Everyone has heard a story or read about someone who bought a property without paying a single dime as a down payment. But how does this work?
There are several "classic" methods commonly used to purchase real estate with no money down. There are an infinite variety of situations in a real estate transaction that could lead to a deal with no down payment. But for the sake of reality, I will focus on those that are most commonly seen in the current market.
1. Seller second - The buyer obtains a new first mortgage for most but not all of the total purchase price. The seller finances the rest.
Purchase price: $100,000 Buyers loan: $90,000 (90% LTV) (new first mortgage) Sellers finances $10,000 (in the form of a new second mortgage) The buyer has borrowed 100% of the purchase price. Thus, you have100% financing, and no down payment was paid by buyer.
This is not a difficult strategy to employ if the seller has enough equity, is willing to hold a second, and the first mortgage lender approves.
One thing that is not mentioned in most articles about this strategy is the requirement for lender approval. The lender who is making the 90% loan will have to agree to allow the seller to take back a second mortgage. In cases where the buyer has better credit, this is usually OK with the lender. But if the buyer has a lower credit score, the lender may not approve of this. If your credit score is on the lower side, but you have good documented income, you may still qualify.
Talk to your lender ahead of time and find out if creative financing options such as a seller second would be allowed. Make sure you have a lender who is used to working on investment property loans. Some mortgage companies only have programs for owner occupants. You need to go to a lender who specializes in loans for investors.
2. Another common way to obtain a no down payment loan is to utilize one of the many low or no down payment programs that exist. Many of these are intended for owner occupants, but some are available for investors. Again, it is important to talk to the right lender.
If you have an investment property that you want to sell, consider taking back a second mortgage for 5-10%. This is not a huge amount, and it can help you sell your property faster.
When it comes to finding a seller who will help you create a no money down deal, consider buying from an investor who is willing to be flexible. Some investors are willing to do creative financing simply because they understand that it helps them sell houses. It never hurts to make an offer that includes a seller second. You never know until you ask.
There are some points to remember when purchasing investment property with no money down. A key point is the comparison of monthly payments to expected rental income. When you are financing 100% of the purchase price, your payments will be higher. If you have a second mortgage payment to add to a first mortgage, your payment may be even higher. Be sure your rental income will cover the entire monthly payment.
3. More common among professional investors is buying wholesale properties, using hard money to purchase and rehab.
When the rehab is completed, you want to get a new mortgage that pays off the hard money loan. Since this is a refinance, you can take cash out of the property. You may have to bring some money to closing on the hard money loan, but you get it all back when you refinance, so you end up with no money out of pocket. This becomes not only a "no down payment" deal, but also a "cash back at closing" deal.
It works like this:
Purchase price $100,000 Repairs $15,000 Hard money loan $115,000
Purchase and repair, then get new loan to pay off hard money. New loan is based on 90% of After Repair Value. For our example, the ARV is $150,000
90% of $150,000 is $135,000. New loan for $135,000. Subtract hard money loan pay off of $115,000 leaves $20,000. You keep the extra $20,000 in cash, tax free since it is a loan, rent your house out and let the tenant pay the loan back. Your gross profit is $20,000 cash and $15,000 equity. Total gross profit $35,000. Not too bad for a couple months work.
Down payment by definition means specifically money that is used to "pay down" the total purchase price. This does not include money for closing costs, points, interest, and other items such as insurance. But if you are buying wholesale properties, fixing them and refinancing to pull cash out, you should be able to pay all your expenses and have a nice profit at the end of the day. (Just keep some of that cash in reserve for emergencies)
If you do 3 houses per year, and you only net $25,000 total, after paying all expenses on each of the 3 houses, you are still netting $75,000 cash and equity in about 6 to 8 months. Plus, if you are renting these properties, you are also creating additional streams of income through monthly cash flow as well as accumulating equity in each property.
This is a solid strategy to achieve a retirement nest egg and ongoing income for life in less than 10 years. If you look around at the real estate investors who are wealthy, the vast majority own rental property, be it residential or commercial.
They understand the concept of buying at a discount, then holding their properties for years. They get to the point where their holdings are worth double or triple the price paid. This is free money that you can earn simply by buying and holding long term. No, this is not as easy as it sounds, but nothing worth doing is ever easy. If it were, everyone would be wealthy.
