Ten Myths Of Real Estate Investing
October 11, 2008
Is real estate investing only for the wealthy? Can you buy with no money down? Do you have to know the “right” people? Let’s answer by looking at some of the myths of real estate.
1. Real estate investing is for the wealthy. Money helps, but my first real estate investment was a $3,500 lot - which I sold for a profit two weeks after I bought it. Small deals, partners, low-down deals, or just putting aside $7 per day for a couple years until you have enough money for a downpayment - these are some of the ways to start with a little and invest in real estate.
2. “0 down” isn’t possible. I sold a rental property for $1,000 down because I trusted the buyer to make the payments, and I wanted the 9% interest and higher price. He could have gotten a cash-advance on a credit card for another $30 per month and made it a “0-down” deal. “No money down” means none of YOUR money down, and yes, it happens.
The Real Estate Market In Spain: Making Profits Out Of Sand
October 10, 2008
The Real estate market in Spain keeps gaining momentum and is of a vital interest among overseas investors. Property prices in the country continue growing at rapid pace due to a sustainable development in many areas of the mainland and the islands.
Spain’s pleasant climate, low cost of living and specific slow pace of life attract more and more real estate investors from many countries of the world and northern European countries in particular. Spain boasts of plenty of magnificent places that encourage tourism, from international playgrounds on the Coast to inland areas such as Granada and Seville. Investing in Spain real estate promises favorable rental income flows with the healthy capital return on top.
The popular areas among real estate investors are Madrid, Barcelona, Valencia, Andalucia, Seville, Granada, Malaga and many others. But, the most popular real estate investments are naturally the Coasts. Be they golf courses in Coastas or rural hideaways and whitewashed village houses in inland areas, property market in Spain has shown a sustained growth in prices and such tendency is likely to continue in the future.
How Does Interest Rates Affect New Home Sales and Wheres The Best Place To Build?
October 9, 2008
These real questions on new home starts and interest rates on real estate are answered by a US Master Builder and myself after receiving them from readers of my e-book, “Residential Development Made Easy.”
Question 1.
What is the your forecast for home starts in the US for the next 12 months? 24 months?
Master Builder & Developer’s Reply:
This depends upon where you are. New home starts are excellent for Florida, Texas, and Arizona.
What most people don’t appreciate is that there is always growth in new homes. Cities grow in spurts, but there is also controlled growth. As one part of an area dies from old age it is revitalized and redeveloped.
So remember national growth statistics on new home starts are not much use to you unless you have a national business. The best advice we can give you is to “read” market data - census data etc.
Personally I have kept average residential dollar sales figures on homes for my City since 1974. At first it might appear to be a lot of work, but after you have your base, say 20 years worth of data, you only have to add one figure a year.
How To Start Investing For Financial Independence, Part 2
October 8, 2008
Last week, we started a multi-part series about how to go from being a beginning investor to being "financially independent" in a steady and predictable way. Many, many people want to overly complicate this process so let’s briefly, let’s recap that discussion.
The bottom line steps that I suggested in the last article was:
1) Look for an opportunity that will return at least 150% in 2 yrs or less;
2) Be mentally and financially prepared if the investment does not work out;
3) Have VERY good reasons why you don’t think you will lose money?? You may not make as much as expected, but you would rather not lose money at this stage.
4) Be patient. This single result should not either make or break you but it is crucial to a longer term plan.
I gave an example where a hypothetical person had gone through this process and ended up with a profit of $43,000 (before taxes) and $36,000 of after tax profit. When this profit was combined with their original investment, they now had around $55,000 of operating capital for Step 2.
Taxes When You Sell Your Home
October 7, 2008
What’s the difference between death and taxes?
Death doesn’t change every time Congress meets. But taxes certainly did in 1997, and the Taxpayer Relief Act of that year made a dramatic difference in the tax liability of those who sell their own homes. As it stands today, almost no one will owe any federal tax on profit made from the sale of a principal residence (defined by the IRS simply as the place you live most of the time.). To qualify, you must have owned and occupied the house as your main home for at least two of the five years before you sell.
And that’s about it..
It won’t matter how old you are when you sell.
It won’t matter if you once used the old one-time $125,000 over-55 exclusion.
It won’t matter whether you buy a replacement home or not.
It won’t even matter if you’ve used this new exclusion on another main home in the past, as long as it was more than two years before the current sale. A single owner can take up to $250,000 gain free of any federal tax ever.
