Category Archives: Real Estate Investing

Why real estate is a good investment

By Betsy Fallwell

“It takes money to make money” – it’s one of the oldest sayings in the book, but is it true? When it comes to property investment, the answer is a resounding yes.

With the stock market still suffering triple-digit gains and losses on a routine basis, investing in the market is volatile; for some investors, it’s still too risky. But if you’re eager to invest in something with the possibility of an immediate return, property investment could be the right path for you.

The Right Time to Buy

Today we’re experiencing the perfect confluence of factors that make property investment a wise choice: nearly historic-low interest rates and property values that are only now beginning to dig out of the basement, where they’ve been residing ever since the housing crisis descended on the market.

This gives you the opportunity to make money from property investment on two fronts. First, not only can you expect to see the value of your property rise over the coming years, expanding your equity in the property with no effort on your part, but second, you’ll be able to collect rent on your properties from day one.

Uncle Sam Wants You (to Invest in Property)

The federal government makes it beneficial to invest in property, too. Those benefits come in the form of tax breaks. While homeowners have to pay out of pocket for building maintenance, homeowners’ association dues, and property insurance premiums without any breaks from the government, landlords aren’t subject to the same tax regulations. When you’re a landlord, you can write off all of these expenses – and many more, including the cost of utilities and advertising your rental space – and reduce your overall tax burden.

Diversify, Diversify, Diversify

What’s the first rule of real estate? Location! What’s the first rule of investing? Diversify! Combine the two, and you’ve got the first rule of property investment: diversity your holdings with a variety of locations. Similar to the saying, “Don’t put all your eggs in one basket,” don’t make the mistake of putting all your investment properties in one location. Look for a variety of home styles – whether they be apartment buildings, duplexes, or single-family homes – in a wide range of neighborhoods. This will give you properties with a wide range of monthly rental fees, which will open you up to a wide range of potential tenants.

How Much Could You Make?

The first step to making money in property investment is finding the right property. Work with a real estate agent to find quality properties in your area; consider foreclosures and short sales, which can reduce the up-front cost of purchasing a building and maximize your budget for any necessary renovations.

Once you’ve found the right property, you’ll have to secure financing. If you’re purchasing a multi-family property, you’ll have to apply for commercial financing as opposed to residential. This type of financing often requires larger amounts of capital up front, as well as higher interest rates over the life of the loan. After you buy your investment property, you may have to fix it up to bring it up to code or to make it appeal to renters.

At this point, you can begin to figure out a price for your property. Look at comparison properties in your area to see what similar apartments or houses rent for. The better a deal you get on the purchase price and the more wisely you spend money during any repairs or renovations, the wide the profit margin on your investment.

Entering The Commercial Real Estate Game

Selling commercial real estate can be a very lucrative career. However, it’s not as easy as just putting up a sign, printing a few business cards and selling property. Depending on the state you wish to sell real estate in, you may need to obtain a license to do so. The requirements for a commercial real estate license will vary from a simple licensure exam to a more specific test for commercial real estate.

You may need to take a class, usually ranging from 40 to 80 hours, depending on the state, before you can take the exam. Once you’ve passed the state licensure exam, an apprenticeship is usually necessary to obtain full credentials in the commercial real estate industry. In some states, the requirements vary a little depending on whether you want to be licensed as an agent or a broker.

Obtaining Full Credentials

After passing the basic testing and finding work in the industry, it’s necessary to develop skills putting you at the top of your game. This is done through experience, continuing education classes and gaining a full understanding of the commercial real estate industry. Specializing in one area of the business will help develop a specific set of skills you can use to sell your services in that specific area.

Some of the areas of the commercial real estate industry include office space, apartment complexes, agricultural lands and industrial warehouse space. These areas are all very different and new agents should only start with one or two specific areas before trying to master all of them. It’s important to gain a full understanding of the different laws, financing, ownership, contracts, title transfers, commercial bonds, insurance and other parts of each type of real estate.

Becoming an expert in one specialized field can make a real estate agent or broker easier to market. This can make it easier to obtain clients and give them the advice they need in regards to their specific property type. In order to gain specialty credentials, however, you need more than just a string of letters after your name. You will need the proper knowledge and experience to help you become the top choice within your specific specialty.

The commercial real estate industry can be very competitive and an agent or broker wanting to succeed must gain a positive reputation. Many recommend those looking to sell commercial real estate to research the reputation and the track record of many different real estate agents before choosing. This is a bit like building a resume for a job interview. You want your credentials to get you the interview and your reputation to get your the job.

Building a Solid Reputation

Honesty and hard work will lead you to a great reputation within the industry. Avoid selling properties for less than they are worth just to make a commission and always put your clients’ needs ahead of your own. You want to represent the needs of your clients in a fair and assertive manner. This will help you gain more clients and the word of mouth advertising about you will always remain positive.

