Entries Tagged 'Real Estate' ↓
August 18th, 2008 — Money, Mortgage, Personal Finance, Real Estate
As housing prices keep falling, many people are considering getting into the property market like never before. If you are looking for an investment property, now is certainly the time to strongly consider your options. However, before you get in over your head, there are a few things you need to know about foreclosed property. First, it is a good idea to figure out how you plan to use the property. Since the rental market is booming right now, we’re going to focus on that for this particular article. Most of the tips will also apply if you are planning on purchasing a property for resale. However, you should be prepared to wait several years before seeing a return.
1. What kind of renters are you looking for?
This makes a huge difference when it comes to purchasing property. Different types of renters will have different needs and risks change significantly. For example, renting to a family is generally safer than renting to a biker gang, but in some ways, the family could do more damage. Every tenant is a potential risk but you’ll really need to think long and hard about your intended market.
The type of renter you select will have a bearing on many aspects of the property. For example, families will need a yard, and will need to be a in specific location. Other renters may want a deck, or other features that make the home stand out. By focusing first on the type of renter you’re looking for, you can save a lot of time.
2. Where is the property located?
Just any property will not do for a rental. For example, if you want to rent to a family, it will need to be located near good schools. If you want to rent to someone that is on the career track, it helps to have the property located close to a metropolitan area, or at the very least, close to transportation. Consider the location of the property very carefully before making your move on any property.
3. What makes the property special?
If you want to charge more rent to make more money on your investment, the property is going to need to have a feature that makes it worthwhile. How big is the yard? Does it have something that makes it truly special? These are things that renters will be looking for, and you can charge a higher price for that rent if your property has it.
4. What kind of shape is the property in?
We always recommend actually visiting the property before you buy it and getting an inspection. There is no point in investing in a property only to find out later that you’ll have to spend more money on it. If you’re looking for a fixer upper great, but if not, you will need a property that is ready to go and requires a minimum of repairs or painting.
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July 31st, 2008 — Debt, Diversification, Financial Security, Income Streams, Investing, Leverage, Money, Mortgage, Personal Finance, Real Estate, good debt
Not all of us have had the luxury of spending the last 20 years to secure our financial future. Most of the time, through no fault of our own, putting aside money for retirement takes a back seat to handling emergencies or schooling for our kids, or simply the daily expenses of life. If you’re looking down the barrel of 65 and you don’t have anything put aside yet for your retirement, don’t worry. It’s never too late to start planning for your retirement. It may take a little extra work, but you can secure your financial future.
Let’s look at one of the best ways to ensure that you’re going to have a steady income coming in after you’ve retired. Millionaires across the world have used this technique for centuries to produce multiple streams of income. When you are no longer reliant on your 401K, or even your social security check, you’ve got a lot more freedom and a lot less worry.
This technique is called debt leveraging. Simply put, you got into a little debt in order to create a new stream of income. One of the easiest ways to illustrate this is through the purchase of a new second property. Let’s say that you find a great deal on a house that is in pretty decent shape. It’s in a good neighborhood and it’s close to good schools. You don’t have the money to buy it outright, but you don’t want to let this chance pass you by.
You can go to the bank to get a mortgage on that property and then start renting it out. Make sure that the monthly rent exceeds your monthly mortgage payment. Now, you’ve got a new stream of income coming in and you’re really not working for it. If you clear an extra $1500 a month, that’s an extra $18,000 a year on top of what you’re already making – and that’s just for one property.
Now, multiply that by a few properties and you’re making enough to really start planning for your retirement. However the key of good debt leverage is to make sure that you are not too heavily invested in one area. You’re going to want to change things up a bit to make sure that if something goes wrong you won’t take a big financial hint.
In addition to that rental property, you could put some of the profits you’re making or even get a new debt loan to put money into a high interest bearing account. Now, you’ve got a second stream of income coming in that will shore up your financial defenses. You can just keep perpetuating this until you are making enough every year to easily put aside quite a bit of money for your retirement. The best part is, this money will continue coming in, even after you’ve left your regular job. The key to a happy and fruitful retirement is having multiple streams of income that keep paying off, even when you’re not working.
