Real Estate Investor - 10 Important Secrets When it comes to investing, everybody has certain goals and aspirations. However, we have found that there are certain guidelines every aspiring real estate investor needs to know:
1. Compare Property Values and Rents Financial statistics only go so far; the best measure of a property's market value is often the sale prices of nearby properties. The same holds true for area rents. A low price can often be justified by a reasonable rent; renters who can afford a high rent can afford to buy instead, so reasonably priced rent is a need.
2. Be careful - Tax laws may change Don't base your tax investment on current tax laws. The tax code is constantly changing, and a good investment is a good investment regardless of the tax code. The right property with the right financing is what you should look for as an investor.
3. Specialize in something you Know Start in a market segment you know. Whether you focus on fixer-uppers, foreclosures, starter homes, low-down payment properties, condominiums, or small apartment buildings, you'll benefit from experience by specializing in one aspect of investment real estate properties.
4. Know the Costs going in! Know the financial statements inside out. What are operating expenses? What are loan payments? Vacancy costs? Taxes? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.
5. Know where your tenants are coming from If the last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenants' security deposits at closing.
6. Assess the tax situation Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be manipulated to your advantage. It may be a good idea to consult a tax advisor.
7. Investigate insurance coverage If seller's coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.
8. Confirm Utility Costs Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant's rent.
9. Consult Your Accountant Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with the constantly evolving tax code.
10. Inspect! Make sure that you always perform a thorough inspection of the property before buying it. Never, ever buy any property without at least examining the site. In some cases, hiring professional inspectors to examine the structural mechanical system may be a sound investment.
5 Secrets To Buying The Best House For Your Money!
1. Get "Pre-Approved" - Not "Pre-Qualified!"
Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller. In years past, I always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here's why! None of the information has been verified! Many times unknown problems can come to the surface! Some of the problems I've seen include recorded judgments, alimony payments due, glitches on the credit report due to any number of reasons both accurately and inaccurately, down payments that have not been in the clients' bank account long enough, etc. So the way to make the strongest offer today is to get "pre-approved". This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It's VERY POWERFUL and a weapon I recommend all my clients have in their negotiating arsenal.
2. Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house to buy! Contingency sales aren't nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario: You've found the perfect house - now you have to go make an offer to the seller. You want the seller to reduce the price and wait until you sell your house. The seller figures that this is a risky deal, since he might pass up a buyer who DOESN'T have to sell a house while he's waiting for you. So he says OK, he'll do the contingency but it has to be a full price offer! You have now paid more for the house than you could have because of the contingency, and you have to sell your existing house in a hurry! Otherwise you lose the house! So to sell quickly you might take an offer that's lower than if you had more time. The bottom line is that buying before selling might cost you THOUSANDS of dollars.
3. If you're concerned that there is not a house on the market for you, then go on a window-shopping trip.
You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that then put your house on the market. Another tactic is to make the sale "subject to seller finding suitable housing". Adding this phrase to the listing means that WHEN YOU DO FIND A BUYER, you will have some time to find the new place. If you don't find anything to your liking, you don't have to sell your present home.
4. Play the Game of Nines Before house hunting
Make a list of things you want in the new place. Then make a list of the things you don't want. You can use this list as a guide to rate each property that you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you're comparing dozens of homes. When house hunting, keep in mind the difference between "STYLE AND SUBSTANCE". The SUBSTANCE are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan. The STYLE represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good SUBSTANCE, because the STYLE can always be changed to match your tastes. I always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not the seller's decorating skills.
4. Don't Be Pushed Into Any House
Your agent should show you everything available that meets your requirements. Don't make a decision on a house until you feel that you've seen enough to pick the best one. A decade ago, homes were selling quickly, usually a few days after listing. In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time. Today there isn't always this urgency, unless a home is drastically underpriced, and you'll know if it is. Don't forget to check into the SCHOOL DISTRICTS of the area you're considering. Information is available on every school; such as class sizes, % of students that go on to college, SAT scores, etc. You can get this information from this web site.
5. Stop Calling Ads!
Please note - ads are sometimes created to make the phone ring! Many of the homes have some drawback that's not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What's not mentioned in the ad is usually more important than what is. For this reason, I want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you! The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will point out any drawbacks you should know about. So whether you decide to work with me or not, pick an agent you feel comfortable with and enlist the services of that agent as a buyer's broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you're no longer just a shopper. Did you know that many homes are sold WITHOUT A SIGN ever going up or an AD EVER BEING PUT IN THE PAPER? These "great deals" go to those people who are committed to working with one agent. When an agent hears of a great buy, who do you think he's going to call? His client, who he has a legal obligation to work hard for you, or someone who just called on the phone and said "keep your eyes open"? So to get the best buy on a property, I always recommend that you hire your own agent and stick with him or her.
9 Questions To Ask A Real Estate Professional Before Getting Into Their Car!
1. How long have you been in residential real estate in our area? If they have not been in local real estate for several years, they have not been involved in the cyclical market that has defined our market to date.
2. What is your procedure for assisting a buyer from beginning to closing? A system designed to serve you as you need, and require it. Also, is a specialist available for each level of the sale?
3. What is your experience with financing alternatives, and what might they be in my situation? Each buyer's situation is different. We can literally put you in a much better financial situation with the same monthly payments just by adjusting the financing? You have lots of alternatives. Don't just depend on the lender. Your agent should lead the way.
4. How do you determine my qualifications and when? You would be shocked at how rare it is for an agent to complete your qualifications right away, but how important it is to already have it done, when you decide on a home.
5. What is your procedure for providing me with information about homes for sale that meet my needs? More often than not, this is just a do it when there is time situation. Our program offers you a consistent, automatic, and dependable resource of information.
6. What is your negotiating philosophy, and how do you apply it to me? We work for you and make sure you get the best value possible. Research and investigation on our part, hard negotiation, and financing put you in the best possible position. Win, Win? NO WAY, we work for you and we work to get you the best deal!!)
7. How do you find the best value for me? How do you make sure it is a good value? Homework! We don't cut any corners. We make sure you know the true value, supported by hard facts, not just that we think it is a good deal.
8. How do you protect me from the extensive costs that lenders, title companies, inspectors and others charge a home purchaser? The typical answer is that these charges are just normal. We know that there are excessive costs involved, and we can save you up to $1,000 by being your advocate with each of these services. Yes you still get top quality service and products.
9. Can you sell us a new, resale or foreclosed home? Most agents will answer affirmatively, but you should follow up with questions about specific builders and areas. Find out the detailed knowledge that the agent has of homes that will fit you.
There are many more questions to ask, this is just a sampling. Hope it helps.