Real_Estate_Investing.htm

REAL ESTATE INVESTING

The most STRESSFUL part of real estate investing is making a sale. During this phase of the investment there are so many things that can go wrong, and your profit depends on making a smooth and quick sale. While most sales do go through smoothly, the uncertainty and anticipation can keep you worrying late into the night. This is especially true if you choose to bypass an agent and sell your property on your own.

If you want to sell your property on your own:

The first thing that you need to do to make your first sale in real estate investing is to calculate the asking price for the property. You can do this by hiring a professional appraiser to price the home or by checking the sales prices of comparable homes in the same area of your property. This is normally done at the court house by comparing similar recent real estate sales prices within a few miles of your property. You should also take into consideration the current real estate market. If the market is a buyers market, you will probably have to lower your price. If it is a sellers market, on the other hand, you might be able to fetch more than the market value of the property.
Once you have settled on a price, you need to market the property. This involves advertising the property and showing it to perspective buyers individually and at open houses.
During this phase you should also contact your attorney to draw up the necessary purchase contract forms. This purchase contract will need to be signed by you and the buyer once you have negotiated an offer.
After you have negotiated an offer, the real work begins. Now it is time to close the deal.
Contact an escrow company to perform the closing. This is the time of paperwork as you will need to provide the buyer with disclosure statements and he will need to provide you with a loan commitment letter.
Inspections are also performed during this time and a title search will be completed by your escrow company.
Next, you will need to meet with the escrow company and buyer to sign the paperwork, pay closing fees to the escrow company; pay off the mortgage; and pay or put aside any taxes owed.

As you can see, the closing phase is the busiest time of selling your first property in real estate investing. But it is also the most exciting. This is where all of your hard work pays off and you get to walk away with the profit.

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Reaching your investing goals

When it comes to investing goals, setting them is the easy part; its reaching them that can get a bit complicated and challenging. What looks feasible on paper can seem insurmountable in real life when obstacles present themselves. Overcoming these obstacles and keeping your goals at the forefront of every investing decision that you make is key to moving up the real estate investing ladder and building residual income.

The number one thing that can distract you from your goals is discouragement. In the world of investments, particularly those involving real estate, nothing goes quite as planned and there is always some element of risk. A miscalculation of costs or an unplanned emergency repair can set you back thousands of dollars. If you allow setbacks like these to discourage you, your project will likely hum along on a sour note making it even harder for you to recoup your original losses. If you remain optimistic, though, you will be able to bounce back from setbacks and stay on track ultimately reaching your goal.

In addition to remaining optimistic, there are several things that you can do to ensure that you meet all of your real estate investing goals.

Here are a few tips for reaching your goals:

Break large, long term goals up into smaller, short term goals.
Display a list of your goals in a spot that you will see them and be reminded of them often.
Re-evaluate your goals often.
Meeting goals requires consistency.
Begin each day by asking yourself what can be done that day to help you reach your goals. Any victory, no matter how small, brings you one step closer to realizing your ultimate investing goals.

Knowing when to back out of an investment deal

The first and most obvious sign that an offer is too good to be true is that it just seems too good to be true.
Maybe he is on the verge of bankruptcy or there is an illness in the family which makes it necessary to move quickly.
There are many overhead costs associated with real estate investing. These costs normally fall into the categories of repairs and advertising. Even after you sell such a property, you can still be held liable for any ground water contamination or illness associated with the property.
For this reason, never buy a property if there are health concerns of any kind involved
Debts can become attached to a property. If you purchase a property for real estate investing purposes that has several liens on it.
Never purchase a property if you cannot have the title searched or if there seems to be some amount of obscurity about legal issues surrounding the property.

The key to building residual income in any real estate investing venture is to know which deals to make and which ones to leave alone. Be sure to do plenty of research on any investment property before you purchase it. If something seems odd at any point during the transaction, back out of it.

Is Flipping a Good Investment Strategy in Current Market?

Many property flippers are questioning their approach to real estate investing. What was once an easy profit has become something of a struggle, and investment properties are continuously taking longer to sell. This has led many investors to discontinue flipping real estate and begin searching for other investment opportunities. Some investors have even bailed completely out of the real estate market.

Granted, times are getting harder for real estate investors, but that does not mean that there is no longer any money to be made in flipping. As times inevitably change, it is up to the investor to revamp his strategy so that he can continue making money in a tight market.

One of the benefits of a declining real estate market is that properties can be purchased at rock bottom prices. Yes, homes are losing value, but this only means that you can purchase more home for each dollar that you invest. And as any investor will tell you, the key to making money is buying low and selling high. That makes the current real estate market a perfect place to buy, buy, buy.

The downfall of a declining real estate market is that the number of houses for sale far outweighs the number of buyers. This can make it difficult, but not impossible, to quickly flip a property for profit. What is needed, then, is not to forgo real-estate investing altogether but to change your sales strategy so that you can stay ahead of your competition.

To make money flipping homes in any real estate market, you need to sell the property quickly. In fact, the majority of flips that lose money do so because they simply sat on the market for far too long.

The number one thing that you can do to ensure that your properties sell before those of your competition is to offer seller financing. Seller financing not only attracts buyers, it is also a great way to supplement your income during a time when you might not be able to earn as much profit from real estate investing as you were once able to.

