This blog gives helpful insights into the newly released book, "How to Make a Killing in the Real Estate Market." Check out the website at www.howtomakeakillinginrealestate.com
Monday, August 30, 2010
How to Buy a Bank-Owned Home
Now this video is a funny but true look at purchasing REO foreclosures!
Factors Of Mortgage Approval
By Beatrice Jordan
When applying for a mortgage, the lender you have chosen
will take many factors into account. These factors not only
influence what type of loans you can qualify for but also
what your monthly payments will be and how many years you
will take to pay the loan off completely.
Knowing these factors and doing what you can to improve
them all can make a tremendous difference when you go and
see your lender and start the process that will get you
your new property.
Some of the basic factors apply for just about any loan but
are especially important if you are trying to get a
mortgage. The big one is, yep, credit.
How good is your credit Get copies of all of your credit
reports from the 3 major consumer reporting companies and
check each one for errors.
Many times they have errors that can be corrected in just a
few weeks and that helps boost your score. If you have
credit cards, pay them off as well as any other outstanding
bills.
A nice large down payment will always improve your chances
of being approved. If your credit isn’t completely top
notch, the bigger the down payment, the more likely you
will get improved.
If your credit is great, you can still put down as much as
possible to lower the monthly payments or decrease the
total loan time.
Above all else, don’t lie to your lender. If you tell them
you are a supervisor of a power plant and they find out you
are a UPS man who has only had the job for 6 months, you
will be totally screwed. Be honest and your lender will do
their best to work with you.
When applying for a mortgage, the lender you have chosen
will take many factors into account. These factors not only
influence what type of loans you can qualify for but also
what your monthly payments will be and how many years you
will take to pay the loan off completely.
Knowing these factors and doing what you can to improve
them all can make a tremendous difference when you go and
see your lender and start the process that will get you
your new property.
Some of the basic factors apply for just about any loan but
are especially important if you are trying to get a
mortgage. The big one is, yep, credit.
How good is your credit Get copies of all of your credit
reports from the 3 major consumer reporting companies and
check each one for errors.
Many times they have errors that can be corrected in just a
few weeks and that helps boost your score. If you have
credit cards, pay them off as well as any other outstanding
bills.
A nice large down payment will always improve your chances
of being approved. If your credit isn’t completely top
notch, the bigger the down payment, the more likely you
will get improved.
If your credit is great, you can still put down as much as
possible to lower the monthly payments or decrease the
total loan time.
Above all else, don’t lie to your lender. If you tell them
you are a supervisor of a power plant and they find out you
are a UPS man who has only had the job for 6 months, you
will be totally screwed. Be honest and your lender will do
their best to work with you.
Sunday, August 29, 2010
How to Sell Your Properties Using Lease-Options
By David Finkel
Selling one of your properties on a lease-option gives you the biggest benefits of renters and buyers without the downsides that normally go along with selling or renting out your property.
When you lease-option your property you get the best parts of having a renter: monthly streams of cash-flow, tax benefits of maintaining ownership, loan amortization, and a healthy chunk of the future appreciation. You get all this without having to deal with the headaches and hassles of traditional renters.
When you lease-option your property you get the best parts of having a buyer: a large chunk of money as an up-front option payment, someone else who will take care of the day-to-day maintenance of the property, and a large profit when your buyer gets a new loan on the property and cashes you out.
Here are the four steps to sell your property using a lease-option:
Step One: Spread the word
There are three magic words to help you find your tenant-buyer for your property. These words go in bold, large print in all your advertising for the property. They are: Rent to Own. People instantly know what "rent to own" means and they also know they want it.
The two best places to invest in advertising your properties are your local newspaper and in signs around your property. Place a small classified ad in the "For Sale" section of your local paper. Also put a large "Rent to Own" sign in the front yard of the property. And put twenty to thirty signs around the neighborhood on all the major access roads leading past the property. These signs can be professionally printed, but chances are they won’t last long so do them as cheaply as possible. I have found that handmade signs on inexpensive posterboard work as well as the more expensive signs.
