| |
| |
|
Real Estate Information |
|
|
|
Secrets of Making Money from Real Estate - Part 3
Great, now how do I actually INVEST in real estate? Investing in real estate will get easier the more you do it. The first deal may take some time, but like anything, the more you do it the better you'll become. Here are some guidelines for investing in real estate. Establish how much you can borrow: Know your limits. Don't go looking for $400,000 houses when you can only afford a $200,000 house. Before you invest real estate you must know how much you can borrow from your lender. This can be anywhere from 80%-100%. If you are investing for the first time, banks will most likely only want to lend you 80%-90%. Once you've established good relations with the bank after five to ten deals, they will most likely be willing to cut you better deals and offer 100% financing. Some private lenders may offer you mortgages and home equity loans of 100%-125%, be careful with these especially if they are individuals. Their motives are often only profit. Most people dread seeing their banker, hoping that THEY will approve your loan application. However from my experience, you need to show the bank who's boss. By this I mean: - Do not deal with only one bank, big mistake. Deal with lots of other banks and let the banks know about it. Send out your loan application to as many banks as you like. The best bank that comes back with the best deal wins. Other things to keep in mind before applying for a loan:
Don't lie, you'll get caught and be in a lot of trouble. Try to eliminate liability payments. Or lower payments. Another choice you must make is whether to make the loan an interest only one or a principal and interest loan. I generally prefer to take out interest only loans for several reasons. You will get more cash flow from a property if the payment is interest only. This can go straight to your pocket or cover and unexpected payments with the property. You will also be able to borrow more because you make smaller payments. You may also have the option of paying off the rest of the principal at a later time. Depending where you live, you might also get a tax advantage for taking out an interest only loan. Also, why would you want to pay off debt on something that is already putting money in your pocket and appreciating in value? Wouldn't the money be better spent on a deposit on another rental property which will give you more cash flow. I know I would rather owe 80% on thirty properties earning me $3,000 a year than two or three properties that I have no debt on. Does this mean you can't take out a principal and interest loan? Of course not! If that's what you really want to do and you still make money on the property, go for it. Asset protection: A house will most likely be your biggest and most expensive asset, you'll certainly want to protect it. There are three ways you can do this. Physical protection, corporate protection, and insurance protection. Physical protection is what you can change in the properties structure to protect it. So you could go as far as building a moat around the property! The first step would be to not buy a house in areas of high crime or natural disaster such as earthquakes or landslides. Then think about installing security systems, burglar alarms, and fences. Having your property in a corporate entity such as a limited liability company, corporation, or trust provides legal security and possible tax breaks. This all depends on where you live, so it is important to look into this type of protection if you are thinking about buying a lot of properties. Insurance is the third type of protection. Many insurance companies or even banks will give you good rates for insurance on an investment property. This is because they consider a house a very safe investment! You can get insured on all kinds of things, like earthquakes, depending on how much you want to pay. Be sure to find out the cost of insurance before you buy a property as well so you can input it into your budget calculations. There is no I in team: Before buying a property be sure to have good team. You will definitely need an accountant and a solicitor. It is important to have a team because you can't do everything, you need specialists. Everyone in your team should be passionate about what they do and know that you are passionate about what you are doing ( real estate investing!). People in your team must have experience in buying property! If you feel that anyone in your team is slack, inexperienced, and has questionable motives don't work with them anymore. You may also find It of use to work with a real estate agent who is a property investor themselves. This can be good because If the agent invests in property he or she will have a good idea of what your looking for. However make sure you know the agent's motives. If they are a property investor themselves, why wouldn't they buy the property? Next, Learn how to analyse a deal in Part 4. This article was written by John Whiteside. The original article can be found here http://www.use-your-equity.com/realestateinvesting.html . Use-Your-Equity can show you how to create value in your home, then show you how to use the newly created equity to make money. http://www.use-your-equity.com for more information.
