Ever investor wants to pay as little as possible for single family rental homes. Have you ever stopped to think why you should negotiate for the lowest possible purchase price? Yes, I know every real estate guru talks about no money down or little money down as the correct approach to investing. Yes, but why?
Let's say a home you are interested in buying has a true market value of $100,000. If the owner was financially distressed you might be able to buy that home for $80,000. The moment the deal closed you would seem to have a free and clear equity in the home of $20,000.
If course, you could not put that $20,000 in you pocket to spend on something else. But you could turn around and sell the home and be left with a portion of the $20,000. There would be selling costs, so it all would not be profit.
Suppose you wanted to take your profit as soon as possible so you put the home on the market, but it took six months to find a buyer. Your six mortgage payments would eat up some of the $20,000 along with other normal selling costs. Even so, chances are you would still have a nice profit and all because you negotiated a below market purchase price.
What if you decide to find a tenant and rent the home for a couple of years? Oops! During those years the local economy falters and real estate in your area actually goes down in value by about 10%. That means your property is now worth about $90,000. Since you paid $80,000 you are still in a comfortable position... and all because you were smart enough to buy below market.
What if you find a house you would like to own, but the seller will only lower his asking price by a few thousand dollars. You need a little better deal to have a profitable investment. As part of your offer ask the seller to pay for your non-recurring purchase cost. Those expenses would include pre-paid interest, taxes, insurance impounds and so forth.
Lenders will allow 2% to 3% in seller-paid costs on a conventional loan. That means that you would be paying less cash out of pocket, or even no out of pocket costs if it were 100% financing.
The seller would pay those costs out of the proceeds of the sale. It's a painless expense for the seller since those expenditures are all items on a closing statement and the seller does not have to write a check for those costs.
This tactic is the same as getting a discount on the purchase price. Remember, as an investor your goal is to buy below full value and this is one little way to do that.
Now I must make a confession. For the last couple of years I've been able to buy nice homes in nice areas for full value and still make a fat profit. In my area prices had been climbing by 20% to 35% yearly. I could find a motivated seller, give them $1,000 to cover moving costs and buy their home by taking over the payments. Within 12 to 18 months I was able to sell that home and cash out for a profit of from $30,000 to $90,000.
Yes, it was an exciting time, but very risky. By paying full value there was no room for error. If values had plunged I would have been in a tight spot. So... the best practice is to always make your profit when you buy. You do that by buying 20% to 30% below market value.
About the author:
Mark Walters is a real estate investor who shares his experience from his web site at http://www.cashflowinstitute.com
Saturday, October 27, 2007
Your Real Estate Investment Team
I had a hard time at first with real estate investment. One of the reasons was that I tended to be a "lone wolf," trying to do too much myself. I've since learned that to really do well investing in real estate, you need to have a team of people you can trust and rely on. Here are some possible team members, and what they need to be on the team.
1. Real estate agent. A licensed agent with experience in the area you invest in and access to the MLS (Multiple Listing Service), can be a great help. If she is a seller's agent, she can still ethically bring the best deals to you once she knows you're a serious buyer.
2. Real estate attorney. This should be someone familiar with the laws and legal customs of your area, and have experience with the type of deals you intend to do (If you are buying rentals, she should be familiar with doing evictions, for example.)
3. Accountant or bookkeeper. Keeping proper books for real estate investments is getting more complicated with all the tax-law changes. Find someone that understands the law, and what you want.
4. Mortgage broker or banker. The first can offer many options, but the second can make the loan decision. Each has their advantages, and you could use both. In either case it's important that they understand what you want (fast closings, lower interest, corporate loans?)
5. Appraiser. Not only can a good appraiser give you an accurate valuation of a property, but they should be able to suggest ways in which you can raise the value of a property. Use someone that will talk to you.
6. Inspector. In some areas it is easy to become an inspector with little experience. It's best if you use one that is or used to be a contractor, so he can find the problems AND give you some idea of the cost of repairs.
