By Lindenberg Junior | Translation: Gisele Sweeney
Buying real estate can be daunting, especially for first-time buyers. Sell your property should be a smooth experience if you count on the skills, professionalism, and assistance of a real estate agent. In order to build a successful and profitable real estate investment business is necessary to learn the little “secrets” of financial independence through researches and real estate principles that can change your life. We have asked real estate agents, home loan officers, real estate investors, housing experts and homeowners themselves for advices and tips for this article.
For now let’s talk about why to buy a property. In addition to the obvious pleasure of enjoying home ownership, is good to remind the financial advantages of doing that:
* Equity Build-up – Making a monthly mortgage payment may create equity. Over time, you may build equity in your property, which can be borrowed against it or converted into cash if you sell. And at this point, if you wish, start as a real estate investor (we explain it later).
* Tax Advantages – The interest on your mortgages and your real estate taxes are tax deductible.
* Security and Satisfaction – Home ownership offers you the security of owning your own home. And your housing costs are stable over time.
We have asked Gisele Sweeney, a real estate agent based in Redondo Beach (CA), about the first 5 questions to consider before “buyers” make their “move, and she answered:
* Who is my Realtor? – Call a reputable Realtor, talk about your expectations and understand the market. Get educated so you can make a smart decision. Your Realtor can refer you to a loan officer.
* Who is my loan officer? – Contact the loan officer and have your credit report checked, explain your financial situation, get pre-approved for the loan, understand the options of mortgage payment and price range.
* What do I need X what I can afford. Be realistic on what you want, what you really need and what you can afford in the current market.
* How soon do I want to move? Motivation is a key factor in a competitive market like ours. Clients who need or want to move within 2 or 3 months are much more aggressive when they make an offer.
* Am I ready to make a move? – In today’s market, if the price is right, any good property for less than $800,000 sells quickly. Nice properties between $350,000 and $550,000 have multiple offers within few days. Realtor and client have to work as a team, act fast, and be ready to go.
We also have asked Celma Bejamim, a real estate agent based in San Fernando Valley (CA), the same questions, and she has made an additional valuable Q & A:
* Can I rent my property out? Buying a house and then renting it out part time is one way to cover some of its cost. To get a realistic picture of whether that would work, call real estate agents in the area where you want to buy, and ask what time of year renters most visit, what type of lodging they prefer, and how much they’re willing to pay. You don’t want to overestimate the amount of rental income you’re likely to get.
Paulo Garcia, a loan officer based in Torrance (CA) said: good credit is important to get a better loan program, but it’s not mandatory. A good and professional loan officer will analyze each individual case, determine interest rate eligibility, calculate the maximum loan amount and provide a pre-qualified letter. In short words, we identify the programs that best fit your situation and show you which loan options best suit your needs.
Anthony Nunez, an experienced loan officer from Countrywide and based in Metro Los Angeles, have added that the three most important factors are your income, your debts and the size of the down payment. Also, he explains how a simple equity loan can work on your favor for you to start your real estate investment dream. After having some equity in your first home, you can refinance, pull some money out and move up, or buy a second, third or more real properties as investment. In most cases, you rent it out and the rents pay your mortgage while the property is appreciating.
Real Estate is booming and those involved in the business of buying and selling land, homes, space and new construction are making a mint. Investing in real estate has always been one of the best ways of making money and accumulating wealth. Your largest asset is probably your home. This type of investment doesn’t always require money. You can buy real estate with little or no credit or cash, perhaps borrowing all the money from a lender or seller, or by transferring title to a buyer seeking a good deal.
It is an investment that does take time to learn how to find an undervalued property and time to prepare it for resale at its full value. It also takes time to identify good rental properties. But totally worth it! If you become a landlord, you can depreciate and write off your taxes 1/28 of the value of your property every year, along with loan interest and most repairs, taxes and insurance. Thus, over time your tenants pay down your debt, while the value of your property typically increases.
Gisele states: A knowledgeable and experienced agent knows all the nuances of the complex process of buying and selling a property. But the market changes and so do the laws. Realtors need to keep themselves updated and educated concerning any kind of change. In case of doubts, a great source is the Legal Hotline of the California Association of Realtors. Most Realtors have direct access to real estate attorneys for questions and answers.
She continues: A realtor’s job is to make the transaction as smooth as possible for the client and avoid any kind of lawsuit against any party involved in the transaction. However, if any unexpected event comes up during the transaction that can lead to a potential lawsuit, realtors cannot give legal advice. The best we can do for our clients is to refer them a good Real Estate attorney.
Many homebuyers hastily purchase homeowner’s insurance to qualify them for their mortgage. And that might be a problem in many cases, as they don’t understand the options of insuring a home. Magnolia Wash, a realtor based in Long Beach, CA states: It is important to ask your broker for a detailed explanation. Also, before closing any deal, make sure you include in the contract an inspection contingency clause. In this way, if the inspection does reveal serious problems with the property, you can get out of the contract safely. It is important to know that by asking the right questions and protecting yourself properly, you can rest assured that your investment was well made.
So, before your smart choice, check all the transaction costs:
* Monthly payments
* Utilities, taxes and interest
* The broker’s commission
* The rent, security deposits, and/or interest on deposits that have not been transferred yet.
* A charge for loan fees that have already been paid.
* A contractor, attorney, appraiser, or any other party of the contract who have not been paid yet.
If you want to invest in real estate you must always be searching for motivated sellers. Remember that if a seller is not motivated, you probably will not find a good deal. Whether you plan to buy and hold property, lease it, fix it up and sell it, or just be paid to find good deals for others, you must find good undervalued property. Without a good deal you cannot make money in real estate in short-term. Finding and purchasing undervalued properties and turning them into instant or long-term profits is the key to make money and be successful in real estate.
* Special thanks to Magnolia Wash, Gisele Sweeney, Paulo Garcia, Vladimir Bellemo and Anthony Nunez for contributing with this article.