Offering custom upgrades is also a great way to attract buyers. You can do this by marketing the home before it is completely finished. Many buyers jump at the chance to choose the finishing touches of their new home. Allowing buyers to choose carpet color, appliances, and other last minute details can give you an edge over the competition.

Author Resource:- James Klobasa, once broke with no job and $20,000 in debt made a choice that changed his life forever. That choice was investing in Real Estate.

GST AND BUYING A CONDO IN CANADA

Death and taxes are said to be the only two sure things in life, and in Canada we are very familiar with the latter of those two. The social programs that many say define us as a country call for some significant charges on citizens in the form of taxes, one of which is the much maligned Goods and Services Tax. The GST is not just hated because it is another tax, but because of the ambiguity with which it is charged. Not many people are really sure when they will need to pay the GST on a purchase, although for the most part we take it for granted that we will have to pay it.

For new homeowners, the subject of the GST is particularly touchy. No matter what percentage of a tax is applied to a new home, it can add up to a substantial amount of additional money. Let’s take a look at where you need to factor in GST when you buy a new condo. You will pay GST when... The rules about GST in application to the purchase of condominiums are fairly specific. Those who purchase new homes or homes that have seen extensive renovations can expect to pay this tax. Please note that new homes is not a term relative to the buyer; it specifically deals with condos that have been newly constructed. But don’t forget!
If you are dancing in front of your computer screen in joy because you realize you don’t have to pay the GST on your home purchase, as the condo is not considered new, do not think that you are off totally free. The GST is also added to many of the services you will need in order to take possession, including lawyer’s fees, processing fees, and as part of your house insurance. That means that everyone will have to pay, and new condo owners in particular will pay a lot of GST when it is all added up.

There is some good news for new homeowners and for everyone in Canada on the GST front. The federal government recently announced that it would be cutting the GST by one percent, down now to 5% of the total purchase cost, effective January 1, 2008. While the average person might gripe that a one percent slash is not much, it certainly can add up when a major purchase such as a new home is considered; that can mean a savings of $3000 for the average Canadian home! Taxes are inevitable, and if you are buying a new condo you need to be aware of the additional costs added due to the GST both on the purchase and transactions for the purchase of your home. Be informed about the current market conditions and what buyers are looking for, that way your home will come to the top of the list when buyers are looking.

MOBILE HOME RENTALS ~ A GREAT INVESTMENT

Why Invest In Mobile Homes

Get past the prejudice and look at the numbers. In our town, for example, a two bedroom house costs $130,000 and rents for $800/month. A $50,000 mobile home on real estate gets $500/month. Cash-on-cash return on investment is obviously higher with mobile homes. Don't let the half-truth that mobiles depreciate in value keep you from investing in them. They lose value in a park, on a rented lot, but not on real estate. My first home was a mobile, bought for $19,000 and sold for $45,000
fourteen years later.

House rentals here usually have negative cash flow, while mobile home rentals have some cash flow. Still, investors prefer houses, believing they'll build equity faster, but is that true? Only during times of fast appreciation.

Equity Building With Mobile Home Rentals

Buy a house for $120,00 with $20,000 down, and take out a $100,000, 6%, 30-year mortgage. You'll have a payment of $599.60. Of the first payment, $500 will go to interest, and $99.60 to principal. You only built equity of $99.60. This ignores appreciation, but only for the moment.

Second scenario: Find a mobile home for sale on land, and borrow $30,000, at 8%, amortized over 10 years. Higher interest and a shorter term is normal with mobiles, but being done with payments in 10 years instead of 30 isn't all bad. The payment will be $363.99. The first month, $200 will go to interest, and $163.99 to principal. You built more equity in this scenario.

Mobile home rentals on land might appreciate more slowly than the "regular" house, but faster loan pay-down usually covers this factor. Pay less per month, have positive instead of negative cash flow, and build more equity! Don't expect your real estate agent to tell you this.

Mobile Homes - Cash Flow

In the example, you'd lose about $150/month on the house, after the payment, taxes, insurance, repairs and other expenses. You'd have cash flow with the mobile home, and after ten years (when the loan is paid off), you'd have a lot of cash flow.

Mobiles are cheap to maintain. The furnace died in rental I owned, and I replaced it for $1,200, much less than a furnace for a larger home. For $200 you can have the roof tarred, instead of $5,000 to re-shingle a traditional roof. Windows, plumbing, doors - they're all cheaper. Property taxes and insurance are less too (be sure you can get insurance, since some old mobiles may be uninsurable).

The Bottom Line

$20,000 can buy two mobiles, with $10,000 down on each, or four with $5,000 down on each, instead of one negative-cash-flow house. The two investors in our town that own most of the mobile homes always have cash flow, and have built millions in equity. Others, following their prejudices, struggle to make money with their "nice" rental homes. So when you're looking for a good investment, don't forget those mobile home rentals.

Steve Gillman has invested in real estate for years. See a photo of a beautiful house he and his wife bought for $17,500 on his home page, or go straight to the section on Investing In Real Estate:

Houses Under Fifty Thousand

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