There are wholesaling companies in every major city that specialize in selling fixer upper properties that fit with strategy number 3 in this article. Look for their signs on the side of the road, their ads in the paper, or ads in local thrifty nickel type shopping papers.
Most deals do require some out of pocket cash, even if it is only temporary, until you refinance.
True no down payment opportunities are pretty rare these days, with interest rates at historic lows. If interest rates go back up, (and they will) we will see more creative financing and more no down payment opportunities in the future.
About the Author
This is an example of the kind of quality training and information you receive when you become a member of The Real Estate Arena. When you join TREA you'll have access to live and recorded investor training, networking and investing tools, all for one low monthly membership fee. Get more information at http://www.therealestatearena.com/ad.aspx?i=rtcl
Saturday, April 7, 2007
Business Debt Relief: Surviving the Market
When operating a business, business debt may be an unavoidable issue because of mismanagement or the economic instability of the market. Business debt relief has become the result of it.
Business debt refers to the money owed by the business to creditors and is usually higher than personal debts. The money that businesses borrow is most commonly used for the business itself, either for development, expansion or even maintenance. Business debt relief tries to soften the damage caused by the accumulated debt and interest. When borrowing money for business dealings, some creditors offer higher interest rates compared to personal loans, which makes a lot of business operators accrue huge business debts. But regaining financial stability may not be as easy as a manager could plan it. To achieve business debt relief, sometimes the business itself has to give up some assets or some percentage of the company itself.
- Why look for business debt relief? -
When a business starts taking on loans and opening lines of credit, this could result in several serious problems, such as:
- Inability to handle costs - Reduced product quality - Reduced business value - Waning trust among shareholders
Business Debt relief is the way out of accumulated debt, and the saving method for your business.
- How can business debt relief be achieved? -
Business debt relief can be achieved in a number of ways, but the most important thing to do is to specify what kind of debt the business it is. Business debt relief is a process that takes into account the current situation of the business: financial status, sales, and any other data that could show the financial standing of the business. After this is done, with the help of the process you can choose which course of action can be more useful for a particular case in the business
Business debt may be handled in a variety of ways. In order to achieve business debt relief, a lot of businessmen prefer debt consolidation programs that allow them to get back to business while a business debt service firm communicates with their creditors. Business debt relief service providers also offer valuable help in business debt counseling and support. Credit repair, financial planning and management are also very important issues when handling business debt properly, which a lot of genuine business debt service firms can do.
- Which methods can help to achieve business debt relief? -
After finding yourself and your business in debt, and your financial future is looking rather dim, you need to start taking care of your finances and figuring out methods to achieve business debt relief. It can be difficult to find a way out of debt for a business, but it is possible to reduce the debt and get your business on the path to a better financial future. The following are a few debt reduction tips that can help you take control and reduce the amount of debt that your business has, and finally achieve business debt relief, as your end objective:
- Talk to creditors - Refinance your home - Debt consolidation loans - Credit counseling
If none of the aforementioned options seems to help your current financial business situation, try not to file for bankruptcy right away. There is always something to be done. Achieving business debt relief is not an easy task, even more so if your business is in buried in debt. Why avoid bankruptcy? When you file for bankruptcy, it will remain on your business's credit report for ten years. So when you are able to obtain credit, it will often be at a higher interest rate, as banks will consider your business to be at greater risk to lend to. You also might not be able to get the entire amount you asked for on credit due to your business's credit history.
Remember that while bankruptcy may be the best option for a business, check out all other avenues first before making this decision and know exactly what the consequences will be if you do file for bankruptcy.
We have different articles on interesting topics and current and former clients' experiences with our programs. Take a look at the different situations on Business Debt Relief and related topics that people can fall into and how to keep yourself a debt free person. Check these links to learn more:
http://www.commercialdebtcounseling.com/business/business-y/business-index.shtml
http://www.commercialdebtcounseling.com/
About the Author
Business debt refers to the money owed by the business to creditors and is usually higher than personal debts. The money that businesses borrow is most commonly used for the business itself, either for development, expansion or even maintenance. Business debt relief tries to soften the damage caused by the accumulated debt and interest. When borrowing money for business dealings, some creditors offer higher interest rates compared to personal loans, which makes a lot of business operators accrue huge business debts. But regaining financial stability may not be as easy as a manager could plan it. To achieve business debt relief, sometimes the business itself has to give up some assets or some percentage of the company itself.
