Any real estate investor who has tried to evaluate the price for a rental property with time value of money consideration has undoubtedly used net present value (NPV).
Although it should not be used as the only factor to decide whether a real estate investment provides a good buying opportunity, NPV does provide the investor with a quick and easy way to determine whether the price that will be paid for the property will yield the investor's desired rate of return (discount rate).
What is net present value?
NPV is the difference between the present value (PV) of all future cash flows produced by a rental property and the amount of cash investment (or, initial investment; i.e., down payment and closing costs) required to purchase the property. For example, let's assume that the real investor desires a 10% yield on all future cash flows, must invest $100,000 cash to purchase the rental property that might produce those cash flows, and wants to know whether the price he will pay achieves his desired yield. He would calculate NPV.
Here's how it works.
First, all future cash flows would be discounted back at 10% to determine the present value of those cash flows. Secondly, the $100,000 initial investment would be deducted from the PV. The difference between the two is the NPV. For example, if the present value winds up equaling $110,000, the $100,000 would be subtracted to determine a net present value of $10,000 ($110,000 - 100,000 = 10,000). Whereas, if the PV calculates at $90,000, the NPV would be -$10,000 ($90,000 - 100,000 = -10,000).
What does it mean?
Whenever the NPV is greater than zero, it means that the discounted value of the future cash flows is greater than the initial investment. In other words, you are getting a good deal and getting a rate of return that is actually higher than the discount rate you desire (in fact, you can pay $10,000 more for the property and still achieve a 10% yield). Likewise, any NPV less than zero means the opposite. You are getting a lower rate of return than you desire, and would have to pay $10,000 less for the property to get a 10% rate of return.
A proforma income statement that includes a calculation for net present value is available for you to preview in a sample real estate investment property analysis report.
About the Author
James R Kobzeff is an active real estate broker and developer of ProAPOD. Quality real estate investment software - real estate investment analysis software - real estate investment blog.
For More Info Visit
http://hot-us-real-estate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
Wednesday, 23 May 2007
Tuesday, 22 May 2007
Real Estate Investment Tips
Real estate investment presents optimistic cash flow along with tax benefits. However, much like any other investment niche, real estate is dependent on intricate market trends that must not be overlooked, in case the investor may undergo a major loss. Surprisingly, many of the newbie investors are keen to part with their hard earned money, devoid of carrying out a preliminary research of their investment. They also bank on intuitions and traditional trends instead of relying on a meticulous analysis. But before you risk your investment, do heed the following real estate investing advice, in order to make certain some momentous returns on your property investment.
a) Verify the seller’s credentials – Newbie investors find a lucrative property but don’t find any inconvenience while verifying the seller’s credentials, since they are in a scurry to bag the property. They should also confirm some definite aspects as well, together with rent payment records, taxes, and other possible expenses.
b) Avoid negative cash flow – This is an additional real estate investing advice for selecting a property that does not eat away your working capital on a standard basis and there is no point in buying a property that necessitates more money for its upkeep relative to the revenue it generates. You might also be forced to sell such a worthy asset former to the realization of any remunerations of ownership.
c) Original tenants can afford the much required information – Ask the tenants if they are troubled by pest infestation, lack of basic amenities, or some other recurring problem. Of course you don’t want to buy a property that requires an awful lot of repair, and even if you do, you must know the problems outspoken.
d) Look for an insurance cover – A decisive real estate investing advice is that you must have sufficient insurance coverage for your property bought recently and insurance will also offer the much needed shroud to guard your personal assets against legal actions.
e) You must charge fair rents – No expense hurts more than what’s acquired in the upkeep of a vacant property and so arraign fair rents to make certain that your tenants affix with you for as long as you wish for. Moreover, you must also ensure that the chosen tenants are not defaulters. Verify their credentials, talk to their previous landlords, and also check their credit history.
f) Sustain a certain degree of stinginess until and unless you have a healthy source of income – Once you have closed a profitable deal, you must ward off from going on a profligate shopping spree. Instead re-invest your profit towards another property payment on a normal basis until you conquer a significant affirmative cash flow.
On the whole, real estate investing can be an extremely profitable investment niche. But you must have a good grip of what the procedure entails, and must not leave any stone unturned. Just stick on to the real estate investing advices, and you shall be on your way to develop into a professional real estate investor. Now let us see how to value any piece of real estate. When considering real estate VALUE, whether it’s a real estate stock or a property, there are two value rules that are to be applied:
Don't pay too much for the earth.
Don't pay too much for the business.