Both your classified ad and your signs should have the phone number of a voice mail box where you have recorded a 60-90 second message singing all the biggest benefits of the property and how easy the rent to own program makes for them to be able to own it. Use your voice mail as a screening device—ask callers how much money they have to work with as a down payment. When you run a "rent to own" ad your biggest problem will be getting too many calls! By screening callers through a voicemail box you will spend your time calling back only those who have a healthy sized chunk of cash to give you as their up-front option payment.
Step Two: Calling back prospective tenant-buyers to set up a group showing
Have you ever been faced with a prospective buyer who just won’t make up his mind about whether he wants the property or not? Or have you ever raced over to one of your units to show it to someone who just didn’t show up? There is a better way of doing it—group showings.
Whenever you can get several prospective tenant-buyers all to look at the property at the same time your property just became more attractive. You are creating a competitive environment and that means the person who wants the property needs to act fast or they will lose out to someone else. This competition will be your biggest aide to closing the deal.
The biggest mistake you can make when you are calling back the people who left their name and phone number on your property voice mail box is to invite them to a "showing" for the property. Instead set a definite "appointment" with each person to meet them at the property to have them take a look. Simply set each individual appointment all at the same time! This way not only are you creating that competitive situation, but you are also protecting your time since if two out of the nine people scheduled to meet you don’t show you still have seven people to show the property to.
Step Three: Get them to fill out an application on the spot
Some people won’t want to hurt your feelings by saying no. Instead they will ask for an application and tell you they will send it in later. Don’t fall for this common pitfall. Simply tell them that if they are really serious about the property then they should take a few minutes and fill it in right there. Also make sure you charge $10-20 for each application. Not only will this pay for your credit check of each applicant, but it will also screen out those last few people who are not truly serious about the property.
Step Four: Choose the best person and call to give them the good news
Speed is of the essence here. If you have someone who wants to have the property who has a healthy option payment and good monthly income I recommend that you get a non-refundable deposit from them to hold their position to rent to own your property. You should collect this deposit as soon as possible. Of course you will make this agreement subject your satisfactory approval of their application (if they don’t pass your evaluation your deposit agreement should say you will return their deposit to them and cancel the agreement.)
This is how you market your property as a "Rent to Own" property.
Selling one of your properties on a lease-option gives you the biggest benefits of renters and buyers without the downsides that normally go along with selling or renting out your property.
When you lease-option your property you get the best parts of having a renter: monthly streams of cash-flow, tax benefits of maintaining ownership, loan amortization, and a healthy chunk of the future appreciation. You get all this without having to deal with the headaches and hassles of traditional renters.
When you lease-option your property you get the best parts of having a buyer: a large chunk of money as an up-front option payment, someone else who will take care of the day-to-day maintenance of the property, and a large profit when your buyer gets a new loan on the property and cashes you out.
Here are the four steps to sell your property using a lease-option:
Step One: Spread the word
There are three magic words to help you find your tenant-buyer for your property. These words go in bold, large print in all your advertising for the property. They are: Rent to Own. People instantly know what "rent to own" means and they also know they want it.
The two best places to invest in advertising your properties are your local newspaper and in signs around your property. Place a small classified ad in the "For Sale" section of your local paper. Also put a large "Rent to Own" sign in the front yard of the property. And put twenty to thirty signs around the neighborhood on all the major access roads leading past the property. These signs can be professionally printed, but chances are they won’t last long so do them as cheaply as possible. I have found that handmade signs on inexpensive posterboard work as well as the more expensive signs.
Both your classified ad and your signs should have the phone number of a voice mail box where you have recorded a 60-90 second message singing all the biggest benefits of the property and how easy the rent to own program makes for them to be able to own it. Use your voice mail as a screening device—ask callers how much money they have to work with as a down payment. When you run a "rent to own" ad your biggest problem will be getting too many calls! By screening callers through a voicemail box you will spend your time calling back only those who have a healthy sized chunk of cash to give you as their up-front option payment.
Step Two: Calling back prospective tenant-buyers to set up a group showing
Have you ever been faced with a prospective buyer who just won’t make up his mind about whether he wants the property or not? Or have you ever raced over to one of your units to show it to someone who just didn’t show up? There is a better way of doing it—group showings.