7. Insurance agent. A good one will understand what you want, and find ways to save you money. Insure all your properties with one agent, and you're likely to have discounts available, and better service.
8. Escrow officer. They will usually be with a closing company. Look for someone that's efficient, and can explain things clearly to both sides. If he is confused by a slightly creative contract, he should educate easily or be replaced.
9. Cleaning person. Having a trusted person or crew ready means a fast turn around when you buy a rental or rehab project.
10. Property manager. Be sure that the company you hire has exerience, is responsive, and will have time when you call. A good property manager can tell you BEFORE you buy, what you should get for rent in a given area.
Real estate investment is less stressful and more profitable with a good team on your side.
About the author:
Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com
1. Real estate agent. A licensed agent with experience in the area you invest in and access to the MLS (Multiple Listing Service), can be a great help. If she is a seller's agent, she can still ethically bring the best deals to you once she knows you're a serious buyer.
2. Real estate attorney. This should be someone familiar with the laws and legal customs of your area, and have experience with the type of deals you intend to do (If you are buying rentals, she should be familiar with doing evictions, for example.)
3. Accountant or bookkeeper. Keeping proper books for real estate investments is getting more complicated with all the tax-law changes. Find someone that understands the law, and what you want.
4. Mortgage broker or banker. The first can offer many options, but the second can make the loan decision. Each has their advantages, and you could use both. In either case it's important that they understand what you want (fast closings, lower interest, corporate loans?)
5. Appraiser. Not only can a good appraiser give you an accurate valuation of a property, but they should be able to suggest ways in which you can raise the value of a property. Use someone that will talk to you.
6. Inspector. In some areas it is easy to become an inspector with little experience. It's best if you use one that is or used to be a contractor, so he can find the problems AND give you some idea of the cost of repairs.
7. Insurance agent. A good one will understand what you want, and find ways to save you money. Insure all your properties with one agent, and you're likely to have discounts available, and better service.
8. Escrow officer. They will usually be with a closing company. Look for someone that's efficient, and can explain things clearly to both sides. If he is confused by a slightly creative contract, he should educate easily or be replaced.
9. Cleaning person. Having a trusted person or crew ready means a fast turn around when you buy a rental or rehab project.
10. Property manager. Be sure that the company you hire has exerience, is responsive, and will have time when you call. A good property manager can tell you BEFORE you buy, what you should get for rent in a given area.
Real estate investment is less stressful and more profitable with a good team on your side.
About the author:
Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com
Your Real Estate Website Template or Custom solution?
Online marketing for Professional Realtors Building your Real Estate website with template or, custom solution.
Online marketing for Realtors involves the application of many different online tools. As a professional Realtor, the decision as to which of these tools is best for you can be somewhat confusing. Here is a break down and brief explanation of some of the many options available to realtors in this modern age.
First you need a website. Your Real Estate website introduces you to you customers and establishes you as a professional in your field. Your website should be attractive, informative and easy for your potential customers to navigate. There are an endless number of people and companies online that can build a website for you. However, I would suggest you have your site constructed by an individual or company that specializes in building Real Estate websites. Next you have to decide if a "template" website is right for you or, should you look for a "custom built" solution.
There are several online companies that have excellent, Real Estate templates available. They have the look and feel of a professionally designed site and include all the bells and whistles. Included in many of these templates are MLS or IDX capabilities, dream home finders, featured listings, pages as well as mortgage calculators, dynamic mapping to available listings, contact us, and about us pages and much more.
A custom designed website is also a very real option. There are web developers out there who concentrate on Real Estate sites. There is a greater amount of flexibility to a custom designed site. Custom designers utilize the most cutting edge technologies available, such as flash, slide shows, dissolving text, mouse rollovers, virtual tours, and more. A custom Real estate website is a thing of beauty and can give you a truly unique online presence.