- Why look for business debt relief? -
When a business starts taking on loans and opening lines of credit, this could result in several serious problems, such as:
- Inability to handle costs - Reduced product quality - Reduced business value - Waning trust among shareholders
Business Debt relief is the way out of accumulated debt, and the saving method for your business.
- How can business debt relief be achieved? -
Business debt relief can be achieved in a number of ways, but the most important thing to do is to specify what kind of debt the business it is. Business debt relief is a process that takes into account the current situation of the business: financial status, sales, and any other data that could show the financial standing of the business. After this is done, with the help of the process you can choose which course of action can be more useful for a particular case in the business
Business debt may be handled in a variety of ways. In order to achieve business debt relief, a lot of businessmen prefer debt consolidation programs that allow them to get back to business while a business debt service firm communicates with their creditors. Business debt relief service providers also offer valuable help in business debt counseling and support. Credit repair, financial planning and management are also very important issues when handling business debt properly, which a lot of genuine business debt service firms can do.
- Which methods can help to achieve business debt relief? -
After finding yourself and your business in debt, and your financial future is looking rather dim, you need to start taking care of your finances and figuring out methods to achieve business debt relief. It can be difficult to find a way out of debt for a business, but it is possible to reduce the debt and get your business on the path to a better financial future. The following are a few debt reduction tips that can help you take control and reduce the amount of debt that your business has, and finally achieve business debt relief, as your end objective:
- Talk to creditors - Refinance your home - Debt consolidation loans - Credit counseling
If none of the aforementioned options seems to help your current financial business situation, try not to file for bankruptcy right away. There is always something to be done. Achieving business debt relief is not an easy task, even more so if your business is in buried in debt. Why avoid bankruptcy? When you file for bankruptcy, it will remain on your business's credit report for ten years. So when you are able to obtain credit, it will often be at a higher interest rate, as banks will consider your business to be at greater risk to lend to. You also might not be able to get the entire amount you asked for on credit due to your business's credit history.
Remember that while bankruptcy may be the best option for a business, check out all other avenues first before making this decision and know exactly what the consequences will be if you do file for bankruptcy.
We have different articles on interesting topics and current and former clients' experiences with our programs. Take a look at the different situations on Business Debt Relief and related topics that people can fall into and how to keep yourself a debt free person. Check these links to learn more:
http://www.commercialdebtcounseling.com/business/business-y/business-index.shtml
http://www.commercialdebtcounseling.com/
About the Author
James Banks is a contributing writer to http://www.commercialdebtcounseling.com and is currently writing some special articles to guide business on how to manage debt and avoid bankruptcy. For Free Information on Business Debt Relief and Debt Help Consultation, call toll-free 1-877-850-3328
Home Equity Loans-What to Look Out For
Fortunately most lenders are pillars of their communities and can be trusted. Unfortunately there are a few lenders who prey on the elderly, the poor, and those in financial trouble with bad credit. These unscrupulous lenders deliberately target weak borrowers with the hopes they get further in trouble and end up losing their home for financial gain.
Like any industry that is capital intensive with money flowing like wine there are a few bad apples in the barrel. There are lots of new brokers out there and some brokers are looking for get rich quick schemes. Real Estate market has been hot and will be again. When things slow down some brokers get overly aggressive and promise things they cannot deliver.
National Association of Mortgage Brokers (NAMB) says as many as 30% of brokers are questionable.
Everyone should be made aware of some tactics used to exploit particularly weak borrowers or borrowers in financial trouble. Here are some examples.
Hidden Balloon Payment Nearly everyone has seen the ads for a high dollar amount loan for a ridiculously low monthly payment. What some lenders will do is forget to tell you that the payments are interest only and at the end of the term of the loan a huge balloon payment is due. If you can't refinance or pay the loan off you may lose your home.