As a good real estate investment rule of thumb, net rents in real estate have averaged about 1% above Treasury bonds. Once you’ve figured your P/E, it may be very different from the current nationwide fair value P/E guess of 16. If your P/E is low, you may have gotten a good deal, or you could collect high rents from your place. If your P/E is twice as high as 16, my advice is that you ought to consider selling. The tricky thing about selling real estate is that real estate is not liquid. Unlike stocks, where we have the luxury of being able to sell whenever we want and the luxury of trailing stops to get us out exactly when we want out, in real estate, it’s not so easy. You unfortunately need to be a good guesser, because you actually need to sell into an “up” market, and buy in a down market.
a) Verify the seller’s credentials – Newbie investors find a lucrative property but don’t find any inconvenience while verifying the seller’s credentials, since they are in a scurry to bag the property. They should also confirm some definite aspects as well, together with rent payment records, taxes, and other possible expenses.
b) Avoid negative cash flow – This is an additional real estate investing advice for selecting a property that does not eat away your working capital on a standard basis and there is no point in buying a property that necessitates more money for its upkeep relative to the revenue it generates. You might also be forced to sell such a worthy asset former to the realization of any remunerations of ownership.
c) Original tenants can afford the much required information – Ask the tenants if they are troubled by pest infestation, lack of basic amenities, or some other recurring problem. Of course you don’t want to buy a property that requires an awful lot of repair, and even if you do, you must know the problems outspoken.
d) Look for an insurance cover – A decisive real estate investing advice is that you must have sufficient insurance coverage for your property bought recently and insurance will also offer the much needed shroud to guard your personal assets against legal actions.
e) You must charge fair rents – No expense hurts more than what’s acquired in the upkeep of a vacant property and so arraign fair rents to make certain that your tenants affix with you for as long as you wish for. Moreover, you must also ensure that the chosen tenants are not defaulters. Verify their credentials, talk to their previous landlords, and also check their credit history.
f) Sustain a certain degree of stinginess until and unless you have a healthy source of income – Once you have closed a profitable deal, you must ward off from going on a profligate shopping spree. Instead re-invest your profit towards another property payment on a normal basis until you conquer a significant affirmative cash flow.
On the whole, real estate investing can be an extremely profitable investment niche. But you must have a good grip of what the procedure entails, and must not leave any stone unturned. Just stick on to the real estate investing advices, and you shall be on your way to develop into a professional real estate investor. Now let us see how to value any piece of real estate. When considering real estate VALUE, whether it’s a real estate stock or a property, there are two value rules that are to be applied:
Don't pay too much for the earth.
Don't pay too much for the business.
As a good real estate investment rule of thumb, net rents in real estate have averaged about 1% above Treasury bonds. Once you’ve figured your P/E, it may be very different from the current nationwide fair value P/E guess of 16. If your P/E is low, you may have gotten a good deal, or you could collect high rents from your place. If your P/E is twice as high as 16, my advice is that you ought to consider selling. The tricky thing about selling real estate is that real estate is not liquid. Unlike stocks, where we have the luxury of being able to sell whenever we want and the luxury of trailing stops to get us out exactly when we want out, in real estate, it’s not so easy. You unfortunately need to be a good guesser, because you actually need to sell into an “up” market, and buy in a down market.
For A New Real Estate Investor The Idea Of Investing In Foreclosures Can Look Temptingly Attractive
You might be looking for "How to make a zillion dollars in 3 months", well, you won't find that here but if you want some practical tips, you came to the right place. Read on ...
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn't want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow 'strict' foreclosure — the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don’t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the 'right of redemption'. This legal claim will let them have a particular amount of time in which to 'cure the loan'. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There's no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold 'as is ', or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you'll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves — besides wearing various other hats.
The property does not need to be free of every little fault, but you'll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you're searching for a 'fixer-upper' and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a 'short sale' deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO — real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say 'Hi' to Donald Trump for me!
Find out how to make money investing in foreclosures and flipping real estate properties by visiting http://www.successful-real-estate-investing-tips.info , a popular real estate investing website that offers advice, tips and free real estate investing advice.
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn't want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow 'strict' foreclosure — the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don’t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the 'right of redemption'. This legal claim will let them have a particular amount of time in which to 'cure the loan'. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There's no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold 'as is ', or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you'll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves — besides wearing various other hats.
The property does not need to be free of every little fault, but you'll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you're searching for a 'fixer-upper' and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a 'short sale' deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO — real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say 'Hi' to Donald Trump for me!
