Biggest Real Estate Investing Mistakes

September 17, 2014

It is impossible to call yourself a real estate investor if you have not made a mistake or two along the way. Sadly, most people don’t even realize the mistakes they made until after several years. If you bought a home and kept it as your primary residence for 30 years, you might not care about mistakes.If not, you will come to know about your investing mistakes sooner or later. The role of research and due diligence is of utmost importance in any real estate transaction. It is important to know your mistakes early and avoid those mistakes in the future.

Impulse Purchases

It might sound a bit odd to new investors, but impulse investing is indeed a common mistake. Once you’ve made your decision on what kind of property you’re looking for as well as the areas you’re most interested in, budget enough time to not only do your research, but to do it two or three times. Finding a deal which requires immediate action isn’t a rare situation for investors, but when you fail to achieve the required research it can turn into an investor’s nightmare. No matter how good the deal, take your time and think it through. Deals that are too good to be true often have hidden problems than can ruin your margins.

Treating Optimism and Potential as Reality 

Long gone are the days of what we might “investing on easy street.” As the market continues to change and force investors to adapt, there are still many who confuse their positive mindset with a factual reality and the mistake can turn into big trouble for them. Keep your momentum and positive mindset, but always examine investments cautiously with the worse case scenario first in your mind. Very few would be upset with earning a bigger ROI because they were conservative with their numbers; but virtually everyone would be disappointed to earn a lower ROI because they were too optimistic.

Buying Real Estate Without an Exit Plan

Investors know the importance of understanding the current real estate market, knowing the direction of the current trends, yet a very common and costly mistake is not knowing your exit plan from an investment. For many investors, buying properties in need of rehab relies on the ability to sell the property afterwards. This would be an exit plan, nut what happens if the property doesn’t sell, or problems prevent the sale from happening in a timely manner? Having your capital tied in a single investment could not only potentially kill your profit, but prevent you from being able to purchase other properties that might be available.

Location of Your Real Estate

It’s not only real estate investors that should understand the important of location. It’s what drives the real estate market and failing to research and understand the neighborhood and location of your investments can often be the death touch on some investments. Learning how to not only assess the property but also the location is what can keep investors further in the green instead of going into the red.

Potential for Converting Your Real Estate into a Rental Property 

If your spouse does not work or your job is a temporary one, make sure that there is a demand for rentals in your location. In case of an emergency, you can convert your property into a rental instead of going through a foreclosure. You can either act as a landlord, or you can fire a property management company. Many homeowners have saved their distressed homes from foreclosures by becoming accidental landlords.

The Renovation Trap

If you decide to invest in a property that either needs improvement or would benefit from some updates or upgrades, know how to estimate properly. This is especially true for beginners who have not yet gained the experience of rehabbing an older property. As the real estate market continues to improve across the country, finding great properties for flipping is increasingly harder. When and if you do choose to do so, know the metrics and ensure your estimates are conservative, so you don’t leave the deal with a loss instead of a profit.

Most people don’t learn from other people’s mistake, they often have to learn it personally, but hopefully these are some mistakes you can save yourself from making.


Learn Great Ideas For Selling Real Estate

September 3, 2014

Selling your home can be a daunting task. There is so much to do and so much to think about. If you are feeling overwhelmed by the process, or by just the thought of it, this articles has some advice for you. Here are some great tips and ideas for ways to make the whole process easier. 

Decorating the inside of your residence with seasonal items can make selling your house easier. Choose a few inexpensive products, such as window treatments that display the colors of the season, and complete a mini-makeover on your home. This will make your residence look fresh and well taken care of, giving the buyer a more favorable impression of the property. 

You should hire your own real estate agent to represent you. An agent that works for both the buyer and the seller can possibly have conflict of interest. Ask friends to recommend an agent to you. Interview several agents and make sure you are comfortable with the person you choose. A knowledgeable agent is an invaluable resource. 

Staging your house can be one of the most effective tools for selling in a different market. Keep your house as neutral as possible, removing personal pictures and painting walls an ivory, light brown, or off white. This allows a potential buyer to picture themselves as the homeowner, rather than you.

When your real estate agent calls to schedule a showing of your home, make sure to the home is always neat and tidy and smells good. Warm up the atmosphere in your home to convey a welcoming environment to all potential buyers, to help them visualize the house as theirs. 

To persuade a serious, qualified buyer who is on the verge of accepting your offer to take the plunge, let them literally sleep on it and get the dotted line signed! 

To negotiate a real estate purchase, you should research the area around the house before making an offer. Finding out what other recent sales in the neighborhood have actually sold for gives you better information in deciding what a reasonable price is for the house and gives you more strength with the seller.

To help you buy or sell real sate, you have to find an agent that knows the market very well. If not, they may suggest that you sell at a lower price than you should.