Pricing Your Property
October 6, 2008
A house properly priced is half sold. But there are plenty of ways to price it improperly.
You can’t go by what you paid for the place. Perhaps you bought two years ago when local prices were skyrocketing, and things have cooled off since. Perhaps houses like yours can now be bought for less, and if you hold out for what you paid, you’ll just waste your time.
On the other hand, perhaps prices in your area have taken off, and you’d short-change yourself if you just tried to “get my money out” (but you’d have a fast sale).
You can’t go by how much you’ve spent on improvements. A given street will support only a given price range. If you’ve invested so much that yours would be the most expensive house on the street, the buying public is not likely to reimburse you.
You can’t go by your tax assessment figure. Even in communities that aim at full-value assessments, the figures are almost never in line with what buyers are currently ready to pay.
So how do you price your house?
By putting yourself in a buyer’s shoes.
Should Sellers Order a Pre-sale Home Inspection?
October 6, 2008
One of the main reasons home sale transactions fall apart is inspections. This happens when something unanticipated is discovered during the buyers’ inspections of the property, and the buyers and sellers can’t agree on a remedy.
For example, the sale of a four-year-old, multi-million dollar property in Northern San Diego County recently fell apart because of an inspection. A team of inspectors were brought in by the buyer to report on the property’s condition. The roof inspector said that the roof needed $450,000 worth of work. Not surprisingly, the buyer immediately backed out of the deal.
The sellers are suing the roofer who inspected the roof. Other roofing experts agreed that the roof had some problems; it had been improperly installed. However, their repair estimates were all a fraction of the “deal-killing” bid. The judge might grant the sellers a judgment against the roof inspector. But, this will provide little satisfaction because the sellers are still searching for another buyer.
How Do I Fix Up a Home to Sell?
October 5, 2008
The first thing you need to do is stop thinking of your home as “home” and start thinking about it as a commodity that you want to sell. To be a successful seller you must detach yourself emotionally from your home and be brutally honest about how it should look in order to sell.
Property condition and appearance play a much bigger part in home sales now than they did in the run-away seller’s market of the late 1980’s, when even rundown fixer-uppers sold at a premium. Today’s buyers discount the price if a home needs work, if they buy it at all.
You don’t have to spend a fortune preparing your home for sale. In fact, you shouldn’t. Concentrate on cost-effective improvements that will give you a good return on your investment.
Paint is the least expensive improvement you can make to a home. And, the transformation can occur quickly. A neutral decor may seem boring, but it is a safe bet from a resale standpoint. The same goes for floor coverings: stick to neutral linoleum and carpet.
What Is a CMA
October 4, 2008
“CMA” is an abbreviation real estate agents use for a Comparative Market Analysis. A CMA gives an estimated sale price for a property given current market conditions. It’s prepared by a real estate agent and it usually comes in report form. Most residential real estate agents don’t charge a fee for preparing a CMA.
An agent needs to walk through the property in question before preparing a CMA. Unless the home is enormous, the agent inspection part of the CMA shouldn’t take long, nor does the home have to show like a model home. However, property condition does affect price. So if you plan to do work on the property, let the agent know.
After the agent previews the property, he or she researches the Multiple Listing Service for information about similar properties in the area that have recently sold. In order to arrive at a current price estimate, an agent should analyze information about listings that have sold and closed, those that are sold but haven’t yet closed (the pending sales), active listings and expired listings.
How To Get Top Dollar For Your Home ? Fast
October 3, 2008
1. Time is money when selling your home
After you’ve made the decision to sell your home, the longer it remains unsold on the market, the more it costs you. Many home sellers feel it’s very important to receive close to their full asking price. But they overlook the additional months of carrying costs, such as mortgage interest, property taxes and maintenance. I’ve seen homes remain unsold on the market for years! Obviously, those home sellers are not highly motivated to sell. If they’ve already moved to their new home, maintaining a vacant, overpriced house can be very expensive, usually costing $1,000 or more each month the home remains unsold.
2. Get your home into near-model home condition
Most home buyers today want to purchase a home which is in basically good condition and does not need major fix-up work. This is called a “red ribbon deal” home because it’s like a gift wrapped with red ribbon.
There are few buyers for fixer-upper houses–and they want bargain prices to compensate for the necessary work. The goal of home sellers who want to sell fast for top dollar must be to get the home into near-model home condition. However, spending major money is not required. Most homes just need basic, inexpensive work to get the residence into very good condition where all the buyer must do is turn the key in the door and move in.