Whenever you can get several prospective tenant-buyers all to look at the property at the same time your property just became more attractive. You are creating a competitive environment and that means the person who wants the property needs to act fast or they will lose out to someone else. This competition will be your biggest aide to closing the deal.
The biggest mistake you can make when you are calling back the people who left their name and phone number on your property voice mail box is to invite them to a "showing" for the property. Instead set a definite "appointment" with each person to meet them at the property to have them take a look. Simply set each individual appointment all at the same time! This way not only are you creating that competitive situation, but you are also protecting your time since if two out of the nine people scheduled to meet you don’t show you still have seven people to show the property to.
Step Three: Get them to fill out an application on the spot
Some people won’t want to hurt your feelings by saying no. Instead they will ask for an application and tell you they will send it in later. Don’t fall for this common pitfall. Simply tell them that if they are really serious about the property then they should take a few minutes and fill it in right there. Also make sure you charge $10-20 for each application. Not only will this pay for your credit check of each applicant, but it will also screen out those last few people who are not truly serious about the property.
Step Four: Choose the best person and call to give them the good news
Speed is of the essence here. If you have someone who wants to have the property who has a healthy option payment and good monthly income I recommend that you get a non-refundable deposit from them to hold their position to rent to own your property. You should collect this deposit as soon as possible. Of course you will make this agreement subject your satisfactory approval of their application (if they don’t pass your evaluation your deposit agreement should say you will return their deposit to them and cancel the agreement.)
This is how you market your property as a "Rent to Own" property.
Commercial real estate: The big profits
By Beatrice Jordan
Real estate is often termed as the safest investment avenue. In fact, real estate investments done with proper evaluation of the property (and its true value), can lead to good profits. This is one reason why some people pursue real estate investment as their full time job. The talks of real estate are generally focussed towards residential real estate; commercial real estate seems to take a back seat. However, commercial real estate too is a good option for investing in real estate.
Commercial real estate includes a lot of different kinds of properties. Most people relate commercial real estate with only office complexes or factories/ industrial units. However, that is not all of commercial real estate. There is more to commercial real estate. Health care centers, retail structures and warehouse are all good examples of commercial real estate. Even residential properties like apartments (or any property that consists of more than four residential units) are considered commercial real estate. In fact, such commercial real estate is much in demand.
So, is commercial real estate really profitable? Well, if it were not profitable I would not have been writing about commercial real estate at all. So, commercial real estate is profitable for sure. The only thing with commercial real estate is that recognising the opportunity is a bit difficult as compared to residential real estate. But commercial real estate profits can be real big (in fact, much bigger than you would expect from residential real estate of the same proportion). You could take up commercial real estate for either reselling after appreciation or for renting out to, say, retailers. The commercial real estate development is in fact treated as the first sign for growth of residential real estate. Once you know of the possibility of significant commercial growth in the region (either due to tax breaks or whatever), you should start evaluating the potential for appreciation in the prices of commercial real estate and then go for it quickly (as soon as you find a good deal). And you must really work towards getting a good deal. If you find that commercial real estate, e.g. land, is available in big chunks which are too expensive for you to buy, you could look at forming a small investor group (with your friends) and buy it together (and split the profits later). In some cases e.g. when a retail boom is expected in a region, you might find it profitable to buy a property that you can convert into a warehouse for the purpose of renting to small businesses.
So commercial real estate presents a whole plethora of investing opportunities, you just need to grab it.
Real estate is often termed as the safest investment avenue. In fact, real estate investments done with proper evaluation of the property (and its true value), can lead to good profits. This is one reason why some people pursue real estate investment as their full time job. The talks of real estate are generally focussed towards residential real estate; commercial real estate seems to take a back seat. However, commercial real estate too is a good option for investing in real estate.
Commercial real estate includes a lot of different kinds of properties. Most people relate commercial real estate with only office complexes or factories/ industrial units. However, that is not all of commercial real estate. There is more to commercial real estate. Health care centers, retail structures and warehouse are all good examples of commercial real estate. Even residential properties like apartments (or any property that consists of more than four residential units) are considered commercial real estate. In fact, such commercial real estate is much in demand.