Instead of defining market value as what buyers are paying for similar homes in your ZIP code, think of it as what buyers are able and willing to pay. When determining selling price, be sure to make allowances for the availability of short sale and foreclosed homes. A house may be worth it, but only if prospective buyers are willing to pay the price. 

Selling your home doesn’t have to be the nightmare that some people experience. That’s why this article has given you such great advice. There are ways that you can increase your profit, decrease the time it takes to sell and keep your sanity in the process. Hopefully this article has shown you that. 

 


How To Transition Into Real Estate

July 21, 2014

Whether you have always had a passion for sales or if you simply want to get into the real estate market for your own future,  transitioning to real estate can be done in less than a year with enough studying, dedication, and preparation.

Consider Your Area of Interest

If you have an interest in working in commercial real estate or if you are drawn more towards residential properties, it’s important to consider your own preferences before you decide to pursue a career in real estate. Knowing whether you prefer representing commercial buildings or if you want to help families buy and sell homes can guide you in the right direction to get started with  accomplishing any goals you have set.

Read Books and Research

Begin the transition into real estate by investing time in researching and reading books by real estate moguls who represent properties you are most interested in. Not only will you gain wealth of knowledge from various bestsellers written by professionals real estate agents who are well-known in the industry, but you will also gain the ability to better connect with potential clients you want to work with professionally.

Get Certified

Taking a real estate agent course and getting certified in you local city or state is often required for you to legitimately begin listing homes, showing them and assisting others with their own hunt for any type of real estate. Research various certification courses and requirements you need to complete in your state before you begin forming your own agency or applying to work as a professional real estate agent at a company near you.

Build a Name For Yourself

Building a name for yourself once you enter real estate is essential, regardless of whether you have chosen to specialize in commercial or residential properties. Building a name for yourself can be done with an official website, local listings as well as by developing an online presence with the use of social media accounts. Having Facebook, Twitter, and other social media sites to represent yourself professionally is a great way to showcase and feature properties you are currently representing or that you have represented in the past.

The more you update and get involved with locals who are interested in real estate themselves, the quicker you can build your portfolio and being making a name for yourself.  Regardless of whether you want to help others invest in chain commercial buildings, warehouses or even the homes of their dreams, making a connection with any potential client is a must if you want to be successful within the real estate industry. If you don’t have clients, you don’t have anything.

Having an idea oh how to go about transitioning into real estate as professional is a way for you to feel more confident and comfortable even when you are working in a highly-competitive market/environment. The more you know about real estate prior to working as one yourself, the less likely you are to encounter hangups when seeking out new clients and building a professional reputation for yourself.


Myths About Real Estate

July 16, 2014

There are countless things that everyone “knows” about real estate.Considering that a house is usually the biggest big-ticket item the average person will ever buy or sell, it would be wise to spend some time searching the truth and the myths.

Compared to buying, renting is always a financial loss:

This is the most popular real estate myth. Buying only produces results when you own the home for several years. Every real estate market has it’s ups and downs that can’t be predicted. Transaction and maintenance costs of a home can require seven or more years of ownership to even break-even.

A house is a good investment:

If you were buying or selling a home during the big market crash of ’08, you know this to be untrue. Breaking even was about the best case scenario you could look for because houses weren’t increasing in value in a downward market. The growth of home prices derives almost solely from inflation. A house does not produce anything; the price can rise only with the purchasing power of buyers. If there’s no buyers, there’s no money coming in.

The best mortgage deal is a the fixed 30-year:

This is true. If you actually stay in the house for close to 30 years.

Paying one-third of income towards the mortgage is affordable:

Each situation is different. If you can pay more, pay more, and vice versa. Track your current income and expense to determine how much you can actually pay each month.

The down-payment should be 20%:

An ideal down-payment ratio would be 20%, however, few buyers can actually afford that. There are alternatives. Some government programs offer qualifying borrowers very low down-payments. Many borrowers chose to pay private mortgage insurance so they can make a minimal, upfront down-payment; it is then removed once the borrower has accrued sufficient home equity. A high-rate secondary mortgage is also available if you have good credit. With this option it is possible to borrow a portion of the down-payment.

Borrowers must also always consider the transactions fees in addition to the simple loan rate. Mortgage lenders are not faceless and interchangeable; each is different. If you are buying in a competitive market, chose a lender with a reliable reputation which may affect the seller’s decision. A lender well-liked by realtors will go a long way.

 

 

 

 


When Not To Try and DIY

July 2, 2014

When it comes to “Do It Yourself” your eyes can be bigger than your skill. Paint your room, pull up carpet, or plant some annuals, but when it comes to the tough stuff, it’s best to know when to call for help.

1) Anything That Involves Water

Don’t mess around with stuff that could hurt the house, like flooding the house and creating a mold situation. Unless it’s something simple like unclogging a toilet or fixing a drain, messing with plumbing can cause major dilemmas. It’s always better to ask a plumber before trying to tackle any plumbing issues on your own.

