A FEW POINTS ABOUT INTEREST RATES!!
Less is more
If you're new to investing or real estate and don't know the first
thing about interest rates, here's a good tip: the higher the interest
rate, the more expensive it's going to be. High interest rates mean
you will have to pay back more on the money you borrow. Another good
rule of thumb is that affordability increases if you use an
adjustable rate mortgage (it's easier to qualify this way). Of
course, there will be a wide range of prices that you can choose
from, depending on what kind of financing you choose.
Not even the Fed knows for sure
The Fed holds a considerable amount of power, but they can't control
everything. Mortgage interest rates are affected by many unpredictable
political, economic and social events. So there is no guarantee what
direction interest rates will go, despite the forecasts of the
experts. Therefore, make your financial decision based on where
things are today including your budget, your needs and your future
plans.
Locking in rates assures your lowest interest
If you do decide you want to lock in at a certain interest rate, you
will need to complete a loan application and send it to your lender as
soon as possible. This must be done so that your commitment doesn't
runout before your loan is approved. Follow up and be se sure that
the lender is receiving all of the necessary documentation. Get a
property appraisal, which usually costs about $300, through your loan
agent as soon as possible.
Don't obsess and miss a good real estate deal
Although rising interest rates can create more problems for home
buyers, waiting and hoping for low rates is not necessarily a smart
move. You may end up paying a higher price. Also, refinancing is
always an option in the event that interest rates come down.
Visit again soon! I have more information that you will need!
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MOVING TIPS
Easing the Transition to Your New Home
Use the right boxes, and pack them carefully.
Professional moving companies use only sturdy, reinforced cartons.
The boxes you can get at your neighborhood supermarket or liquor store
might be free, but they are not nearly as strong or padded, and so
can't shield your valuables as well from harm in transit.
Use sheets, blankets, pillows and towels to separate pictures and
other fragile objects from each other and the sides of the carton.
Pack plates and glass objects vertically, rather than flat and
stacked.
Be sure to point out to your mover the boxes in which you've packed
fragile items, especially if those items are exceptionally valuable.
The mover will advise you whether those valuables need to be repacked
in sturdier, more appropriate boxes.
The heavier the item, the smaller the box it should occupy. A good
rule of thumb is if you can't lift the carton easily, it's too heavy.
Label your boxes, especially the one containing sheets and towels,
so you can find everything you need the first night in your new home.
For your family's safety and comfort
Teach your children your new address. Let them practice writing it on
packed cartons. You can lighten your load and reduce any storage space
you need to rent by hosting a garage or yard sale.
Fill two "OPEN ME FIRST" cartons containing snacks, instant coffee or
tea bags, soap, toilet paper, toothpaste and brushes, medicine and
toiletry items (make sure caps are tightly secured), flashlight,
screwdriver, pliers, can opener, paper plates, cups and utensils, a
pan or two, paper towels, and any other items your family can't do
without. Ask your van foreman to load one of these boxes, so that
it will be unloaded at your new home first. Why the second box? In
case the movers are delayed getting to your house on the day of the
move.
Keep your pets out of packing boxes and away from all the activity on
moving day.
Let all your electrical gadgets return to room temperature before
plugging them in.
Since you may need to call old neighbors or businesses from your new
home, pack your phone book.
Work hand in hand with your mover.
Give the mover's foreman your reach numbers and email addresses so
you can stay in contact.
Read the inventory form carefully, and ask the mover to explain
anything you don't understand. Make a note of your shipment's
registration number, and keep your Bill of Lading handy.
If you're moving long distance, be aware that your property might
share a truck with that of several other households. For this reason,
your mover might have to warehouse your furniture and belongings for
several days. Therefore, ask your mover whether your goods will remain
on the truck until delivered. If they have to be stored, ask whether
you can check the warehouse for security, organization and
cleanliness.
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10 Important Tips to Successful Real Estate Investing
When it comes to investing, everybody has certain goals and
aspirations. However, we have found that there are certain guidelines
every aspiring real estate investor needs to know:
- Compare Property Values and Rents
Financial statistics only go so far; the best measure of a property's market value is often the sale prices of nearby properties. The same
holds true for area rents. A low price can often be justified by a
reasonable rent; renters who can afford a high rent can afford to buy
instead, so reasonably priced rent is a need.
- Be careful - Tax laws may change
Don't base your tax investment on current tax laws. The tax code is
constantly changing, and a good investment is a good investment
regardless of the tax code. The right property with the right
financing is what you should look for as an investor.
- Specialize in something you Know
Start in a market segment you know. Whether you focus on fixer-uppers,
foreclosures, starter homes, low-down payment properties,
condominiums, or small apartment buildings, you'll benefit from
experience by specializing in one aspect of investment real estate
properties.
- Know the Costs going in!
Know the financial statements inside out. What are operating expenses?