Find out how to make money investing in foreclosures and flipping real estate properties by visiting http://www.successful-real-estate-investing-tips.info , a popular real estate investing website that offers advice, tips and free real estate investing advice.
Friday, 18 May 2007
How To Sell Your Property
There are five distinct phases to selling your property.
1. Preparation
During the preparation period you should be doing three things:
a) Decide how you are going to sell. This can be through an estate agent, selling privately or going to auction. When you have worked this out, you can then
b) work out how much it is going to cost you. This should include items such as relocation costs, purchase costs associated with a new property, solicitors' and agents' fees, tax (including VAT), mortgage penalties and even the cost of hiring a removals van.
c) Prepare the property for viewing and, hopefully, a quick sale.
1. Preparation
During the preparation period you should be doing three things:
a) Decide how you are going to sell. This can be through an estate agent, selling privately or going to auction. When you have worked this out, you can then
b) work out how much it is going to cost you. This should include items such as relocation costs, purchase costs associated with a new property, solicitors' and agents' fees, tax (including VAT), mortgage penalties and even the cost of hiring a removals van.
c) Prepare the property for viewing and, hopefully, a quick sale.
2. Valuation and marketing
Your property should be prepared to pass the stiffest of inspections, both inside and out. Make sure that the person who values your home possesses the appropriate professional qualifications from the Royal Institute of Chartered Surveyors or the National Association of Estate Agents. A valuer, usually employed by your estate agent, will visit the property and put a price on it. The price needs to be set low enough for you to be able to sell it within the timeframe you require and also so that you can attract enough potential buyers to view the property. But it also needs to be set sufficiently high that you don't lose out on any money that you could have made from the sale. The agent will then advertise your property in the local press, in his window or on the internet
3. Negotiation
When someone is interested in buying your property, they may make an offer below the asking price. It is up to you to decide how much or how little you are prepared to accept. If your property has been on the market for months with very few viewers, you may be happy to accept less than the valuation price just to be rid of it and move on. However, if several offers come in during the first two weeks of the sale period, you would be well advised to stick to the asking price. Whether you accept an offer or not depends on your situation and circumstances.
4. Conveyancing
Once you have agreed the sale with a buyer, your solicitor will take over. Although the conveyancing process (moving title of the property from your name to the buyer's) takes the same length of time for buyers and sellers, there is much more onus on the buyer's solicitor in terms of the amount of work required so your legal bill on a property sale should be lower than for a property purchase. The normal total cost of disbursements for a seller usually amounts to an £8 land registry charge, plus legal fees. Though not usually charged as a percentage of the property value, most solicitors and conveyancers will link their fees to the price band in which your property falls. Expect to pay anything from £250 to £500 for solicitors fees on the sale.
5. Completion
This is the last stage of the process. It is the precise moment at which the sale is complete and you no longer own the property.
PREPARATION
When to sell
The best time to sell is when there are many buyers in the market and prices are increasing, and when interest rates remain low.
Buying and selling property is also seasonal, with more sales being made between March and July each year. The year-end or Christmas period is slow, but a pick-up is usually achieved in the new year.
When not to sell
The worst time to sell is when there are fewest buyers in the market. If interest rates are temporarily raised to calm the market, you may find that buyers are in short supply. If both your neighbours put identical houses up for sale at the same time, it may be a bad idea for you to do the same. Try to follow the markets and read the signs. If your property is in a sought-after location, you should have no problem selling at a reasonable asking price regardless of the time of year or market conditions.
Choosing An Estate Agent
An estate agent can take care of all aspects of the property sale for you. A good estate agent will:
Arrange a property valuation
Advertise the property for sale - both online and in traditional media
Court potential buyers
Arrange and conduct property viewings
Negotiate with potential buyers on your behalf
Help to maximise the property sale price
An estate agent will ensure you avoid mistakes when selling your home, which could otherwise be costly. The agent will charge a commission of up to four per cent of the sale price, although this is normally around two per cent. The actual amount is likely to be at the top end of this scale if you instruct them as a joint or multiple agent, but at the lower end if you decide they should be the sole agent in charge of the sale. No fees are payable up front and you should accept only a no sale, no fee agreement with your chosen agent.
Try several agents and get recommendations from people living around you. Find out about estate agency bodies and only choose one which is professionally accredited.
An estate agent acting as a sole agency is acting alone in the sale of your property. You are contractually bound not to allow other agents to try and sell your property during the term of the agreement and will be liable for a commission payment to the sole agent should you do so and successfully sell the property.