2) Anything That Involves Electricity

If there’s a risk of being electrocuted, ask an expert. You usually don’t get a second chance with electricity.

3) Hanging Drywall

Give it a shot in an easily accessible area. But in complicated installation areas and especially high areas, get a professional. It’s too easy to fall trying to do such a complicated process on stilts. Any process that could potentially end in a trip to the ER is better fitted for a professional.

4) Demolition

Swinging a sledge hammer looks easy, but you could also do great damage if you don’t know how to go about it. Beyond the risks of exposing yourself to asbestos, lead paint dust, and other hazardous material, who knows what else might be behind those walls. Gas pipes, water lines, live electrical wires are just a few of the dangers.

5) Roof Repair

Not only is this dangerous, but DIY patches on the roof could also end up damaging it even worse, cause a leak, and maybe void that part of your home warranty. Most roofing companies will come out to give you a free estimate anyway, so no need to risk your safety. If you suspect a problem, call your insurance company and have them check it out. It will cost you nothing.

6) Baseboards and Molding

Unless your confident you can properly calculate the angels and master that whole “measure twice, cut once” thing, you should leave this to the experts.

7) Paving Your Driveway

While the installation may look relatively simple to install, the reality is that the measuring and positioning of paving stones can be very time consuming. A team of professionals can cut installation down to a day, depending on your driveway size.  This is a very complicated and time consuming project. To save yourself the time and the frustration, it’s almost always easier to call a professional.


How To Transition To Real Estate

June 25, 2014

Whether you have always had a passion for sales or if you simply want to get into the real estate market for your own future, transitioning to real estate can be done in less than a year with enough studying, dedication and preparation.

Consider Your Area of Interest

If you have an interest in working in commercial real estate or if you are drawn more towards residential properties, it’s important to consider your own preferences before you decide to pursue a career in real estate. Knowing whether you prefer representing commercial buildings or if you want to help families buy and sell homes can guide you in the right direction to get started with accomplishing any goals you have set.

Read Books and Research

Begin the transition into real estate by investing time in researching and reading books by real estate moguls who represent properties you are most interested in. Not only will you gain a wealth of knowledge from various bestsellers written by professional real estate agents who are well-known in the industry, but you will also gain the ability to better connect with potential clients you want to work with professionally.

Get Certified

Taking a real estate agent course and getting certified in your local city or state is often required for you to legitimately begin listing homes, showing them and assisting others with their own hunt for any type of real estate. Research various certification courses and requirements you need to complete in your state before you begin forming your own agency or applying to work as a professional real estate agent at a company near you.

Build a Name for Yourself

Building a name for yourself once you enter real estate is essential, regardless of whether you have chosen to specialize in commercial or residential properties. Building a name for yourself can be done with an official website, local listings as well as by developing an online presence with the use of social media accounts. Having a Facebook, Twitter, Tumblr and even an Instagram to represent yourself professionally is a great way to showcase and feature properties you are currently representing or that you have represented in the past.

The more you update and get involved with locals who are interested in real estate themselves, the quicker you can build your portfolio and begin making a name for yourself. Regardless of whether you want to help others invest in chain commercial buildings, warehouses or even the homes of their dreams, making a connection with any potential client is a must if you want to work successfully within the real estate industry after your transition.

Having an idea of how to go about transitioning into real estate as a professional is a way for you to feel more confident and comfortable even when you are working in a highly-competitive environment. The more you know about the real estate industry prior to working as one yourself, the less likely you are to encounter hangups when seeking out new clients and building a professional reputation for yourself.


What is a Final Walk-Through?

June 4, 2014

The notion of a “final walk-through” seems to confuse both buyers and sellers of homes. Here is an explanation of a walk-through.

Walk-Throughs

What is a walk-through? What is its purpose? Is it important or just a formality? Can it be used to re-negotiate the terms of the contract at the last minute?

Typically the buyer just before settlement conducts a final walk-through. The idea is to be sure the seller is delivering the home to the buyer in the condition they agreed to under the terms of their contract. Therefore, it includes checking on anything the contract says about the condition of the property.

One requirement often seen in contracts about the condition of the home at time of settlement and possession by the new owner is that it will be “in substantially the same condition” as on the date of the contract. Another frequent requirement is that it will be “broom clean.” Still another is that all the working parts of the home (such as heating and cooling systems, plumbing, appliances that convey, electrical systems, etc.) be “in normal working order.”

Sometimes contracts require things like new carpeting to be installed, gutters to be cleaned out, and HVAC systems to be “professionally serviced and filters changed.”

Sometimes contracts require things like new carpeting to be installed, gutters to be cleaned out,

Read Your Contract

It’s a good idea for both buyer and seller to review their contract paying attention to what is said about the condition in which the home will be delivered. Those are the things that should get attention at the walk-through.

While walk-throughs are a formality of closing or settlement, they are not something you should take lightly. This is your chance to get any problems straightened out.


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