Archive for Buying Real Estate

Things to Beware of When Buying an Older Home

April 18, 2009 at 8:37 am · Filed under Buy a Property?, Buying Real Estate, buy sell home ·Tagged , ,

You’ve decided to not hassle with building and want to get an older home. There can be some major expenses associated with this, so be careful. Always get an inspector out to the property and make sure to have him check the following 3 things.

If the house is 20 years or older, most likely the utilities are at the end of their lifecycle. You can probably bet the warranties on the water heater and air conditioning units have already expired as well. Will you be left making all the replacements? Most homeowners do not want to front the expenses associated with utility repairs or replacement and would rather move before that becomes an issue.

What condition is the roof in? Depending on what area of the country you live in, roof maintenance can come every 10-20 years. Is it ready to be replaced as well? If you’ve ever paid for a new roof, you know how expensive they can be. Check out the shingles to see what condition they are in. Make sure that is not another chunk of change you will have to fork over come a year or two.

Lastly, make sure you have the walls and siding thoroughly checked. Sadly, a lot of people will slap a new coat of paint over any suspicious cracks or water damage. You don’t want to get in a home just to find you have to replace all the sheetrock or the wood siding. If you are buying a home in a more humid climate, mold is a major issue. You don’t want to chance a member of your family getting sick down the road. Get particular and make sure you dig up all the home’s dirty secrets.

The most important rule of thumb is to speak up and make sure you know what you are getting into. Hiring a home inspector isn’t enough. Some of the state laws don’t require enough from the inspector. Do your own homework as the buyer and thoroughly question both the seller and the inspector. Then when you are ready to sign those closing papers, you can do so knowing exactly what you are getting into.

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The Easy Way to Assess Property Value

April 15, 2009 at 10:27 am · Filed under Basics of Real Estate, Buy a Property?, Buying Real Estate, Buying an Appartment, Buying and renting low priced homes, Key to Real Estate Success, buy sell home

The notion that assessing a property to arrive at good decisions is difficult is globally ubiquitous in the minds of property-investor starters. It’s not that hard actually if you just know how to compare logically and if you practice prudence in your judgment particularly in giving percentages in the process of rectifying/adjusting the differences of the comparables’ features.

Though there are a lot of books that teach how to assess and select a good property to invest to, these starters usually, after reading such books, still end up investing their money on the wrong property because of rush decisions and of not thinking that there might be more properties out there with the same or more superior features offered at much lower prices. I’m not saying that they should go from one state to another state just to look for such property but what I would advise them to do is to look around first in the neighborhood for other properties with same features and try to compare their prices before buying the said property. It’s that simple.

A lot of them tend to forget immediately what they have read and make some rush wrong decisions inadvertently. Why? Because instead of trying to look around first and give themselves more time to think before buying it, they let themselves fall in the pit holes prepared by agents just to be able to convince them and make a sale. Right there and then they will decide to buy it without even canvassing by just taking a look around in that area for other offers. As a result, they will just realize later that they have become a victim of overpricing after knowing that there are more properties in the neighborhood with superior features offered at much lower prices.

Now, let’s go to the basics of comparing properties and what are they. These are the price, location, physical attributes and of course, the improvements and land developments if there are any.

Location should be based on the kind and condition of its fronting road, potential of the whole property and the activity in the vicinity.

Physical attributes are characteristics of the land such as the lot’s dimensions, size, shape, elevation and topography.

Land developments are developments introduced on the land such as landscape, perimeter fence, driveways and pathways, and swimming pool. Improvements are buildings whether residential, commercial or industrial depending on the kind of property you’re considering but just make it sure that it conforms to the property’s HBU and the neighborhood’s prevailing structures as well.

When you compare properties, you have to make sure that you’re comparing the same types of properties that are located within the same neighborhood. It’s a rule that you compare only same classification/type of properties.

In comparing you have to assign percentages to the differences of the properties’ locations and physical attributes by evaluating which is more superior. If your subject property is inferior, you have to deduct a certain percentage of the price of the comparable but if it’s more superior then you have to add. How much percentage you will add or deduct will depend on your observation of the extent of superiority or inferiority of your subject property to that of the other property or comparable.

On improvements, you should determine the areas of each property’s building(s) and cost grades, and their corresponding ages for you to be able to get their depreciated building values. It’s the same thing with land developments but then you have to determine which property has developments that are more attractive to you and the others as well.