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July 24th, 2008 — Money, Personal Finance, Real Estate
If you invested in the real estate market recently and are now regretting that decision, there are a few ways that you can get out of financial trouble. For awhile, the real estate market was very solid and property values were going up. Many experts advised investing heavily in real estate, seemingly forgetting to take into consideration that the ride couldn’t last for long. This means that thousands, if not millions of people, are now wondering how they can get out of the real estate market and salvage at least some of their investment.
First, it is important to see if you really do need to get out. If you have only one property and its value is dropping fast, it can be tempting to unload it. However, those property values will eventually come back up. If your property is located in a good area, you may be better served to hang on to it until the market stabilizes. You can always rent it out until that happens to at least keep some money coming in.
But if you are over invested in real estate panic may be setting in. If you have several properties that are now worth less than you owe on them, it can be tough to know where to turn. While it is easy to cut your losses and run, it may not be possible. Your first option is to just sell and hope that you’ll get a good price. Right now, it is definitely a buyer’s market again and it may be hard to recoup a good portion of your investment.
However, in some people’s books, something is better than nothing, or waiting around for the values to drop even further. If you are absolutely uncomfortable holding on to that property or you are at risk of defaulting on your loan, you need to do something quickly. There are several Federal programs in the works that will be used to help some people, but if you cannot qualify for these, your options begin to shrink.
The SBA and FHA both offer special low interest loans with flexible terms that can help you get current on your mortgage payments and get out of danger of a foreclosure. Most of these loans do not need to be paid back until you actually sell that property, so if you are in a tight pinch, this is a good idea.
Selling out will not be easy right now, so you may want to consider spreading the risk around. Offer someone a share in the property to give you some extra capital. You’ll still own part of the property but you won’t have to worry so much since you won’t be carrying the entire debt load by yourself.
The property market will turn around again, and it is best to hold on as long as you can, unless the property is already worthless. By spreading around that debt however, you can hold on quite a bit longer and still see a return on your investment.
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June 9th, 2008 — Investing, Long Term, Money, Personal Finance, Real Estate
Right now, if there was a market that had bad news written all over it, it would be real estate. The housing crisis has made investors jumpy, the economy appears to be tanking and home values are plummeting across the country. Would you believe that this is actually a good time to get into real estate? With the proper choices and management, this is absolutely true.
Down markets are a speculator’s dream come true and they can easily change your entire fortune. While we certainly don’t recommend sinking your life’s savings into a bunch of dead end properties this instant, this is a good time to think about investing in real estate the smart way. Never overextend yourself and always take the time to make smart investments that will pay off in the long term.
Let’s look at that statement a little more closely, especially the last two words – long term. Yes, right now, an investment in real estate is not going to do very well. In fact, it may even lose some value over the next few months. But, what goes down will go back up. Property values cannot stay low forever, and although they may not reach the insane heights they recently attained, it’s easy to make a good chunk of money with the right house.
Instead of looking at an investment in real estate in the tangible form, let’s compare it to an investment in a stock. You purchase a stock at $4 today and while it’s been steadily going up over the past few years, it’s still a pretty cheap buy. However, in eight months, the company takes off and the value of your stock increases exponentially. This would be considered a good investment. How is investing in real estate right now any different?
In fact, in some ways, you can do quite well with an investment in real estate right now. Consider the fact that foreclosures are at an all time high. What does this mean? Thousands of families need a place to live and they’re not going to be able to get a new home loan right away. This means that thousands of new renters have flooded the market and they have to find a house to rent.
Investing in real estate is always risky, but sometimes, the best returns come from taking a chance in a down market. You can easily pick up a property for pennies on the dollar, earn money from renting it out right now until the market changes and then sell it for a profit in a few years.
Remember – if you are going to jump into the real estate market, never purchase a property without first getting an inspection. Some homes that have been foreclosed on will be wrecked by the old owner or may have fallen into disrepair. Never accept anything on face value and insist on seeing the property in person. Pick properties that are solid, located in good neighborhoods and likely to go up back in value once this crisis passes.
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