Two agencies working together to try and sell your home is known as joint sole agency. The main advantage is that there will be more than one outlet or distribution channel for your property. You may pay slightly more in total commission than you would if there were just a single sole agent, as both businesses will receive a share of the commission when the property is sold.
Multiple agency is where you instruct a number of agencies working in competition with each other. Each is acting fully autonomously and the person or business that sells your property gets to keep the commission. It can be the case that the agent will spend less on marketing your property or act less aggressively trying to sell your property under these terms. This is because they are aware that there is a possibility that they will receive zero commission regardless of how much effort they put in, and so may focus their efforts on properties for which they are the sole agents. Auction
If you need a quick and virtually guaranteed sale, you could auction your property. As long as the property is sold, you can guarantee that the transaction will be complete within 28 days of the auction date which offers a certainty of timescales not enjoyed by either of the other two methods. Auctions are becoming increasingly popular with buyers but there is no guarantee that the seller will achieve the asking price of the property. Auctions are not suitable for everyone, as they attract a certain breed of buyer that may not be interested in every type of property. However, if you set the reserve price low enough, then you can virtually guarantee a sale, even if the price may not be what you are looking for. Selling your property at auction generally costs around two and a half percent of the price attained. There may well be additional charges involved for marketing your property, adding it to the catalogue or contributing to the hire of the auction room. These charges are not always made separately - sometimes they are incorporated into the commission payment - but you will probably have to pay for them separately if your property is not sold.
Private sale
You could decide to do all the agent's work yourself by selling privately, and, if you manage to get a few lucky breaks along the way (such as already knowing someone who might be interested in buying your property), it is possible to spend no money at all on the actual sale of your house.
For those people whose overriding goal is to maximise the proportion of the sale revenue that ends up in their own bank account, selling privately is certainly the best option. You can directly constrain your marketing expenditure and not a single penny of the sale price will be lost in commission payments.
The main downside of a private sale is that sometimes it can take longer to sell your home, as your property does not enjoy the level of exposure that it would have if it were being marketed by a professional estate agent. But if time is not crucial, then saving thousands of pounds can be a good reason to go it alone.
Prepare for Viewing
Buyers can be put off before they're through the front door. Make sure the outside of your property looks its best, with the rubbish in a bin, and communal hallways clear of junk. Make sure any lawn, garden or window box is a selling point. Clean, repair and repaint exterior surfaces. This should be done before you contact an agent. Caravans, white vans and old vehicles on and around your property deter more buyers than anything else. Get rid of them on viewing days.
Make sure that you clear away any junk or untidy looking areas in your property before potential purchases arrive on the doorstep. Aim to have your property in pristine, showhome condition at all times. This means sparkling surfaces in bathrooms and kitchen, fresh made beds, plumped cushions on sofas and chairs, polished furniture and clean floors throughout.
Disguise pet smells and make sure that fresh flowers are displayed. Make your home as warm and welcoming as possible to potential buyers.
The Future
A new way of selling your home will be introduced in June 2007. You will have to prepare a Home Information Pack (HIP) which will be made available to purchasers and will cost the seller around £1,000 to prepare.
The Home Information Pack is like a traditional survey and will include local authority searches and the property's title deeds as well as energy performance information and certificate. Buyers and sellers will be given A-G ratings on their properties, as well as practical measures to cut fuel bills and carbon emissions. This must be introduced in response to new European laws.
The Government says that the home condition report - the most expensive part of the pack - will no longer be mandatory. Sellers will only be obliged to provide a half-HIP at an estimated cost of £150 to £200.
HIPs are supposed to speed up the house buying process, ensure that fewer deals fall through, help first-time buyers and reduce the scope for gazumping.
Selling your home can be a stressful and expensive experience. To make it easier on yourself you should:
a) choose a reputable estate agent
b) prepare your home for sale
c) build in plenty of time - the process can take months
d) find out what it is going to cost and make sure you can afford it.
This is meant as a general guide and should not be seen as legal advice.
Thursday, 17 May 2007
Mortgage Refinancing With a Fixed Interest Rate Loan
If you have little tolerance for financial risk and are considering mortgage refinancing, choosing a fixed interest rate is usually the safest option. Fixed rate home loans come with higher interest rates than their Adjustable Rate Mortgage counterparts; however, there are steps you can take to pay less when refinancing. Here are several tips to help you qualify for the lowest mortgage rate when refinancing.
The most important concept you need to wrap your head around before refinancing your mortgage is how Yield Spread Premium works. Yield Spread Premium sounds scary and will cost you thousands of dollars unnecessarily; however, once you understand it and learn how to recognize it, you’ll save yourself a bundle of cash on your mortgage payments.