What are loan payments? Vacancy costs? Taxes? What does the cash flow
statement look like? These are key issues that must be addressed
before making a solid investment.
- Know where your tenants are coming from
If the last rent increase was recent, your tenants may be considering
a move. If tenants have a short-term lease, they may be living there
simply to attract unsuspecting buyers. It is also important to collect
the tenants' security deposits at closing.
- Assess the tax situation
Taxes are an integral part of successful real estate investing, and
they often make the difference between a positive cash flow and a
negative one. Know the tax situation, and see how it can be
manipulated to your advantage. It may be a good idea to consult a
tax advisor.
- Investigate insurance coverage
If seller's coverage is based on lower-than-current replacement value,
your insurance cost may increase when you pay a higher purchase price.
- Confirm Utility Costs
Ask the local utilities to verify recent utility expenses, especially
if any of these costs are included in your tenant's rent.
- Consult Your Accountant
Taxation is a key element of successful real estate investing, so be
sure to find an accountant who is well-versed with the constantly
evolving tax code.
- Inspect!
Make sure that you always perform a thorough inspection of the
property before buying it. Never, ever buy any property without at
least examining the site. In some cases, hiring professional
inspectors to examine the structural mechanical system may be a sound
investment.
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Secrets to Buying the Best House for Your Money
- Get "Pre-Approved" - Not "Pre-Qualified!"
Do you want to get the best property you can for the least amount of
money? Then make sure you are in the strongest negotiating position
possible. Price is only one element in the negotiations, and not
necessarily the most important one. Often other terms, such as the
strength of the buyer or the length of escrow, are critical to a
seller.
In years past, I always recommended that buyers get "pre-qualified" by
a lender. This means that you spend a few minutes on the phone with
a lender who asks you a few questions. Based on the answers, the
lender pronounces you "pre-qualified" and issues a certificate that
you can show to a seller. Sellers are aware that such certificates
are WORTHLESS, and here's why! None of the information has been
verified!
Many times unknown problems can come to the surface! Some of the
problems I've seen include recorded judgments, alimony payments due,
glitches on the credit report due to any number of reasons both
accurately and inaccurately, down payments that have not been in the
clients' bank account long enough, etc.
So the way to make the strongest offer today is to get "pre-approved".
This happens AFTER all information has been checked and verified. You
are actually APPROVED for the loan and the only loose end is the
appraisal on the property. This process takes anywhere from a few days
to a few weeks depending on your situation. It's VERY POWERFUL and a
weapon I recommend all my clients have in their negotiating arsenal.
- Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house to buy!
Contingency sales aren't nearly as strong as one that comes in with a
ready, willing and able buyer. Consider this scenario: You've found
the perfect house - now you have to go make an offer to the seller.
You want the seller to reduce the price and wait until you sell your
house. The seller figures that this is a risky deal, since he might
pass up a buyer who DOESN'T have to sell a house while he's waiting
for you. So he says OK, he'll do the contingency but it has to be a
full price offer! You have now paid more for the house than you
could have because of the contingency, and you have to sell your
existing house in a hurry! Otherwise you lose the house! So to sell
quickly you might take an offer that's lower than if you had more
time. The bottom line is that buying before selling might cost you
THOUSANDS of dollars.
If you're concerned that there is not a house on the market for
you, then go on a window-shopping trip. You can identify possible
houses and locations without falling in love with a specific house.
If you feel confident after that then put your house on the market.
Another tactic is to make the sale "subject to seller finding suitable
housing". Adding this phrase to the listing means that WHEN YOU DO
FIND A BUYER, you will have some time to find the new place. If you
don't find anything to your liking, you don't have to sell your
present home.
- Play the Game of Nines
Before house hunting, make a list of things you want in the new place.
Then make a list of the things you don't want. You can use this list
as a guide to rate each property that you see. The one with the
biggest score wins! This helps avoid confusion and keeps things in
perspective when you're comparing dozens of homes.
When house hunting, keep in mind the difference between "STYLE AND
SUBSTANCE". The SUBSTANCE are things that cannot be changed such as
the location, view, size of lot, noise in the area, school district,
and floor plan. The STYLE represents easily changed surface finishes
like carpet, wallpaper, color, and window coverings. Buy the house
with good SUBSTANCE, because the STYLE can always be changed to match
your tastes. I always recommend that you imagine each house as if it
were vacant.
Consider each house on its underlying merits, not the seller's
decorating skills.
- Don't Be Pushed Into Any House
Your agent should show you everything available that meets your
requirements. Don't make a decision on a house until you feel that
you've seen enough to pick the best one.
A decade ago, homes were selling quickly, usually a few days after
listing. In that kind of market, agents advised their clients to make
an offer ON THE SPOT if they liked the house. That was good advice at
the time. Today there isn't always this urgency, unless a home is
drastically underpriced, and you'll know if it is.
