If you know all about properties, you can make profitable and sensible investments. Then again, some people end up getting things all wrong for the simple reason of not knowing enough about making money in real estate investment. They end up making costly mistakes such as purchasing wrong properties or trying to make their money go far when it really can't. It is this second reason alone that is worse, because there are people who actually lure potential investors and then try to take their money. In this light, you should know all about things that ought to be avoided when making real estate investments.
When it comes to mistakes, these are often related to one's choice of property purchased. It is imperative to be knowledgeable about the entire real estate market as well as the property in particular so you know if you are going to make a good purchase or not. There are a lot of people out there who buy properties and then the prices end up going down. Instead of making a profit, they end up with more costs. As a general rule, you should buy a property in a location wherein the prices are on the rise and seem to continue as such for a long time. Ergo, it is important to purchase a property in an in-demand location so you can make a profit out of it. If you buy one in a not-so-desirable location you might end up paying for more in repairs to increase its value.
Always view potential scams with a sharp eye. Avoid real estate investors who promise you huge returns that have no risk and you can make quickly. This line is common to most scams and you should avoid this at all costs. Usually, the offer sounds amazing but it might end up being impossible or even illegal. They use twists and turns to confuse you with the explanation of how it works so you end up not knowing where exactly you are putting your money in. If one investment is of the legitimate kind, then the person ought to answer all of your questions until you gain full comprehension of the situation.
Avoid con artists who have the practice of manipulating prices of properties to make it seem as if you are being offered a bargain price. They probably will say that you can get it at the wholesale price so you can make a huge cut when you resell it. They show you that the valuation is actually much higher - only to find out that they lied and overvalued the property to make it seem tempting. It can be hard to spot this scam because the people are usually very sophisticated and seem like they really know what they are talking about when in fact all they care about is taking your money and leaving you with some bad investments. Always avoid these people and make sure you know exactly how the entire real estate market operates. This way, you can stay away from bad scammers and con artists who only have bad intentions for you.
Beverly Manago is a freelance writer focused on the real estate industry. She is also a consultant for My [http://www.my-virtual-tour.com]Real Estate Virtual Tour, a web 2.0 marketing tool that lets real estate agents create stunning virtual tours and single property sites easily, with a free version available for listing presentations. She also contributes to the [http://www.my-virtual-tour.com/virtual-house-tours]Virtual House Tours there.
Article Source: [http://EzineArticles.com/?Things-to-Avoid-in-Real-Estate-Investment&id=4032156] Things to Avoid in Real Estate Investment
Showing posts with label renovate. Show all posts
Showing posts with label renovate. Show all posts
Monday, April 5, 2010
Saturday, October 24, 2009
Discover the Jealously Guarded Insights of Real Estate Tycoons and Hot Dealers!
Back in the days of the wild, Wild West, when easterners travelled across this vast country looking for opportunity in the newly opened territories, they were often referred to as a ‘tenderfoot’.
This wasn’t a complimentary term but it was a rather apt one. The easterners wore ‘city’ shoes that weren’t designed to withstand the rigors of the western terrain. Their hats didn’t have wide brims to protect them from the sun and their clothing wasn’t made of tough material like denim.
These new westerners didn’t know how to take care of themselves and because they didn’t know where and what the dangers were they didn’t have any idea how to avoid them. If you are just beginning to consider the idea of investing in real estate you are a tenderfoot and you do need some instruction to avoid losing your shirt…and probably your pants, hat and boots, as well.
First you will need to determine what your strategy will be in real estate investing. Do you want to buy a property, fix it up and sell it quickly or do you want to buy a property, hold it and wait for the market to increase? Do you want to deal with renters? All of these questions are ones that you need to answer before you invest in any piece of real estate.
You will need to learn how to investigate the value of properties yourself. It isn’t fair to use the time of a real estate agent and have them show you property after property while you try to look for a good real estate investment.
There are several online sites that are helpful in determining the real value of real estate. DO NOT rely on tax values. They are not reliable and they are not accurate either. You can find a real estate agent that you can work with and you can find recommendations for such agents online.
After you have learned how to determine property values yourself and have chosen a real estate agent that you can work with, the next thing that you need is a good broker that you can also work with. Ask your real estate agent for the names of three mortgage brokers.
Then you will need to find out what interest rates and closing costs each one charges. (Check out your local bank or credit union as well). Take copies of your three credit reports and choose a sample property for each broker to run hard numbers on.