What is Yield Spread Premium? Simply put, it’s the retail markup of your mortgage interest rate by the person originating your loan. This person could be a mortgage broker, the representative at your local mortgage company, or the faceless internet giant you find on the web. Every mortgage company, with the exception of banks, works the same way when it comes to originating mortgage loans. They all mark up your mortgage rate to get a bonus from the wholesale lender behind your mortgage.
Fixed rate mortgages already come with higher mortgage rates than a comparable Adjustable Rate Mortgage. In addition to paying this higher mortgage rate you’ll be required to pay an origination fee for this person’s role in arranging your home loan. Here’s an example to illustrate how Yield Spread Premium results in paying double, even triple when refinancing.
Suppose you refinance your home loan for $300,000. Your mortgagee broker quotes you an interest rate of 6.75%. You agree to pay a 1% origination fee which is a reasonable amount to pay when refinancing. Think you’re getting a good deal? What the mortgage broker isn’t telling you is the interest rate you qualified is actually 6.0%. They’ve marked it up to 6.75% because the wholesale lender pays them 1.0% of your loan amount for every .25% you agree to overpay. In this example you paid $3,000 for the loan origination and the mortgage broker received $9,000 from the lender for overcharging you.
Your mortgage broker walks away with $12,000 and you get stuck paying thousands of dollars in unnecessary mortgage interest. Not such a good deal after all is it? Fortunately for you, once you’ve learned how to recognize Yield Spread Premium you can avoid paying it. To learn more about refinancing your home loan while avoiding costly mistakes register for a free mortgage video tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinance - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
More info sites:http://eu-realestate.blogspot.com/
http://hot-us-real-estate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
The most important concept you need to wrap your head around before refinancing your mortgage is how Yield Spread Premium works. Yield Spread Premium sounds scary and will cost you thousands of dollars unnecessarily; however, once you understand it and learn how to recognize it, you’ll save yourself a bundle of cash on your mortgage payments.
What is Yield Spread Premium? Simply put, it’s the retail markup of your mortgage interest rate by the person originating your loan. This person could be a mortgage broker, the representative at your local mortgage company, or the faceless internet giant you find on the web. Every mortgage company, with the exception of banks, works the same way when it comes to originating mortgage loans. They all mark up your mortgage rate to get a bonus from the wholesale lender behind your mortgage.
Fixed rate mortgages already come with higher mortgage rates than a comparable Adjustable Rate Mortgage. In addition to paying this higher mortgage rate you’ll be required to pay an origination fee for this person’s role in arranging your home loan. Here’s an example to illustrate how Yield Spread Premium results in paying double, even triple when refinancing.
Suppose you refinance your home loan for $300,000. Your mortgagee broker quotes you an interest rate of 6.75%. You agree to pay a 1% origination fee which is a reasonable amount to pay when refinancing. Think you’re getting a good deal? What the mortgage broker isn’t telling you is the interest rate you qualified is actually 6.0%. They’ve marked it up to 6.75% because the wholesale lender pays them 1.0% of your loan amount for every .25% you agree to overpay. In this example you paid $3,000 for the loan origination and the mortgage broker received $9,000 from the lender for overcharging you.
Your mortgage broker walks away with $12,000 and you get stuck paying thousands of dollars in unnecessary mortgage interest. Not such a good deal after all is it? Fortunately for you, once you’ve learned how to recognize Yield Spread Premium you can avoid paying it. To learn more about refinancing your home loan while avoiding costly mistakes register for a free mortgage video tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinance - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
More info sites:http://eu-realestate.blogspot.com/
http://hot-us-real-estate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
Real Estate Tips for Landlords
Real Estate Tips
Most "guru's" are currently spouting about how good real estate investments can be. I won't seek to reinforce their sales pitch, nor will I argue with it. Real Estate can be a great investment, but if you not careful it can also be a financial disaster. You may ask who I am to speak on real estate. Whilst not a multi-millionaire selling my next great book I can give you some practical advise of someone who rented out for over five years and explain the pitfalls and the success stories.
Important Lessons:-
1) Good Insurance:- number one is not an option - its a necessity. Ensure your asset is fully insure both normal house insurance and extras like tenant damage and loss of rental income.