There are two other factors you should give a great deal of thought and consideration to when making your decision. There is the cost involved, but equally as important is how much control you want to have over your site after it is finished. Down the road you will inevitably want to make changes to your site. You need to consider how this will be done.
There is an excellent template driven, Real Estate website company online that I would highly recommend. To begin with you can get a Free website to work on and customer support while you are learning is 100% Free. They have over sixty custom built templates available and you can change your template anytime you like, on the fly. There is no software to download, you simply go online, log in and work on your site. When you decide to publish your new website, you can have your completed website live and on the internet for less than twenty dollars per month.
This solution allows you to have complete control over your website and at a cost per month that is less than the cost of taking the kids to McDonalds for lunch. A custom solution will most likely cost, anywhere between nineteen hundred and thirty five hundred dollars. The expense can be well worth it, as they are one of a kind, and unique to you and the professional image that you want to present. However, You will have to contact your webmaster when you want to make any changes. There is usually an expense involved. I have only been able to find one company that offers a completely custom solution, and gives you complete control of your website after it is completed, and has 100% Free customer support for as long as you own your site.
About the Author
Mike Alves is the Owner of http://www.Marketing4Leads.com My only business is marketing realtor websites. I create, publish and manage pay per click campaigns on Google full time, for real estate agents all over the U.S. I can start sending new real estate customers to your website in 48 hours.
Online marketing for Realtors involves the application of many different online tools. As a professional Realtor, the decision as to which of these tools is best for you can be somewhat confusing. Here is a break down and brief explanation of some of the many options available to realtors in this modern age.
First you need a website. Your Real Estate website introduces you to you customers and establishes you as a professional in your field. Your website should be attractive, informative and easy for your potential customers to navigate. There are an endless number of people and companies online that can build a website for you. However, I would suggest you have your site constructed by an individual or company that specializes in building Real Estate websites. Next you have to decide if a "template" website is right for you or, should you look for a "custom built" solution.
There are several online companies that have excellent, Real Estate templates available. They have the look and feel of a professionally designed site and include all the bells and whistles. Included in many of these templates are MLS or IDX capabilities, dream home finders, featured listings, pages as well as mortgage calculators, dynamic mapping to available listings, contact us, and about us pages and much more.
A custom designed website is also a very real option. There are web developers out there who concentrate on Real Estate sites. There is a greater amount of flexibility to a custom designed site. Custom designers utilize the most cutting edge technologies available, such as flash, slide shows, dissolving text, mouse rollovers, virtual tours, and more. A custom Real estate website is a thing of beauty and can give you a truly unique online presence.
There are two other factors you should give a great deal of thought and consideration to when making your decision. There is the cost involved, but equally as important is how much control you want to have over your site after it is finished. Down the road you will inevitably want to make changes to your site. You need to consider how this will be done.
There is an excellent template driven, Real Estate website company online that I would highly recommend. To begin with you can get a Free website to work on and customer support while you are learning is 100% Free. They have over sixty custom built templates available and you can change your template anytime you like, on the fly. There is no software to download, you simply go online, log in and work on your site. When you decide to publish your new website, you can have your completed website live and on the internet for less than twenty dollars per month.
This solution allows you to have complete control over your website and at a cost per month that is less than the cost of taking the kids to McDonalds for lunch. A custom solution will most likely cost, anywhere between nineteen hundred and thirty five hundred dollars. The expense can be well worth it, as they are one of a kind, and unique to you and the professional image that you want to present. However, You will have to contact your webmaster when you want to make any changes. There is usually an expense involved. I have only been able to find one company that offers a completely custom solution, and gives you complete control of your website after it is completed, and has 100% Free customer support for as long as you own your site.
About the Author
Mike Alves is the Owner of http://www.Marketing4Leads.com My only business is marketing realtor websites. I create, publish and manage pay per click campaigns on Google full time, for real estate agents all over the U.S. I can start sending new real estate customers to your website in 48 hours.
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