Now you are ready to actually make your first investment. You want to choose the lowest price house in the best possible neighborhood to put a contract on.
Let's say the cheapest two-bedroom house in the best neighborhood in Fort Wayne costs $100,000 and the next cheapest, comparable home is listed for $140,000. If you buy the home that is priced at $100,000, you can raise your price to $130,000 the next day and make a dandy little profit.
Now let’s talk about closing the deal. First show the seller your pre-qualification letter from your lender. Then get the required inspections for termites and get your appraisal. Once you have all of your ‘ducks in a row’ so to speak, it takes about 30 days to make the final close.
A note here about any renovations or repairs that you might want to make to the property: Before you close, you might want to think about a Purchase and Renovate loan. A Purchase and Renovate loan wraps the cost of construction up in the loan so you don’t have many out-of-pocket expenses. This may require an estimate from a general contractor and plans from an architect as well.
Okay, now let’s go back to the first thing that you needed to do and that was to determine your strategy. Now is the time for you to execute that strategy that you have used to invest in this real estate. If you bought it with the strategy of flipping it when the market went up then you just simply wait.
If you bought it with the strategy of renovating and then selling then it is time to start your renovations. On the other hand, if you bought it with the strategy of renting it, it is time to start looking for tenants.
You see, the point of having a strategy for profiting from the purchase of any piece of real estate must be your first decision because everything that comes after that is dependent upon it.
This wasn’t a complimentary term but it was a rather apt one. The easterners wore ‘city’ shoes that weren’t designed to withstand the rigors of the western terrain. Their hats didn’t have wide brims to protect them from the sun and their clothing wasn’t made of tough material like denim.
These new westerners didn’t know how to take care of themselves and because they didn’t know where and what the dangers were they didn’t have any idea how to avoid them. If you are just beginning to consider the idea of investing in real estate you are a tenderfoot and you do need some instruction to avoid losing your shirt…and probably your pants, hat and boots, as well.
First you will need to determine what your strategy will be in real estate investing. Do you want to buy a property, fix it up and sell it quickly or do you want to buy a property, hold it and wait for the market to increase? Do you want to deal with renters? All of these questions are ones that you need to answer before you invest in any piece of real estate.
You will need to learn how to investigate the value of properties yourself. It isn’t fair to use the time of a real estate agent and have them show you property after property while you try to look for a good real estate investment.
There are several online sites that are helpful in determining the real value of real estate. DO NOT rely on tax values. They are not reliable and they are not accurate either. You can find a real estate agent that you can work with and you can find recommendations for such agents online.
After you have learned how to determine property values yourself and have chosen a real estate agent that you can work with, the next thing that you need is a good broker that you can also work with. Ask your real estate agent for the names of three mortgage brokers.
Then you will need to find out what interest rates and closing costs each one charges. (Check out your local bank or credit union as well). Take copies of your three credit reports and choose a sample property for each broker to run hard numbers on.
Now you are ready to actually make your first investment. You want to choose the lowest price house in the best possible neighborhood to put a contract on.
Let's say the cheapest two-bedroom house in the best neighborhood in Fort Wayne costs $100,000 and the next cheapest, comparable home is listed for $140,000. If you buy the home that is priced at $100,000, you can raise your price to $130,000 the next day and make a dandy little profit.
Now let’s talk about closing the deal. First show the seller your pre-qualification letter from your lender. Then get the required inspections for termites and get your appraisal. Once you have all of your ‘ducks in a row’ so to speak, it takes about 30 days to make the final close.
A note here about any renovations or repairs that you might want to make to the property: Before you close, you might want to think about a Purchase and Renovate loan. A Purchase and Renovate loan wraps the cost of construction up in the loan so you don’t have many out-of-pocket expenses. This may require an estimate from a general contractor and plans from an architect as well.
Okay, now let’s go back to the first thing that you needed to do and that was to determine your strategy. Now is the time for you to execute that strategy that you have used to invest in this real estate. If you bought it with the strategy of flipping it when the market went up then you just simply wait.
If you bought it with the strategy of renovating and then selling then it is time to start your renovations. On the other hand, if you bought it with the strategy of renting it, it is time to start looking for tenants.
You see, the point of having a strategy for profiting from the purchase of any piece of real estate must be your first decision because everything that comes after that is dependent upon it.
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