With the proper licensing and a great reputation, the commercial real estate industry can be very lucrative. It may require long hours and hard work, at first, but as you gain experience and build your reputation, the work will come to you much easier.

How to Succeed in Real Estate Investment as a First-Time Buyer

Despite the ups and downs of a volatile global economy in recent years, purchasing property remains a sound form of investment in many areas. Whether you’re looking for property solely with its investment value in mind or are also searching for a long-term home, the process of purchasing real estate can be nerve-wracking at times for beginners. By preparing yourself for this process, you can ease yourself through it and make a worthy investment.

Get Educated

There are numerous resources available online to help first-time buyers, including real estate investment courses, E-books, and brochures. If you’ve never made a purchase of this magnitude before, it can also be a good idea to take a basic personal finance course. By learning more about what to expect with this type of investment, you can work with brokers and sellers more efficiently and know where to look to narrow your focus on the right property.

Location is Everything

One of the most stable property markets in the world at the moment is in Australia, making it a prime place to invest in real estate. Yet even within this country, there will be some areas that are more financially sound than others. Home prices have more than doubled in large cities like Brisbane, Melbourne, and Canberra in the last ten years, according to the Australian Capital City Indexes. However, these can be costly for first-time buyers, whose salaries may not have kept up with the real estate boom. In addition to property investments in Melbourne or Sydney, it’s worth looking at alternative hotspots like Hunter Valley, Tasmania, or Port Lincoln, which offer a strong tourist infrastructure and agriculture-based economies.

Getting Finances in Order

As you research the best location for your investment, it’s also important to be sure that should you see the right opportunity, you will be ready to seize it. This includes getting your credit in best shape. You can request a free copy of your credit report to ensure that there are no errors or surprises. Those with imperfect credit will need to start preparing at least a year in advance, as lenders will need to see a steady track record of on-time payments before they will consider approval.

Create a Nest Egg

Although investing in Australian property is statistically safer than many other types of investment opportunities, it’s still best to prepare for financial upheaval. Experts recommend setting aside at least six months’ worth of mortgage payments before closing on any deal, so that you will have a safety net to avoid foreclosure. This may come in handy should your circumstances change in the future. An added bonus is that this money will not only make you look better in the eyes of the lender, but it can also be used for home repairs or maintenance down the line.

Find an Estate Agent with the Right Experience

There are many estate agents who can help you purchase a home, but if you’re shopping around for investment purposes it makes sense to choose an agent who owns property. A professional who has first-hand experience with property investment in the area you are interested in can help guide you through the local market with ease. They can also help give referrals for other professionals, such as insurance agents, mortgage brokers, and home inspectors.

When to Hire Help

Should you purchase a property with multiple rental units, it’s time to think about hiring a property manager. Although this will require further investment on your part, it’s well worth it because the manager will deal with maintenance issues, help find tenants, and deal with any daily issues that come up. It’s recommended to set aside 10% of the rental income that you make for this purpose, depending on the scale of your property. To protect your investment don’t forget to get cheap landlord insurance as well.

By following these tips and taking some time to plan your investment strategy, you will stand a better chance of completing all transactions with ease.

Financially Affordable Home Improvements

Whether you’re dealing with the elderly, disabled or other people with mobility issues, having to improve the home can often be a daunting prospect. It might not be your highest concern, but most people eventually worry about the costs of such improvements.

Yet, if you look at it another way, in terms of an investment in the future, there is an easier way to tackle this problem. First of all, one can look at cheap options that don’t strain the bank account. Secondly, for those that are expensive, there are often alternative ways around it, such as renting a staircase over outright buying one.

Cheap Solutions

A lot of the needs when dealing with disabled people, or other mobility issues, can be addressed with very cheap and simple solutions.

Likewise, one can look at floor options. Laminate and other smooth floors pose a serious risk to people who have trouble walking. This is a big concern with the elderly, where falls pose a bigger health risk. As such, a simple carpet will remove this threat, as it’s easier to walk on. Carpets, of course, come in a range of prices, sizes and styles, so you can get what you want within a price range you are comfortable with.

Additionally, if someone in the home has a mobility or walking aid, you might want to make for space. This is a simple case of rearranging furniture and units. Additionally, certain objects, such as coffee tables, simply get in the way, taking up valuable floorspace that might be needed to reach the surrounding furniture. If this is the case for you, you might want to look into selling these, which will in fact make you money you can put towards other improvements.

Working around Costs

Stairlifts, for instance, are something many consider to be expensive, but this simply isn’t true. For one, they don’t actually require any alterations to the house. The rail sits on the staircase, it’s not built into or installed into the house.

Furthermore, with rental options you can manage the costs more effectively. Smaller costs make it easier to pay on a limited budget or income. Additionally, you only have to rent it as long as you need it; since these costs include installation and removal, it takes all the financial trouble out of the equation.

If you’re looking for the right options, a stairlift advisor will better help you make the correct choice. There isn’t just one stairlift; there are a few models available, in addition to the custom rail. Finding the right one is crucial, but you need not worry over the financial side.