Flipping Loans This is the practice of luring a borrower into repeated home equity loan refinancing over a period of time. Each time the rate goes up and points and other closing costs are rolled into the loan making the net proceeds lower than expected and the payments higher than expected.
"Home Improvement" Loan A contractor offers to do some much needed work on your house but you tell him you can't afford it. He offers to get financing thru a lender he has done business with before. The work on the house starts. Then you are asked to hurry and sign some papers for the loan. You realize the loan is a home equity loan and the rate is very high so you hesitate to sign. The contractor says he will not do any more work unless you sign. The contractor already has a lien on your property.
Bait and Switch Tactics This is the practice of getting to within a critical time of closing the home equity loan and finding out the terms are different from those agreed to. The unscrupulous lender is hoping that he has the borrower in a position that he must accept the terms.
No matter what your situation borrowers are well advised to follow common sense when picking a mortgage broker. There is a lot at stake. Don't press the "EASY" button.
Jack Krohn is a leading free lance writer on Home Equity and Mortgage issues with over 35 articles to his credit. He is also the #1 author of Home Security Articles in the country.
About the Author
Like any industry that is capital intensive with money flowing like wine there are a few bad apples in the barrel. There are lots of new brokers out there and some brokers are looking for get rich quick schemes. Real Estate market has been hot and will be again. When things slow down some brokers get overly aggressive and promise things they cannot deliver.
National Association of Mortgage Brokers (NAMB) says as many as 30% of brokers are questionable.
Everyone should be made aware of some tactics used to exploit particularly weak borrowers or borrowers in financial trouble. Here are some examples.
Hidden Balloon Payment Nearly everyone has seen the ads for a high dollar amount loan for a ridiculously low monthly payment. What some lenders will do is forget to tell you that the payments are interest only and at the end of the term of the loan a huge balloon payment is due. If you can't refinance or pay the loan off you may lose your home.
Flipping Loans This is the practice of luring a borrower into repeated home equity loan refinancing over a period of time. Each time the rate goes up and points and other closing costs are rolled into the loan making the net proceeds lower than expected and the payments higher than expected.
"Home Improvement" Loan A contractor offers to do some much needed work on your house but you tell him you can't afford it. He offers to get financing thru a lender he has done business with before. The work on the house starts. Then you are asked to hurry and sign some papers for the loan. You realize the loan is a home equity loan and the rate is very high so you hesitate to sign. The contractor says he will not do any more work unless you sign. The contractor already has a lien on your property.
Bait and Switch Tactics This is the practice of getting to within a critical time of closing the home equity loan and finding out the terms are different from those agreed to. The unscrupulous lender is hoping that he has the borrower in a position that he must accept the terms.
No matter what your situation borrowers are well advised to follow common sense when picking a mortgage broker. There is a lot at stake. Don't press the "EASY" button.
Jack Krohn is a leading free lance writer on Home Equity and Mortgage issues with over 35 articles to his credit. He is also the #1 author of Home Security Articles in the country.
About the Author
If you are looking for a mortgage, home equity loan, or refinance. GET UP TO 4 FREE MORTGAGE QUOTES and FREE HOME EQUITY LOAN INFORMATION
Homeowners get details on ONE MONTH FREE HOME SECURITY and great FREE Home Security Information
How To Succeed in Property Investing
How to succeed in Property Investing
Is there really a 100% safe way to invest in real estate? No, there is NO plan that will guarantee your success. No one can guarantee that you will make a profit. However, if you follow these guidelines, you will have a greater chance of being successful. Instead of potentially making costly mistakes, you will be able to generate a steady stream of extra income and you will be building your equity.
The following topics will be covered in this series of articles: Setting clear investment objectives, How to find profitable investment properties, How to mine properties for profit, How to make the initial offer, Navigating the financial maze, Closing the Sale, How to select a remodeling contractor, Renters, Renters, Renters, Tax Time - Pay uncle Sam, Miscellaneous real estate investment factors.