So, is commercial real estate really profitable? Well, if it were not profitable I would not have been writing about commercial real estate at all. So, commercial real estate is profitable for sure. The only thing with commercial real estate is that recognising the opportunity is a bit difficult as compared to residential real estate. But commercial real estate profits can be real big (in fact, much bigger than you would expect from residential real estate of the same proportion). You could take up commercial real estate for either reselling after appreciation or for renting out to, say, retailers. The commercial real estate development is in fact treated as the first sign for growth of residential real estate. Once you know of the possibility of significant commercial growth in the region (either due to tax breaks or whatever), you should start evaluating the potential for appreciation in the prices of commercial real estate and then go for it quickly (as soon as you find a good deal). And you must really work towards getting a good deal. If you find that commercial real estate, e.g. land, is available in big chunks which are too expensive for you to buy, you could look at forming a small investor group (with your friends) and buy it together (and split the profits later). In some cases e.g. when a retail boom is expected in a region, you might find it profitable to buy a property that you can convert into a warehouse for the purpose of renting to small businesses.
So commercial real estate presents a whole plethora of investing opportunities, you just need to grab it.
Real estate management firms – making life easier
By Beatrice Jordan
Real estate investment can happen for various reasons. You could invest in real estate because you need a house for yourself (that house of your dreams that you so badly want). You could use real estate as a means for supplementing your income either by buying at a lower price and selling at a higher price or by renting it out. Sometimes you might buy a property for the purpose of resale but might want to wait for a few years before you actually sell it. In such a case, again it would make sense to rent out the property and earn some money till you actually decide to sell it off.
Whatever the reason, renting out real estate demands real estate management and real estate management is not an easy job for everyone. In fact, a lot of people find it so much of a hassle that they prefer keeping their property vacant instead of renting it. Real estate management demands time, which you will rarely have. Real estate management is not just about finding tenants and collecting rent from them. Real estate management is also about ensuring that you do all the duties that a landlord/landlady is required to do. Real estate management is about verifying the credentials of the tenants before you actually rent out your property to them. Real estate management is about ensuring that all the paper work is complete and correct i.e. the tenancy agreement etc are properly done. Real estate management also requires you to do repairs as and when required. Real estate management activities also include maintenance, painting, polishing etc of the house when the tenants move out and before the new tenants get in. So, really, real estate management is not that easy a job for someone who is in a full time job. However, there is a solution to this and that is hiring a real estate management firm to do all these activities on your behalf. Yes, this will mean that what you receive as an income by renting your property will be reduced (due to the commission/ fee charged by the real estate management firm). But that is just a small price for the convenience that a real estate management firm brings to you. However, it’s important that you choose the real estate management firm carefully. There are all kinds of real estate management firms out there (good and bad). You must check the references of the real estate management firm before you actually hire them for the job. A good real estate management firm will not only keep your property occupied at all times but will also ensure that you always receive the rent in time and without any hassle.
Real estate investment can happen for various reasons. You could invest in real estate because you need a house for yourself (that house of your dreams that you so badly want). You could use real estate as a means for supplementing your income either by buying at a lower price and selling at a higher price or by renting it out. Sometimes you might buy a property for the purpose of resale but might want to wait for a few years before you actually sell it. In such a case, again it would make sense to rent out the property and earn some money till you actually decide to sell it off.
Whatever the reason, renting out real estate demands real estate management and real estate management is not an easy job for everyone. In fact, a lot of people find it so much of a hassle that they prefer keeping their property vacant instead of renting it. Real estate management demands time, which you will rarely have. Real estate management is not just about finding tenants and collecting rent from them. Real estate management is also about ensuring that you do all the duties that a landlord/landlady is required to do. Real estate management is about verifying the credentials of the tenants before you actually rent out your property to them. Real estate management is about ensuring that all the paper work is complete and correct i.e. the tenancy agreement etc are properly done. Real estate management also requires you to do repairs as and when required. Real estate management activities also include maintenance, painting, polishing etc of the house when the tenants move out and before the new tenants get in. So, really, real estate management is not that easy a job for someone who is in a full time job. However, there is a solution to this and that is hiring a real estate management firm to do all these activities on your behalf. Yes, this will mean that what you receive as an income by renting your property will be reduced (due to the commission/ fee charged by the real estate management firm). But that is just a small price for the convenience that a real estate management firm brings to you. However, it’s important that you choose the real estate management firm carefully. There are all kinds of real estate management firms out there (good and bad). You must check the references of the real estate management firm before you actually hire them for the job. A good real estate management firm will not only keep your property occupied at all times but will also ensure that you always receive the rent in time and without any hassle.
