August 2009

Some Words on Real Estate Investing

Just like any other big decision, if you’re thinking about getting involved with real estate investing then you need to keep a number of things in mind. Here are 3 things to do and 2 things to avoid so you can be successful.

Things To Do

 

1. Visit the house first. Do a thorough investigation of the property yourself, and then get a professional inspector involved as well. And since you will be spending quite a lot of money in terms of an investment, it is important that you take the time to complete your due diligence.
2. Learn from others investor’s mistakes. The last thing you want to end up doing is making any sort of mistake that could have easily been avoided. Do enough back ground research so that you feel confident before taking your first step.
3. Be realistic. Investing in property can give you a handsome return but you need to understand the time frame. Make sure you leave enough lenience when it comes to calculating your expenses.

Things To Avoid

1. Jumping in before considering the market. This is probably one of the most common mistakes that is committed by all real estate investors regardless of experience. Even though you want a high profit, make sure that you do not “jump the gun”. Look at the market and read into it, then plan your strategy.
2. Skipping due diligence. Without adequate diligence, you probably won’t be successful. You’d be surprised how many people don’t take the time to research the property and the surrounding area.

Some Words on Real Estate Investing

Just like any other big decision, if you’re thinking about getting involved with real estate investing then you need to keep a number of things in mind. Here are 3 things to do and 2 things to avoid so you can be successful.

Things To Do

 

1. Visit the house first. Do a thorough investigation of the property yourself, and then get a professional inspector involved as well. And since you will be spending quite a lot of money in terms of an investment, it is important that you take the time to complete your due diligence.
2. Learn from others investor’s mistakes. The last thing you want to end up doing is making any sort of mistake that could have easily been avoided. Do enough back ground research so that you feel confident before taking your first step.
3. Be realistic. Investing in property can give you a handsome return but you need to understand the time frame. Make sure you leave enough lenience when it comes to calculating your expenses.

Things To Avoid

1. Jumping in before considering the market. This is probably one of the most common mistakes that is committed by all real estate investors regardless of experience. Even though you want a high profit, make sure that you do not “jump the gun”. Look at the market and read into it, then plan your strategy.
2. Skipping due diligence. Without adequate diligence, you probably won’t be successful. You’d be surprised how many people don’t take the time to research the property and the surrounding area.

Advice on Buying a First Home

The housing market has always been a bewildering place, especially for those who have never purchased property before, and the credit crunch/sub-prime lending crisis has only added to the confusion. On the one hand, I have found that many first time buyers are finding great opportunities with house prices falling significantly.

However, buying a home is still a major commitment, no matter how great of a deal you find. So to avoid regret, here are a few steps I think you’ll find helpful:

• Work out a Budget. If you currently have a steady job, a decent credit score and saved some money for a downpayment, you will have a much easier time applying for and finding an affordable mortgage.
• Don’t be tempted to borrow more than you can afforded. And I’d like to add “comfortably afford”. It’s always a good idea to leave yourself a cushion for a potential increases in your cost of living, such as food and fuel prices. Also think about what you’ll need for furnishing, renovation and decoration, and other home-buying expenses.
• Decide what kind of property you needed. How many bedrooms are you looking for? Is outside space, or secure parking important to you? Make a wishlist to help you decide what’s essential and what is just a luxury.

Defining Different Types of Home Sales

If you’ve always wondered the difference between different types of home sales, you’re not alone. People in the industry love to throw around “buzz words” like foreclosure, shortsale, bank owned, etc. But if you don’t know what they mean, it doesn’t do you any good. Here’s a quick breakdown to help you see the difference:

1) SHORT SALES: These seem to be the most common sales in today’s market. In a nutshell, this is a house with a mortgage higher than what can be garnered from a sale. So lenders allow borrowers to sell their property for less than what they owe on their mortgage to avoid foreclosure. However, the lender does not base their decision to allow a short sale on the loan balance alone. Their decision is based on the current value of the home, as well as the circumstances surrounding it.

2) REGULAR SALES: These are generally people who’ve taken care of their homes, have equity, and can sell them at their regular value. With this type of home sale, you can usually send an offer and hear back from them within a week.

3) BANK OWNED PROPERTIES. These are homes that have already been foreclosed on. When making an offer on this type of home sale, you can also expect an answer within a week or two, much like a regular sale. Therefore, there are two great parts about banked owned properties: 1) the short response time, and 2) the great deals you can get on the price. But there are much fewer bank-owned properties than short sales. And keep in mind that it can be hard to find one in good condition.

4) FORECLOSURES: This seems to be the term everyone thinks of first when they are looking for a good deal. Technically speaking, a foreclosure takes place when the homeowner can no longer keep up with mortgage repayments on their home. The lender can then recover the amount owed on the loan by selling or taking ownership. The thing to remember with a foreclosure is that once it’s bought, it’s bought. In most cases, you are not allowed to inspect the house before making an offer.

Avoiding Risky Home Loans

Nobody wants to get stuck in a situation where you buy a home and then later loose it to foreclosure. If I can offer any advice, it would be to always be careful BEFORE getting a loan by making sure you understand the terms, and seeing that it fits your budget the best it can.

Here are 3 pieces of information I hope you will consider regarding your new or current home loan:

1) You should always aim for a fixed home mortgage rate. As you can see from the current economy, an adjustable rate loan can get you into trouble down the road by fluctuating up higher than you can afford.

2) It’s a good idea to meet with a home loan financial adviser you trust, and make sure they have the experience you need to make the right decision. By taking the time to build a relationship with them, you can more easily stay out of trouble. You want to work with a loan adviser you are comfortable calling at any time for answers and advice.

3) Never ignore any notices you receive from the bank. If you are currently in a bad mortgage, please know there may still be options to help you get into a better mortgage before your house goes into foreclosure.