These are the nitty-gritty of direct comparison method. Simplified for you to easily imbibe and adopt if you want to avoid the pit hole. However, it’s your prudence in judgment that matters for you to make good decisions. Bear also in mind that if you don’t use your common sense even if you know how to compare properties, you are sure to fall in that pit. So, be meticulous and be cautious . . . and you’re sure you will end up with a good property to invest to.

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Essential FSBO Tips

April 15, 2009 at 9:59 am · Filed under Buy a Property?, Buying Real Estate, buy sell home ·Tagged ,

Selling your home without a real estate agent can be a difficult task. Here are some tips to help you as a for sale by owner seller.

Price it Right the First Time

The price of your for sale by owner home will play a huge factor in whether or not you receive offers from buyers. Whats the worst that could happen if you overprice your home? Well, it could remain on the market for months, growing stagnant and unattractive to buyers. Thats the last thing you want to happen. Do the work necessary to price your for sale by owner home correctly the first time you put it on the market. Even if you have to go slightly under what your ideal price, its worth it. A house sold is much better than a house unsold.

Little Fixes Go a Long Way

You dont have to put in marble countertops and stainless steel appliances to increase the value of your for sale by owner home. Youd be surprised as all the little things you can do that make your for sale by owner home look more attractive and boost the value. Since the kitchen is one of the rooms that buyers want to look up to date, start there. Replace the faucet, add new door handles to cabinets, and update lighting fixtures. Bathrooms are next most important. Putting in a new toilet seat, putting down vinyl tiles, and replacing tile grout will all do wonders for the bathroom.

More Than One Way to Advertise

Simply putting a sign in your yard and calling it a day wont do much in the way of advertising your for sale by owner home. There are a number of innovative and inexpensive ways that you can advertise your home. Pass the word around among your friends, relatives, and co-workers. Use a for sale by owner website. Create flyers and pass them around. Design a website to showcase your homes best features. Use several methods of advertising for the best results.

Answer and Return Phone Calls

Even though youre selling your home, life is still going on around you. Dont let that keep you from accomplishing what youve set out to do. Answer phone calls as much as possible. When buyers leave messages with someone else make sure you return the call. You never know which ring is going to be the selling offer. Dont want to sacrifice quality time with your loved ones? Subscribe to voice mail or purchase an answering machine. Let the answering service pick up when you are too busy to answer the phone, but make sure you always return the phone calls.

Let Sentimental Attachments Go

Undoubtedly your for sale by owner home has many memories attached to it, especially if you have lived in it for an extended period of time. Selling your home doesnt mean you have to let these memories go. However, if you let your sentimental attachments get in the way, you could end up botching a deal unintentionally. Preserve the memories of your for sale by owner home by creating a scrapbook or starting a photo album. You dont have to be callous about the home. Rather, you should remain objective as if youd never lived in it.

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Buying Real Estate Undervalued vs. Buying UNDER VALUE!

March 19, 2009 at 9:32 am · Filed under Buying Real Estate

“Undervalued” vs.. “under value”… is there a difference? 

People often speak of buying a property “undervalued”, as if they are discovering something nobody else figured out.  Stocks, land, and real estate can all be purchased undervalued, but this is different from buying property UNDER value.

Here’s the difference…

Let’s say you think a company is ripe to expand within the next few years. You are speculating that the value of the company’s stock will increase, so you buy AT MARKET PRICE and hope you are right.  You can also buy a property at MARKET PRICE and hope demand will increase and thus its value will go up.  You can buy gold at today’s price and hope it will go up in price.  However, in all cases you are speculating that the asset will increase in value and that it is CURRENTLY undervalued.

Compare this thinking to buying a property UNDER VALUE, that is below its CURRENT market value.  If a house is worth $200,000 based on similar houses that have sold recently, the market value is $200,000.  It may be an “up and coming” neighborhood with a good school district that most people have not yet discovered, so you can buy it for $200,000 based on the idea that the future value will be more, so it’s currently ”undervalued.” 

Or, you can buy a property with a current market value of $200,000 and pay $150,000, in which case you are buying BELOW value, or with BUILT-IN value.  Why is there built in value?  Simple – you can sell it tomorrow for up to $200,000!  If you buy real estate undervalued, you have to wait until everyone else realizes what you suspect to be true, that the property SHOULD be worth more.