In short, these are just some of the options available to you. Whilst there are some areas of the house, such as the bathroom, which will naturally cost more money and require more work and alterations, the rest of the house generally isn’t that difficult to work around. By reducing costs and saving money here, you have more funds for the more important areas, helping to reduce costs over all.

Advice for Property Flipping

Property flipping is the process of investors purchasing a property at a price below market value, then re-selling quickly at a profit. The below market price can be for any number of reasons, for example, the property is in need of major renovations.

Investors use flipping in communities to purchase a discounted property

whereby the property is in a state of disrepair. In areas such as these, properties are often offered at below market value and the surrounding area is generally in a rundown condition. Flipping is used to increase the value of the area and produce economic growth within the area by investors purchasing a number of properties. This in turn will increase the value of the properties, once renovations have completed and the re-sale value is closer to market value. This encourages communities to flourish with families and has a knock on effect for the wider area.

Recognising a way to make a profit, flipping has now become booming business. Companies are available who will purchase your property regardless of its condition at below market value. Vendors have a number of reasons for wishing to sell the property quickly and the convenience of a company who will project manage the conveyancing, removing stress of endless viewings and fear of offer withdrawal. This can be particularly useful in the event of vendors having to relocate to another area. A company can also relieve the stress of pending repossession.

Property flipping may appear to have an element of risk in the current housing market. Investors may be wary with the current lending criteria being stricter and more regulated following the financial crash of 2008. With repossessions at an all-time high, there are properties available for purchase and an astute flipper can still snag a bargain. It is important to note that flippers will need to do their research and ensure that they can flip a property quickly and at a profit. Careful thought is needed and investors who have access to credit are wise to research and look at the surrounding area. This is important for future market value and to profit, this relieves the risk of investors being property heavy and running into problems.

Flipping has pitfalls. More commonly known in the UK, for MP’s using flipping to take advantage of tax allowances, it has become quite a scandal infuriating tax payers. This process of flipping involves a second home closer to London aside from their constituency. Flipping the second property involves renovating the property and claiming the cost of the expenses from the public purse and selling the property to avoid capital gains tax. However, important to note that flipping to avoid capital gains tax is not solely used by MPs. Anyone who can afford a second home is able to use this loophole to their advantage.

House flipping takes time, patience and money. It is easy to make expensive mistakes, but with the right advice, an investor is able to make a profit. House flipping is a business venture and like any other business venture it is wise to research all avenues and invest wisely.

If you are looking for great below market value properties visit investors.nationalhomebuyers.co.uk

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Are You Ready to Buy a Home?

For the last few years, in many areas of the United States, home markets have fallen while interest rates have reached historic lows.  Many who are underwater in their homes have been waiting and waiting for the market to rebound while those who are waiting to become home owners continue to wonder where the bottom of the market is and when is the best time to buy.

There are now indications that the market is slowly beginning to improve.  If you haven’t jumped into home ownership yet, you may wonder if now is the time to begin your home search and to see how much you qualify for a mortgage loan.  However, before you take the leap to homeownership, make sure you are truly prepared.  Remember, many people who found themselves in dire financial straits a few years ago were in that position because they bought a home before they were truly prepared.

Can you pay 10 to 20% down?  Conventional wisdom used to be to have a down payment of 20%, but that can be difficult in some areas of the country where typical housing prices are $400,000 or more.  At the very minimum, you should plan to have at least 10% down.  If you can’t, from a conservative viewpoint, you are probably not yet ready to own a home.

Have you practiced making the monthly payment?  If you are currently renting and paying $1,000 a month and a house in your price range with your available down payment would cost $1,560 a month, begin setting aside an additional $560 a month for at least 6 months to make sure you can comfortably afford the monthly payment.  (Plus, practicing like this can bulk up your savings.  Setting aside an additional $560 a month for 6 months will net you an extra $3,360 in your savings.)

Can you afford to set aside money for repairs and maintenance?  While many homeowners wish their homes would never need expensive repairs, that just isn’t reality.  Homes need to be maintained and repaired, and if you don’t put that money aside, you can find yourself in a financial mess.  Experts recommend you set aside 2 to 4% of your home’s value for annual repairs.  On a $250,000 home, that means you should set aside $5,000 to $10,000 or approximately $415 to $830 a month in addition to your monthly house payment.

Can you afford annual property tax?  Property tax rates can vary widely depending on your location and the value of your home from just a few thousand dollars to $10,000 or more.  Before you buy, determine what your property taxes will be and how much you should set aside annually.

Unfortunately, new homebuyers often just focus on one price—the monthly property investment mortgage payment.  However, there are many more variables and expenses than just the mortgage.  Even though now is still a great time to buy, before you take the leap into home ownership make sure you can afford all of the expenses.  And remember too, you will be able to deduct some of your expenses on your income tax filing, essentially lowering your expenditures a bit.

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