Showing posts with label Real estate broker. Show all posts

Tuesday, December 8, 2009

A Simple Real Estate Investing Primer

Image by Casey Serin via Flickr

A Simple Real Estate Investing Primer

Adem Hamidovic

In this real estate investing primer I hape to give you a simple view into the basic principles that underlie investing in real estate.

There are a great many books and web sites devoted to real estate investing out there, but most of them concentrate on one specific area of investing. It's often hard to find a general description of real estate investing, one that lists the various real estate investing strategies and how to get started. That's what this article will set out to do.

Before beginning, you must understand that real estate investing is not a get rich quick scheme. Real estate investing can, and will, make you wealthy, but it certainly won't happen overnight and it will require work. As you perfect your technique and gain experience, the amount of work needed to gain a lot of money will reduce, but it will take effort and persistance to make it there.

If you're completely new to real estate investing then the only sort of investing strategy you're likely aware of is rental properties.

Landlording has been around since there have been houses and people to rent them to, and it will continue to be a wealth builder. In fact, most of the 'no money down' real estate strategies you hear about still include rentals as part of their plan. Still, there are other ways to make money from real estate investing out there.

The next most 'traditional' method is to buy a fixer-upper, fix it up, and then sell it for a profit. This is commonly referred to as 'rehabbing' and is a very good way to make a lot of money in a relatively short period of time. Most rehabbers won't even look at a property unless they can make at least $20,000 of profit, and this is usually within 3-4 months time. Rehabbers tend to be experienced investors with available money, or have partners who help provide any extra cash required.

But if you're just starting out you likely won't have access to large amounts of money. One way to get involved in this area of real estate investing without needing any money at all is to 'flip' houses to these rehabbers. What this entails is you going out and finding these fixer-uppers, noting all the work required to fix the place up. You then place a low offer in to the owner, taking into account the fix up price and some built in profit. Once you have the house under contract you then flip it to a rehabber for a small fee. This can result in several thousand dollars for you, without you having to spend a dime. 'Flipping' properties can be a great way to start your real estate investing career.

Another 'no money down' technique that's popular on the late night infomercials is called 'lease optioning'. This is basically a rent to own strategy that allows you to control a property without ever taking ownership of it. It's a slightly more complicated strategy that warrents its own article, but it does allow you to make money in several different ways, each without ever having to spend any of your own money. If you're not put off by longer term investments then lease options are definately worth more research.

There are other strategies that involve foreclosures and getting the home owner to sign the deed over to you, but for now I'd suggest learning more about flipping and lease options as entry-level real estate investing strategies.

How do you find properties that would make good real estate investments? Again, an entire article can be devoted to that, but there are basically two ways: you go looking for them, or you get them to come to you. The first way involves reading the newspaper classifieds and scanning the Multiple Listing Service (MLS). This is where having a great real estate agent is a must - they can get you more details on homes than you can view on the mls website, and can often let you know of great deals before they even become available to the general public.

Having home owners contact you means setting up an advertising campaign. This can involve placing ads in the newspaper, placing bandit signs at strategic locations around town, starting a direct mail campaign, etc. There are many ways to let people know that there's a new real estate investor in town, and it would be in your best interest to try each of them to see which ones work best for you.

Whether you decide to go looking for deals, have them come to you, or both, they key is to be persistant. Real estate investing is a numbers game - most of the time you won't be able to make the deal work, but every time you do it translates into thousands of dollars for you. The more owners you talk to, the more deals you'll be able to do, the more money you'll make.

I hope this article gives you a bit of an idea of what the world of real estate investing is like. There's a lot to learn out there, and all of it is very interesting. Find the area that interests you the most, then get out there and start talking to home owners. Don't be discouraged if you're getting turned down a lot - just remember that when it does pay off, it will pay off big!

Adem Hamidovic is a part time real estate investor and operator of www.ProfitPiggy.com, a website devoted to new and experienced real estate investors alike. - admin@profitpiggy.com

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Friday, August 14, 2009

Real Estate Short Sales - Answers to the Top 10 Most Frequently Asked Short Sale Questions

Image by Getty Images via Daylife

By Sean Bonini

With the national real estate market in turmoil we are seeing homeowners turn to short sales as a solution to avoid foreclosure. In this article we will answer the top 10 most frequently asked short sale questions that we receive from clients. We highly encourage you to explore all of your options to avoid foreclosure and become as informed as you can about each option and speak to qualified individuals who can help you decide what is best for you and your family.