Given a disasterous tennant this can lessen the pain. Be WARN! Don't underinsure your house, if it burns down, particularly if there is any suspicion of arson the insurance company will do their own independant investigation and here is the real kicker - THEY WILL CHARGE YOU FOR THE PRIVALEGE - thats right, read the fine print, the insurance company before paying you out will minus their costs - i.e. $100,000 policy - $20,000 investigation means only $80,000 to you. Read the fine print, the insurance despite their ads is not your friend if a million dollar house and therefore a million dollars on the line, don't expect the insurance company to be happy to pay out, if they can find a way to slime out of the policy they probably will.
An insurance policy is a contact make sure you read it. Make sure you chose an insurance policy not just on price but also on good reputation and on company strength. (Want more advice try Real Estate Underground - Click Here!)
2) A Bargin isn't always a bargin:- When purchasing a house remember to be very careful. Don't buy on emotion. Never buy without visiting it several times on different days and times. I know of a nice suburb that has nice houses with big yards, but the smell of the local slaughter house is enough to make you want to vomit. Remember you only become aware of such things by visiting the house personally. Go at least one time without the real estate agent, speak to the neighbours and ask if they like living there. When buying a fix it uper check how easy it is to fix up. Does it contain asbestos, lead paint or like harmful products that are going to cost you a fortune to remove? Would you like to live there? If you don't then don't expect others to. Remember whilst more expensive houses may cost more they tend to attract better class of tennants and less maintenance costs as well as higher rental returns. Remember there are always more houses out there it the buyer is stuck on a price thats no good for you, don't be afraid to walk away. Never buy a house on emotion! (Want to learn more on fixer upper fortunes then click Here!)
3) Do it yourself:- Unless you have a huge portfolio of real estate under your control try to do it yourself and you will save alot more. If you engage a real esate agent to rent your house they will charge between 10%-15% of the rental income, in return you get very little. They will rent out the house, may inspect once or twice a year (some agents will charge extra for this privallege) and you don't have the choice of the tennants. Do it yourself and save the money. Pay a small fee to join online real estate black list - (this is a list that blacklists bad tennants) and you are in the same position as them. A real estate first goal is not to please you but to ensure they get their cut - this may mean they make decisions that are not in your best interest, but in theirs (e.g. they may get kick backs from their trademan and other relationships - in my case they repaired a hot water cyclinder without my permission - the cyclinder was less than a year old and still under warranty - thus I could of got it repaired for free, was I angry - you bet).
Don't forget with agents its your house, if they are not keeping you satisfied, change agents. In regards to maintenance trademens are hugely expensive, whatever you can do yourself, do. For example, changing a tap washer is an easy thing to do, some plumbers charge $100 just to pay a visit. (Want to Buy and Sell Real Estate from home? Click Here! )
4) There is more than Rent. Remember to factor in the rise in real estate prices. You may be able to buy a cheap house in a country town, but if that town has shown no growth and is unlikely to grow then you will not be able to resell the house at the later stage for a much increased price. What creates regularly increasing house prices is even increasing demand. Be careful buying in places like a mining town or a town with one industry, mine resources are limited and one industry towns can turn into ghost towns overnight if the main factory closes. Play it safe buy in towns and cities where growth has been and will continue to be good.
Therefore don't just consider the rate of return on investment in terms of rent, but also factor in capital growth. If there is likely to be little or no capital growth the rental returns need to be higher - if they aren't, forget it and keep looking. When a place is vacant charging too high a rent will ensure it takes weeks to fine a new tennant - every week it is unrented is costing you between $5-$10 a week in rent - (e.g. which is better renting a house for a year at $400 a week or $380 a week - if the fails to rent for four weeks at $400 even if you finally rent it at $400 you have lost out ($20 extra rent X 48 weeks - ($960) (4x$380= 1520)- if you'd rented it straight away at $380 a week - you would have been $560 better off for the year)
5) Good Tennants are worth keeping. If you have good tennants who are looking after the house, you don't alway have to keeping raising the rent every year with the general market increase - reward good tennants and increase your likihood of retaining them by giving them a discount on the market rate. If the tennant puts in a garden and trees and other landscaping, the capital value they are adding to your property may mean you should not hit them with the highest possible rent. Tennants who damage a house or fail to pay rent can cost a fortune. It normally takes 6 weeks or more to evict a non-paying tennant, that can mean a big loss, doubly so if you are paying the mortgage.
To go to the original site and working links, go to
rental-tips.blogspot.com
http://hot-uk-real-estate.blogspot.com/
http://eu-realestate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
Most "guru's" are currently spouting about how good real estate investments can be. I won't seek to reinforce their sales pitch, nor will I argue with it. Real Estate can be a great investment, but if you not careful it can also be a financial disaster. You may ask who I am to speak on real estate. Whilst not a multi-millionaire selling my next great book I can give you some practical advise of someone who rented out for over five years and explain the pitfalls and the success stories.