Let's start on the road to discovery:
Setting Clear Investment Objectives
Start with a set of clear objectives for any property you intend to buy. You might be asking what is the relationship between real estate investing and objectives. The investment objectives will give you the track to run on. There is a direct relationship between the level of clarity about what you want and virtually everything you accomplish in life. Successful men and women invest the time necessary to develop absolute clarity about they really want. It is like designing a detailed blue print for building a custom home before they begin construction. Like a blueprint for a building, your investment goals must be written down on paper. Do NOT skip this step or you will be helping some else accomplish their objectives.
Start by writing your investment goals or strategies on paper. Which money making strategy is best for you depends on your tolerance for risk. You might be happy making only 15% on a quick sale, or you may need $100,000 a year to maintain your current living style. You might want to build your current net worth over time, getting continuous appreciation on your properties, and generate some extra income or enough rental cash to become financially independent. Keeping a clear picture of your investment objectives will increase the likelihood of finding the right properties.
Your investment objectives will also need to include some of the following items: What kind of home should it be, Single family vs. multifamily, condo or detached, how many rooms will the property have, a good or medium neighborhood, age of the property, who will maintain your properties, high priced or low priced. You will need to determine how long, you want to hold the investment property. Are you planning to flip your investment in 5 years or less? In this case, you might want maximize your monthly return by obtaining a low variable rate for 5 years. If this is your objective, it might be necessary to take some precautions in order to avoid getting burned in the fifth year. For instance, start looking to refinance the mortgage loan in the middle of the fourth year.
If your aim is to hold the investment property for 20 or 30 years, then the approach needs to be different. You can still choose to pay off the property in a short period of time. In this instance, you might want to get a 15 year mortgage. Another important factor that needs to be taken into account is the age of the investment property. It is a good idea to select properties that are under 10 years old in order to avoid that high maintenance fees that come with an older home. Please remember that the secret to long term real estate investing is renting the property for less or close to your yearly expenses.
Do not forget to make your objectives SMART: 1. Specific - Your objectives need to specify what you want to achieve in detail. 2. Measurable - You should be able to measure whether you are meeting the objectives or not. 3. Achievable - Are the objectives you set, achievable and attainable? 4. Realistic - Can you realistically achieve the objectives with the resources you have? 5. Time - When do you want to achieve the set objectives?
Jamar Properties Inc has a free property investment template, http://www.jamarhouses.com/Articles/Downloads.html, you can download to help you set your investment objectives.
Now that you have a clear set of objectives, it is time to start searching for our investment property. This will be the topic of my next article.
Jake Borjas Jamar Properties Inc - NC Custom Homes http://www.JamarHouses.com
About the Author
Mr Borjas started investing in Real Estate 7 years ago. This activity led to a General Contractors license and to build Custom Homes in NC
Is there really a 100% safe way to invest in real estate? No, there is NO plan that will guarantee your success. No one can guarantee that you will make a profit. However, if you follow these guidelines, you will have a greater chance of being successful. Instead of potentially making costly mistakes, you will be able to generate a steady stream of extra income and you will be building your equity.
The following topics will be covered in this series of articles: Setting clear investment objectives, How to find profitable investment properties, How to mine properties for profit, How to make the initial offer, Navigating the financial maze, Closing the Sale, How to select a remodeling contractor, Renters, Renters, Renters, Tax Time - Pay uncle Sam, Miscellaneous real estate investment factors.
Let's start on the road to discovery:
Setting Clear Investment Objectives
Start with a set of clear objectives for any property you intend to buy. You might be asking what is the relationship between real estate investing and objectives. The investment objectives will give you the track to run on. There is a direct relationship between the level of clarity about what you want and virtually everything you accomplish in life. Successful men and women invest the time necessary to develop absolute clarity about they really want. It is like designing a detailed blue print for building a custom home before they begin construction. Like a blueprint for a building, your investment goals must be written down on paper. Do NOT skip this step or you will be helping some else accomplish their objectives.
Start by writing your investment goals or strategies on paper. Which money making strategy is best for you depends on your tolerance for risk. You might be happy making only 15% on a quick sale, or you may need $100,000 a year to maintain your current living style. You might want to build your current net worth over time, getting continuous appreciation on your properties, and generate some extra income or enough rental cash to become financially independent. Keeping a clear picture of your investment objectives will increase the likelihood of finding the right properties.