Now, let's answer some questions!

1. What is a Short Sale?

A short sale is when a homeowner owes more to the bank than the value of the home and the bank agrees to sell the property for less than is owed. For example, if your outstanding mortgage balance is $500,000 but your home is only worth $300,000 then you are upside-down and may be able to do a short sale to get you out of the property.

2. Why would a lender accept less?

A lender or bank takes a discount or agrees to take less because it saves them money in the long run. It gets bad debt off their books so they can reinvest that money by giving out another loan to a customer. In many cases a short sale is necessary in order to get you out from under your mortgage debt. By doing a short sale, you will be able to take a large bite out of the money you owe to your mortgage company so that you are no longer liable for the entire amount.

3. What is required?

First you need a qualified, professional short sale agent who knows how to handle this special type of transaction. Your agent will know how to properly prepare the financial package for the bank.

Every lender or bank has its own set of required information and some may even have a set of paperwork specific to them. In general, most banks require at least the following:

Hardship Letter

Financial Statements

2 Years Tax Returns

2 Months Bank Statements

2 Months Paystubs

Profit & Loss Statement (If Self-Employed)

Throughout the process additional paperwork may be requested so be sure to keep everything handy.

4. How long does a typical deal take?

Depending on what state you are from, this answer will vary and thl timeline is subject to your lender or bank. Many banks are overwhelmed right now with short sale requests however most do have an understandable review process. Unnecessary delays can be avoided by not sending incomplete short sale packages. Incomplete offers are often passed over or rejected. Your file is then closed and you would have to start over from the beginning. It is very important to be sure you provide everything required by your lender and requested by the person helping you negotiate. On average we are seeing most of these deals being closed in less than 90 days.

5. How much does it cost?

Unlike a traditional real estate listing where you pay an agent a commission to sell your property, in a short sale transaction the lender pays for the commissions so there is no out-of-pocket cost to you.

6. How long until I can buy another house?

There are new loan programs designed to help people who have recently had to short sell their home. You can apply for a home loan in as little as two years provided you have maintained your credit with good payment history, kept your debt-to-income ratios within lending guidelines, and have verifiable income.

7. What qualifies as a hardship?

There are many types of hardships that can be considered valid. Here are a few:

Mortgage rate adjustment

Increase in monthly expenses

Need to move

Reduced Income

Unemployment

Health issues

Separation or Divorce

Medical Bills

Business Failure

Business cutbacks or downsizing

Death of a Spouse

A valid reason you are unable to make your mortgage payment

8. Can I short sell an investment property or 2nd home?

Absolutely. It is a common misconception that people think they can only short sell their primary residence but this is not true! You can do a short sale on your primary home, all of your investment properties, and even on your second home.

9. What about my credit score?

There is a lot of misinformation floating out there about credit scoring. You will definitely want to seek a credit expert for more information about your situation. In speaking with credit experts ourselves, most have agreed that although a short sale will probably affect your credit in some way it will not be as badly affected as a foreclosure would. A good credit repair company may be able to negotiate any damaging remarks on your credit report. By doing a short sale you can avoid having a foreclosure haunt your credit for years to come.

10. Who can do a short sale for me?

You will need a well-qualified real estate agent to help prepare all your paperwork, list your property, and navigate through the negotiations for you. We also highly recommend that you consult with a qualified tax attorney, CPA, and real estate attorney regarding any future ramifications.

You can find more information about short sales and foreclosure avoidance options at http://www.AzHomeHelp.com

Sean Bonini is a Real Estate Agent/Broker in Scottsdale Arizona specializing in short sales. He serves as the Managing Director of AzHomeHelp.com which is a company that helps homeowners avoid foreclosure.

Sean's up-to-date blog at http://www.PhoenixRealEstate247.com also covers local and national news regarding the real estate & mortgage industries with a focus on helping homeowners in distressed mortgage situations.