Important Lessons:-
1) Good Insurance:- number one is not an option - its a necessity. Ensure your asset is fully insure both normal house insurance and extras like tenant damage and loss of rental income.
Given a disasterous tennant this can lessen the pain. Be WARN! Don't underinsure your house, if it burns down, particularly if there is any suspicion of arson the insurance company will do their own independant investigation and here is the real kicker - THEY WILL CHARGE YOU FOR THE PRIVALEGE - thats right, read the fine print, the insurance company before paying you out will minus their costs - i.e. $100,000 policy - $20,000 investigation means only $80,000 to you. Read the fine print, the insurance despite their ads is not your friend if a million dollar house and therefore a million dollars on the line, don't expect the insurance company to be happy to pay out, if they can find a way to slime out of the policy they probably will.
An insurance policy is a contact make sure you read it. Make sure you chose an insurance policy not just on price but also on good reputation and on company strength. (Want more advice try Real Estate Underground - Click Here!)
2) A Bargin isn't always a bargin:- When purchasing a house remember to be very careful. Don't buy on emotion. Never buy without visiting it several times on different days and times. I know of a nice suburb that has nice houses with big yards, but the smell of the local slaughter house is enough to make you want to vomit. Remember you only become aware of such things by visiting the house personally. Go at least one time without the real estate agent, speak to the neighbours and ask if they like living there. When buying a fix it uper check how easy it is to fix up. Does it contain asbestos, lead paint or like harmful products that are going to cost you a fortune to remove? Would you like to live there? If you don't then don't expect others to. Remember whilst more expensive houses may cost more they tend to attract better class of tennants and less maintenance costs as well as higher rental returns. Remember there are always more houses out there it the buyer is stuck on a price thats no good for you, don't be afraid to walk away. Never buy a house on emotion! (Want to learn more on fixer upper fortunes then click Here!)
3) Do it yourself:- Unless you have a huge portfolio of real estate under your control try to do it yourself and you will save alot more. If you engage a real esate agent to rent your house they will charge between 10%-15% of the rental income, in return you get very little. They will rent out the house, may inspect once or twice a year (some agents will charge extra for this privallege) and you don't have the choice of the tennants. Do it yourself and save the money. Pay a small fee to join online real estate black list - (this is a list that blacklists bad tennants) and you are in the same position as them. A real estate first goal is not to please you but to ensure they get their cut - this may mean they make decisions that are not in your best interest, but in theirs (e.g. they may get kick backs from their trademan and other relationships - in my case they repaired a hot water cyclinder without my permission - the cyclinder was less than a year old and still under warranty - thus I could of got it repaired for free, was I angry - you bet).
Don't forget with agents its your house, if they are not keeping you satisfied, change agents. In regards to maintenance trademens are hugely expensive, whatever you can do yourself, do. For example, changing a tap washer is an easy thing to do, some plumbers charge $100 just to pay a visit. (Want to Buy and Sell Real Estate from home? Click Here! )
4) There is more than Rent. Remember to factor in the rise in real estate prices. You may be able to buy a cheap house in a country town, but if that town has shown no growth and is unlikely to grow then you will not be able to resell the house at the later stage for a much increased price. What creates regularly increasing house prices is even increasing demand. Be careful buying in places like a mining town or a town with one industry, mine resources are limited and one industry towns can turn into ghost towns overnight if the main factory closes. Play it safe buy in towns and cities where growth has been and will continue to be good.
Therefore don't just consider the rate of return on investment in terms of rent, but also factor in capital growth. If there is likely to be little or no capital growth the rental returns need to be higher - if they aren't, forget it and keep looking. When a place is vacant charging too high a rent will ensure it takes weeks to fine a new tennant - every week it is unrented is costing you between $5-$10 a week in rent - (e.g. which is better renting a house for a year at $400 a week or $380 a week - if the fails to rent for four weeks at $400 even if you finally rent it at $400 you have lost out ($20 extra rent X 48 weeks - ($960) (4x$380= 1520)- if you'd rented it straight away at $380 a week - you would have been $560 better off for the year)
5) Good Tennants are worth keeping. If you have good tennants who are looking after the house, you don't alway have to keeping raising the rent every year with the general market increase - reward good tennants and increase your likihood of retaining them by giving them a discount on the market rate. If the tennant puts in a garden and trees and other landscaping, the capital value they are adding to your property may mean you should not hit them with the highest possible rent. Tennants who damage a house or fail to pay rent can cost a fortune. It normally takes 6 weeks or more to evict a non-paying tennant, that can mean a big loss, doubly so if you are paying the mortgage.