Don't forget to check into the SCHOOL DISTRICTS of the area you're
considering. Information is available on every school; such as class
sizes, % of students that go on to college, SAT scores, etc. You can
get this information from this web site.
- Stop Calling Ads!
Please note - ads are sometimes created to make the phone ring! Many
of the homes have some drawback that's not mentioned in the ad, such
as traffic noise, power lines, or litigation in the community. What's
not mentioned in the ad is usually more important than what is.
For this reason, I want you to be very careful when reading ads.
Remember that the person writing the ad is representing the seller
and not you! The most important thing you can do is have someone
on your side looking out for your best interests. Your own agent
will critique the property with an eye towards how well it meets your
needs and will point out any drawbacks you should know about. So
whether you decide to work with me or not, pick an agent you feel
comfortable with and enlist the services of that agent as a buyer's
broker. Then you become a client with all the rights, benefits, and
privileges created by this agency relationship, and you're no longer
just a shopper. Did you know that many homes are sold WITHOUT A SIGN
ever going up or an AD EVER BEING PUT IN THE PAPER? These "great
deals" go to those people who are committed to working with one
agent. When an agent hears of a great buy, who do you think he's
going to call? His client, who he has a legal obligation to work
hard for you, or someone who just called on the phone and said"keep your eyes open"? So to get the best buy on a property, I always
recommend that you hire your own agent and stick with him or her.
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Finding the Best Real Estate Professional
Finding the right real estate professional requires doing a little
research and asking a few questions. You need to know everything
about the selling process. What is the marketing strategy? What kind
of advertising will be done? Is the REALTOR® capable and willing to
communicate effectively? Can the REALTOR® effectively present and sell
the less-noticeable assets of the property?
Real estate professionals also need to be knowledgeable about the
community. They need to have a feel for the history of the area and
the approximate price that people will be willing to pay. Also, real
estate agents should know what the competition is and how much it
will effect your sale.
NEVER choose a REALTOR® on price alone. Remember that a REALTOR® cannot
magically raise the selling price of the house. Consider the buyer.
The purchaser won't willingly pay too much; it's most likely that he
or she will do research on the market and try to find the best product
for the best price. The facts simply cannot be changed, no matter
which REALTOR® you select. In spite of these unchangeable factors, the
REALTOR® you select must still be diligent and knowledgable.
If your property does not elicit attention within several weeks, the
cause can most likely be attributed to one of these three factors:
location, condition, and price. The location obviously cannot be
changed. You should consider examining the conditioning of your
property and reevaluating the marketing strategy. Ask your REALTOR® to
offer an explanation of the competition and your pricing strategy.
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How to Make Money in Real Estate Investing
Lower Your Taxes
Tax incentives for real estate investors can often make the difference
in your tax rates. Deductions for rental property can often be used to
offset wage income. Tax breaks can often enable investors to turn a
loss into a profit.
For which items can investors get tax breaks? You could claim
deductions for actual costs you incur for financing, managing and
operating the rental property. This includes mortgage interest
payments, real estate taxes, insurance, maintenance, repairs, property
management fees, travel, advertising, and utilities (assuming the
tenant doesn't pay them). These expenses can be subtracted from your
adjusted gross income when determining your personal income taxes. Of
course, these deductions cannot exceed the amount of real estate
income you receive. In addition to deductions for operating costs,
you can also receive breaks for depreciation. Buildings naturally
deteriorate over time, and these "losses" can be deducted regardless
of the actual market value of the property. Because depreciation is a
non-cash expense -- you are not actually spending any money -- the
tax code can get a bit tricky. For more information about
depreciation and various tax alternatives, ask your tax advisor about
Section 1031 of the U.S. Tax Code.
Have a Positive Cash Flow
There are two kinds of positive cash flows: pre-tax and after-tax. A
pre-tax positive cash flow occurs when income received is greater than
expenses incurred. This sort of situation is difficult to find, but
they are usually a strong and safe investment. An after-tax positive
cash flow may have expenses that outweigh collected income, but
various tax breaks allow for a positive cash flow. This is more
common, but it is generally not as strong or safe as a pre-tax
positive cash flow.
Regardless of what kind of real estate you choose to invest in, timely
collections from your tenants is absolutely necessary. A positive cash
flow -- whether it be pre-tax or after-tax -- requires rental income.
Be sure to find quality tenants; a thorough credit and employment check
is probably a good idea.
Use Leverage
One of the most important factors in determining a solid investment is
the amount of equity you are purchasing. Equity is the difference
between the actual worth of the property and the balanced owed on the
mortgage.
Benefit from Growing Equity
While investing in real estate is relatively complex, it is often worth
the extra work. When compared to other financial investments, like
bonds or CD's, the return on investment for real estate purchases can
often be greater.
The key to real estate investing is equity. Determine an amount of
equity that you want to achieve. When you reach your goal, it's time to
sell or refinance. Determining the proper amount of equity may require
the assistance of a real estate professional.
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