Article Source: http://EzineArticles.com/?expert=Sean_Bonini
http://EzineArticles.com/?Short-Sales---Answers-to-the-Top-10-Most-Frequently-Asked-Short-Sale-Questions&id=2707619

Friday, March 20, 2009

Understanding Your Costs To Help You Calculate Profits Flipping Real Estate.

Calculate Profits Flipping Real Estate

By Heather Seitz

If you've been in the real estate investing business, or more specifically been flipping real estate, for more than a few days, you've inevitably gotten an email that reads something like this:

"Investor's Dream. This property will go QUICK."

Property Address: 1234 Main Street
Asking Price: $100,000 (Add or subtract zeros!)
Value After Repair: $150,000
Less cost of Repairs: $15,000
Profit: $35,000
Details: Needs paint, carpet, tile, new kitchen, update bathroom, some
roof damage.
Tenant occupied. Need to evict!"

STOP! Before you read on...

Take a guess at what you think the "real" profit's going to be on this real estate investment...

If you haven't ever gotten an email or fax broadcast like this, then rest assured, you will! I'm about to probably tick off all of the late night infomercials and pitchmen out there!

Sure, I understand that when you've got 30 minutes (or 90 minutes, for that matter), that you've got to sell what's sexy... not what's real!

Now it's my turn to expose the real deal on real estate investing!

This goes for flipping real estate itself (i.e. properties) or simply flipping the contract (also known as assigning the contract).

When you're flipping real estate, you need to be able to calculate the real bottom line and if you're assigning the contract, you need to know your numbers so you don't get blacklisted from investors!

This one piece of information will keep you from getting into trouble because of any "real estate bubble"!

Purchase Costs

Here goes... Have you EVER purchased and sold a piece of real estate for FREE?

If you're not sure what the answer is... It's an emphatic NO...

You are going to have costs to buy, costs to hold and costs to sell. This holds true even if you are buying a property for all cash. (Think title fees, attorney's fees, recording fees, etc.)

If you're not getting a mortgage, your purchase costs are obviously much lower, but nonetheless, there are costs associated with any real estate transaction. Plus, more than likely, if you're relatively new, you're probably not paying all cash for property anyways. You're probably going to be using a hard money investor for your initial real estate investing financing!

For a quick calculation, you can estimate anywhere between 3% - 5% for closing costs to just acquire the property. That's 3%-5% of the purchase price.

Holding Costs

How much is it going to cost you each and every day to own this piece of real estate?

See, if you're making money in real estate, you'd better believe that there are a lot of other people that are going to expect to get paid and they get paid in the form of mortgage interest, property taxes, utilities, property insurance, etc. Each of these is an expense each and every day that you own the property.

Here's an example...A hard money loan on a bread and butter type piece of real estate might run you 15%.

Let's say you got the property for $100,000.

Every month, you are paying $1250 in interest alone.

Let's say that taxes and insurance are another $200/month and then utilities at $100.

Right there, the property is costing you $1550/month - or roughly $50/day.

See, why it's important to know your not only your holding costs on a real estate investment, but also how long it's going to be on the market before you can flip the property.

Selling Costs

Here's the third part of the real estate investing puzzle.

When you want to turn around and sell this piece of real estate, it's going to cost you yet again!

Are you going to use a real estate agent and pay a commission or 3-4-5% or even more? On $150,000, that's anywhere from $4500 to $7500 chopped of the top. Then, you can figure 1-2% in closing fees.

If you can remember this... and apply what you've just learned to each and every real estate deal that you do, you'll be safe flipping real estate in any market.

You see, if it's a hot market, you can calculate less time for holding cost. But, in a slower market, make your offer based on 6 months or 9 months of holding costs. It's really simple math! And real estate really is a numbers game...

Recommended Resources:

Finding Deals: www.motivatedsellermarketing.com

Estimating Repairs: www.fixingandflipping.com

Finding Contractors: www.servicemagic.com

About the author:Heather Seitz

Heather is the co-creator of Fixing and Flipping software. It takes the guesswork out of estimating repairs.

Learn how to estimate repairs and calculate profits in seconds. Click below for your free video and mini-course: www.fixingandflipping.com

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Tuesday, December 8, 2009