To go to the original site and working links, go to
rental-tips.blogspot.com
http://hot-uk-real-estate.blogspot.com/
http://eu-realestate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
Finding The Right Homes To Buy Tips
Once a decision to buy a home has been reached, be sure to research the market before going on the search. Look at information on the internet, figure out what is most important and needed in a home, and get familiar with the area before looking at the houses.
Make sure the budget will be able to handle buying a new home. Decide what is most important and what is not. What kind of house is desired is also important. Don‘t go and buy a house and not be able to afford it, especially if a first time home buyer. Try to avoid the “house-poor“ situation, in other words, a really nice house, but no money.
If being near a school, work public transportation, or anything else like family, doctors, or anything that is important in daily life, denote that.
Preapproval for a mortgage is key. It will help with the lending process and will make the home buying process in itself much easier.
Picking an agent that understands the buyer’s needs is crucial. Getting the advice from friends and and family is a good place to start. Most full time serious agents have web sites these days and it is a good place to begin to get a feel for a real estate agent. Plus, most real estate agents have the feature on their website for you to browse local listings.
When looking to buy a home, take into account that needs will change. For instance, one may be buying as a newlywed couple, but down the road, they may choose to start a family, so finding a home that has space for children would be ideal.
There are other things to consider. Will you be entertaining? Plan to have children? Want to have own private space and how much square footage is really needed? Designate between a closed space that limits noise and an open space one that does not. Want to have a den, office, or library? For me a big garage is important because I like to restore old cars.
For those who already have children, keep in mind that each child doesn’t have to have his or her own bedroom. Be sure to designate a play area for the children so they can have their own space.
Also, keep in mind that safety particularly with children should be a big issue when buying a house. According to the U.S. Consumer Products Safety Commission, accidents in the home account for 2.5 million injuries or death to children a year. Take into consideration even if you do not have children what risks the new house may pose to a child. Does the house have a lot of stairs or is there bad lighting around areas that children could fall? Does the garage door have a motion detector and is the driveway flat? This is important during increment weather. Is the yard fenced?
Keeping these considerations in mind can help anyone on their hunt for their first home, second home, or dream home.
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit Encinitas Homes for Sale.
More info sites:
http://eu-realestate.blogspot.com/
http://hot-us-real-estate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
Make sure the budget will be able to handle buying a new home. Decide what is most important and what is not. What kind of house is desired is also important. Don‘t go and buy a house and not be able to afford it, especially if a first time home buyer. Try to avoid the “house-poor“ situation, in other words, a really nice house, but no money.
If being near a school, work public transportation, or anything else like family, doctors, or anything that is important in daily life, denote that.
Preapproval for a mortgage is key. It will help with the lending process and will make the home buying process in itself much easier.
Picking an agent that understands the buyer’s needs is crucial. Getting the advice from friends and and family is a good place to start. Most full time serious agents have web sites these days and it is a good place to begin to get a feel for a real estate agent. Plus, most real estate agents have the feature on their website for you to browse local listings.
When looking to buy a home, take into account that needs will change. For instance, one may be buying as a newlywed couple, but down the road, they may choose to start a family, so finding a home that has space for children would be ideal.
There are other things to consider. Will you be entertaining? Plan to have children? Want to have own private space and how much square footage is really needed? Designate between a closed space that limits noise and an open space one that does not. Want to have a den, office, or library? For me a big garage is important because I like to restore old cars.
For those who already have children, keep in mind that each child doesn’t have to have his or her own bedroom. Be sure to designate a play area for the children so they can have their own space.
Also, keep in mind that safety particularly with children should be a big issue when buying a house. According to the U.S. Consumer Products Safety Commission, accidents in the home account for 2.5 million injuries or death to children a year. Take into consideration even if you do not have children what risks the new house may pose to a child. Does the house have a lot of stairs or is there bad lighting around areas that children could fall? Does the garage door have a motion detector and is the driveway flat? This is important during increment weather. Is the yard fenced?
Keeping these considerations in mind can help anyone on their hunt for their first home, second home, or dream home.
John Harris is an expert researcher and writer on real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit Encinitas Homes for Sale.
More info sites:
http://eu-realestate.blogspot.com/
http://hot-us-real-estate.blogspot.com/
http://seized-real-estate-propertyinvetment.blogspot.com/
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