Your investment objectives will also need to include some of the following items: What kind of home should it be, Single family vs. multifamily, condo or detached, how many rooms will the property have, a good or medium neighborhood, age of the property, who will maintain your properties, high priced or low priced. You will need to determine how long, you want to hold the investment property. Are you planning to flip your investment in 5 years or less? In this case, you might want maximize your monthly return by obtaining a low variable rate for 5 years. If this is your objective, it might be necessary to take some precautions in order to avoid getting burned in the fifth year. For instance, start looking to refinance the mortgage loan in the middle of the fourth year.
If your aim is to hold the investment property for 20 or 30 years, then the approach needs to be different. You can still choose to pay off the property in a short period of time. In this instance, you might want to get a 15 year mortgage. Another important factor that needs to be taken into account is the age of the investment property. It is a good idea to select properties that are under 10 years old in order to avoid that high maintenance fees that come with an older home. Please remember that the secret to long term real estate investing is renting the property for less or close to your yearly expenses.
Do not forget to make your objectives SMART: 1. Specific - Your objectives need to specify what you want to achieve in detail. 2. Measurable - You should be able to measure whether you are meeting the objectives or not. 3. Achievable - Are the objectives you set, achievable and attainable? 4. Realistic - Can you realistically achieve the objectives with the resources you have? 5. Time - When do you want to achieve the set objectives?
Jamar Properties Inc has a free property investment template, http://www.jamarhouses.com/Articles/Downloads.html, you can download to help you set your investment objectives.
Now that you have a clear set of objectives, it is time to start searching for our investment property. This will be the topic of my next article.
Jake Borjas Jamar Properties Inc - NC Custom Homes http://www.JamarHouses.com
About the Author
Mr Borjas started investing in Real Estate 7 years ago. This activity led to a General Contractors license and to build Custom Homes in NC
How To Succeed in Property Investing
How to succeed in Property Investing
Is there really a 100% safe way to invest in real estate? No, there is NO plan that will guarantee your success. No one can guarantee that you will make a profit. However, if you follow these guidelines, you will have a greater chance of being successful. Instead of potentially making costly mistakes, you will be able to generate a steady stream of extra income and you will be building your equity.
The following topics will be covered in this series of articles: Setting clear investment objectives, How to find profitable investment properties, How to mine properties for profit, How to make the initial offer, Navigating the financial maze, Closing the Sale, How to select a remodeling contractor, Renters, Renters, Renters, Tax Time - Pay uncle Sam, Miscellaneous real estate investment factors.
Let's start on the road to discovery:
Setting Clear Investment Objectives
Start with a set of clear objectives for any property you intend to buy. You might be asking what is the relationship between real estate investing and objectives. The investment objectives will give you the track to run on. There is a direct relationship between the level of clarity about what you want and virtually everything you accomplish in life. Successful men and women invest the time necessary to develop absolute clarity about they really want. It is like designing a detailed blue print for building a custom home before they begin construction. Like a blueprint for a building, your investment goals must be written down on paper. Do NOT skip this step or you will be helping some else accomplish their objectives.
Start by writing your investment goals or strategies on paper. Which money making strategy is best for you depends on your tolerance for risk. You might be happy making only 15% on a quick sale, or you may need $100,000 a year to maintain your current living style. You might want to build your current net worth over time, getting continuous appreciation on your properties, and generate some extra income or enough rental cash to become financially independent. Keeping a clear picture of your investment objectives will increase the likelihood of finding the right properties.
Your investment objectives will also need to include some of the following items: What kind of home should it be, Single family vs. multifamily, condo or detached, how many rooms will the property have, a good or medium neighborhood, age of the property, who will maintain your properties, high priced or low priced. You will need to determine how long, you want to hold the investment property. Are you planning to flip your investment in 5 years or less? In this case, you might want maximize your monthly return by obtaining a low variable rate for 5 years. If this is your objective, it might be necessary to take some precautions in order to avoid getting burned in the fifth year. For instance, start looking to refinance the mortgage loan in the middle of the fourth year.
If your aim is to hold the investment property for 20 or 30 years, then the approach needs to be different. You can still choose to pay off the property in a short period of time. In this instance, you might want to get a 15 year mortgage. Another important factor that needs to be taken into account is the age of the investment property. It is a good idea to select properties that are under 10 years old in order to avoid that high maintenance fees that come with an older home. Please remember that the secret to long term real estate investing is renting the property for less or close to your yearly expenses.