Real estate appraisal
By Beatrice Jordan
Real estate appraisal – is that the real one?
Real estate appraisal or property valuation is the process of determining the value of the property on the basis of the highest and the best use of real property (which basically translates into determining the fair market value of the property). The person who performs this real estate appraisal exercise is called the real estate appraiser or property valuation surveyor. The value as determined by real estate appraisal is the fair market value. The real estate appraisal is done using various methods and the real estate appraisal values the property as different for difference purposes e.g. the real estate appraisal might assign 2 different values to the same property (Improved value and vacant value) and again the same/similar property might be assigned different values in a residential zone and a commercial zone. However, the value assigned as a result of real estate appraisal might not be the value that a real estate investor would consider when evaluating the property for investment. In fact, a real estate investor might completely ignore the value that comes out of real estate appraisal process.
A good real estate investor would evaluate the property on the basis of the developments going on in the region. So real estate appraisal as done by a real estate investor would come up with the value that the real estate investor can get out of the property by buying it at a low price and selling it at a much higher price (as in the present). Similarly, real estate investor could do his own real estate appraisal for the expected value of the property in, say 2 years time or in 5 years time. Again, a real estate investor might conduct his real estate appraisal based on what value he/she can create by investing some amount of money in the property i.e. a real estate investor might decide on buying a dirty/scary kind of property (which no one likes) and get some minor repairs, painting etc done in order to increase the value of the property (the value that the real estate investor would get by selling it in the market). So, here the meaning of real estate appraisal changes completely (and can be very different from the value that real estate appraiser would come out with if the real estate appraiser conducted a real estate appraisal exercise on the property).
A real estate investor will generally base his investment decision on this real estate appraisal that he does by himself (or gets done through someone). So, can we then term real estate appraisal as a really real ‘real estate appraisal’?
Real estate appraisal – is that the real one?
Real estate appraisal or property valuation is the process of determining the value of the property on the basis of the highest and the best use of real property (which basically translates into determining the fair market value of the property). The person who performs this real estate appraisal exercise is called the real estate appraiser or property valuation surveyor. The value as determined by real estate appraisal is the fair market value. The real estate appraisal is done using various methods and the real estate appraisal values the property as different for difference purposes e.g. the real estate appraisal might assign 2 different values to the same property (Improved value and vacant value) and again the same/similar property might be assigned different values in a residential zone and a commercial zone. However, the value assigned as a result of real estate appraisal might not be the value that a real estate investor would consider when evaluating the property for investment. In fact, a real estate investor might completely ignore the value that comes out of real estate appraisal process.
A good real estate investor would evaluate the property on the basis of the developments going on in the region. So real estate appraisal as done by a real estate investor would come up with the value that the real estate investor can get out of the property by buying it at a low price and selling it at a much higher price (as in the present). Similarly, real estate investor could do his own real estate appraisal for the expected value of the property in, say 2 years time or in 5 years time. Again, a real estate investor might conduct his real estate appraisal based on what value he/she can create by investing some amount of money in the property i.e. a real estate investor might decide on buying a dirty/scary kind of property (which no one likes) and get some minor repairs, painting etc done in order to increase the value of the property (the value that the real estate investor would get by selling it in the market). So, here the meaning of real estate appraisal changes completely (and can be very different from the value that real estate appraiser would come out with if the real estate appraiser conducted a real estate appraisal exercise on the property).
A real estate investor will generally base his investment decision on this real estate appraisal that he does by himself (or gets done through someone). So, can we then term real estate appraisal as a really real ‘real estate appraisal’?
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