Certainly, buying property that is undervalued can make you money in that you are speculating future demand will be higher and prices will increase for that asset.  But, a safer, smarter approach is to buy under value because a particular seller has some motivation, such as a foreclosure, estate, or divorce.  Instead of looking for “value plays”, look for value built-in, which can always be found when a particular seller has extreme motivation and needs to sell quickly.

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Warning!! Buying a Vacation Home?

February 13, 2009 at 5:18 pm · Filed under Buy a House, Get Thrown in Jail?, Buy a Property?, Buying Real Estate, Real Estate Investing, buy sell home ·Tagged , ,

Warning: Don’t Buy a Vacation Home or Timeshare Unless You Ask These Questions

These questions determine what investing in a vacation home or timeshare will mean to you:

1. How many weeks can you actually use it?

2. Do your own the property or just get to use it? Deeded Ownership v. Timeshare

3. When do you get to use it?

4. Who takes care of the property?

5. What is the monthly maintenance cost?

6. Do you share in the profit from any resale?

7. Can you deduct your investment in the property?

8. Can you really afford, or do you really want to afford to buy the whole property?

9. Can you afford a luxury million dollar home or do you have to settle for a condo?

10. Will you get a profit locked in when you buy the property?

Love to ski and longing to actually own a mountain home? Or have you always wanted to be able to enjoy the mountain climate and lifestyle during the summer months?

But:

- You can only get there for two to four weeks per year? Not enough vacation to justify owning the house?

- You hate maintaining your own house and dread the thought of having to take care of a second house

- Your pocketbook can’t afford the house you would really want?

- You want a house with room to invite friends not a condo that doesn’t really have enough room for your own family

- You realize timeshares are not a real estate investment and only make the timeshare seller rich?

- The maintenance costs of a second home scare the you know what out of you?

Ask yourself the questions above before you take any action to achieve your dream.

A mountain vacation home should be that dream. You should be able to buy the amount of the home you can actually use. It should be a real estate investment that builds equity for you, not a cash drain. You should be able to have someone else deal with the maintenance and cleaning. You should be able to go fishing or skiing without having to worry about the home when you get there or leave. You should not have to worry about the home when you are not there.

All you can find is 2 bedroom, 2 bath condos for over $300,000 plus the cost of running and maintaining it every month? Not exactly what you had in mind?

Why not buy more house than what you can afford but pay less than you would for the condo?

You want to own the house with a deed but why not just pay for the amount of time you can actually use at the house?

Would you prefer not to worry about the maintenance?

Would you prefer to just lock up and leave when you go home?

How to own a luxury, six bedroom, over 4000 square foot $1,200,000 home.

You could of course buy the house all by yourself. You would pay $240,000 down and have a 30 year mortgage for $960,000.00. Your payments would be $6,387.00 per month. You would also have to pay the taxes, insurance, utilities, and maintenance. You would though have a luxury home instead of a condo that really isn’t big enough and is not what you really want.

However, since you can only use your house two to four weeks a year, just buy the piece of the house you can use. You can even use your house at other times on a space available basis

So how much would you pay to own two weeks? $300,000 to own a condo? $200,000, the cost to own a luxury timeshare for two weeks?

Buy a luxury home instead. Properly structured, you can buy your share of a house for $50,000 to $80,000. Use it for at least two weeks and space available the rest of the year. Want more weeks, buy another share. Just pay your share of the taxes, insurance, utilities, and maintenance. Those costs will run about $400 per month. Just renting a house like that will normally run $800 per night or $11,200 for two weeks per year or IF you could pay monthly, $933 per month for just those two weeks. But by buying, you also get the appreciation in value of the house and if the house is also rented, your investment could be eligible for depreciation and deductions for the upkeep payments. Your interest in the house can be sold, willed to your family, or gifted to your family. You can donate your time to your favorite charity for auction.

You can actually own the house for two weeks for less than you could rent the house for one week!

Trick Question: Is it better to pay $5,000 annually plus maintenance for at least two week’s use (and not worry about the house when you aren’t there) or rent the house for $5,250 for one week rental? A house like these luxury homes rents for at least $800 per night. One week’s rental would be $5,250.00. If you finance the whole $50,000, your payments will be about $5000 per year. If you rent, your money is gone and all you have is the memory. If you buy, you own the house and you have the memories of at least two weeks.

What two weeks do I get? Time at the house is allocated by lottery. Your pick is determined by when you buy. Holidays are rotated so that everyone gets an opportunity. No more that 20 shares should be considered in any property.

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