Do not forget to make your objectives SMART: 1. Specific - Your objectives need to specify what you want to achieve in detail. 2. Measurable - You should be able to measure whether you are meeting the objectives or not. 3. Achievable - Are the objectives you set, achievable and attainable? 4. Realistic - Can you realistically achieve the objectives with the resources you have? 5. Time - When do you want to achieve the set objectives?
Jamar Properties Inc has a free property investment template, http://www.jamarhouses.com/Articles/Downloads.html, you can download to help you set your investment objectives.
Now that you have a clear set of objectives, it is time to start searching for our investment property. This will be the topic of my next article.
Jake Borjas Jamar Properties Inc - NC Custom Homes http://www.JamarHouses.com
About the Author
Is there really a 100% safe way to invest in real estate? No, there is NO plan that will guarantee your success. No one can guarantee that you will make a profit. However, if you follow these guidelines, you will have a greater chance of being successful. Instead of potentially making costly mistakes, you will be able to generate a steady stream of extra income and you will be building your equity.
The following topics will be covered in this series of articles: Setting clear investment objectives, How to find profitable investment properties, How to mine properties for profit, How to make the initial offer, Navigating the financial maze, Closing the Sale, How to select a remodeling contractor, Renters, Renters, Renters, Tax Time - Pay uncle Sam, Miscellaneous real estate investment factors.
Let's start on the road to discovery:
Setting Clear Investment Objectives
Start with a set of clear objectives for any property you intend to buy. You might be asking what is the relationship between real estate investing and objectives. The investment objectives will give you the track to run on. There is a direct relationship between the level of clarity about what you want and virtually everything you accomplish in life. Successful men and women invest the time necessary to develop absolute clarity about they really want. It is like designing a detailed blue print for building a custom home before they begin construction. Like a blueprint for a building, your investment goals must be written down on paper. Do NOT skip this step or you will be helping some else accomplish their objectives.
Start by writing your investment goals or strategies on paper. Which money making strategy is best for you depends on your tolerance for risk. You might be happy making only 15% on a quick sale, or you may need $100,000 a year to maintain your current living style. You might want to build your current net worth over time, getting continuous appreciation on your properties, and generate some extra income or enough rental cash to become financially independent. Keeping a clear picture of your investment objectives will increase the likelihood of finding the right properties.
Your investment objectives will also need to include some of the following items: What kind of home should it be, Single family vs. multifamily, condo or detached, how many rooms will the property have, a good or medium neighborhood, age of the property, who will maintain your properties, high priced or low priced. You will need to determine how long, you want to hold the investment property. Are you planning to flip your investment in 5 years or less? In this case, you might want maximize your monthly return by obtaining a low variable rate for 5 years. If this is your objective, it might be necessary to take some precautions in order to avoid getting burned in the fifth year. For instance, start looking to refinance the mortgage loan in the middle of the fourth year.
If your aim is to hold the investment property for 20 or 30 years, then the approach needs to be different. You can still choose to pay off the property in a short period of time. In this instance, you might want to get a 15 year mortgage. Another important factor that needs to be taken into account is the age of the investment property. It is a good idea to select properties that are under 10 years old in order to avoid that high maintenance fees that come with an older home. Please remember that the secret to long term real estate investing is renting the property for less or close to your yearly expenses.
Do not forget to make your objectives SMART: 1. Specific - Your objectives need to specify what you want to achieve in detail. 2. Measurable - You should be able to measure whether you are meeting the objectives or not. 3. Achievable - Are the objectives you set, achievable and attainable? 4. Realistic - Can you realistically achieve the objectives with the resources you have? 5. Time - When do you want to achieve the set objectives?
Jamar Properties Inc has a free property investment template, http://www.jamarhouses.com/Articles/Downloads.html, you can download to help you set your investment objectives.
Now that you have a clear set of objectives, it is time to start searching for our investment property. This will be the topic of my next article.
Jake Borjas Jamar Properties Inc - NC Custom Homes http://www.JamarHouses.com
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