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
10 "No Money Down" Ways to Buy Real Estate Turn the Television on any Sunday morning and you'll find yourself in the middle of a "how to buy real estate" infomercial. Can you really buy a house with no down payment? Can you really make thousands or millions of dollars buying real estate. Is Second Home Ownership In Your Future? According to the National Association of REALTORS® (NAR), a record 2.82 million second homes were sold in 2004. Real Estate Investing - Makeovers vs. Flipping Please don't call it "flipping."Some real estate investors who practice the technique of buying property for immediate fixup and resale call it "flipping houses. Real Estate Local FAQs. There are many frequently asked questions and any local real estate area. In our area here at the local Delaware Beaches, the most frequently asked questions are how to get a good deal and if there are any fixer-uppers available. Odors Can Make or Break The Sale of Your Home It's amazing how important the sense of smell is to many people. If you're selling your home, and this applies across the board to houses, townhouses, condos, apartments, or whatever, you need to be aware of the power of odors. Home Buying: Things To Keep In Mind So you've decided you want to own a home and now you want to begin your search for one. Before jumping into a home search, there are a few things you should keep in mind when going about buying a home. Spain Excellent Choice for British SIPP Investors Second homes in favourite holiday destinations such as Spain are likely to be top of the shopping list when the pension rules change April 6th 2006, allowing individuals to invest in residential property through Self Invested Personal Pensions (SIPPs).Research shows that Spain's mature market makes an excellent choice for SIPP investors, with capital growth still high and forecast to grow at 10% a year for the next five years at least. Budgeting Your Log Home: Where Do You Start? The Log home industry has matured these last many years, but there is still a lot of confusion about how much a log home costs. Naturally, everyone wants to know the cost of the log package; however, the budgeting only starts here. Real Estate Investing Is A Better Gamble Than The Lottery Real estate investing begins when you move to the starting point.Get ready. Kings Bay Georgia Real Estate - Be Picky When You Choose your Realtor! I have been a mortgage lender for many years and have seen a few transactions go sour. When problems arise after a contract is signed, it can be stressful for everyone involved. Selling Your House Fast! The physical senses of buyers respond to a home's design, and buyer base their purchase decisions on what the see, hear, smell, touch, and even taste. But what do buyers actually want?All buyers what a home that most closely suits their needs and makes them feel a sense of happiness. Searching For Maui Beachfront Houses? Who wouldn't want to move into a Maui beachfront house? From the custom architectural jobs done on many Maui homes, to the beautiful beaches and other natural attractions in Maui, you're bound to find something you will love about Maui beachfront houses. However, like any home buying process, you'll need to make sure several things are in order before you make your move into your new Maui beachfront house. Secrets of Making Money from Real Estate - Part 3 Great, now how do I actually INVEST in real estate?Investing in real estate will get easier the more you do it. The first deal may take some time, but like anything, the more you do it the better you'll become. Boston Real Estate - You Still Have Considerable Control Over the Sale of Your Boston Home Boston real estate is a hot topic. Daily newspaper articles comment on whether or not a bubble exists in the Boston real estate market, when and if it will pop, how interest rates affect the market, why Boston residents are snapping up interest-only loans, and how foreign investors in our treasuries keep interest rates low. 3 Strategies For Buying Property With No Money Down 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. How to Get Financing after Filing Bankruptcy If you're thinking about buying a home but have declared bankruptcy in the past, don't give up hope. There are still ways for you to be able to find a loan, even if your credit history is less than sterling. Why Property Investors can Crash and Burn Many experts say you can't lose if you put your money into Property. Not true. Commercial Real Estate Industry - Is the Condo Craze Over, or Just Gaining Steam Over the last two years there has been so much condo activity that many commercial real estate lenders are starting to express concern over the future stability of condo markets. Some lenders have recently found themselves over allocated in condominiums as a result of the recent activity and have therefore become wary of all but the best opportunities. Timing Is Everything When It Comes To Buying Homes The old adage that "timing is everything" especially applies to buying a new home. And trying to be at the right house at the right time and get it for the right price can be tricky. Real Estate Investing - Finding Cheap Houses Real estate investing expertise can certainly accommodate the luxury home market. In some ways, the upper end of the housing marketplace produces easier success than the lower end.
|
| home | site map |
| © 2006 |
