Lisa Jones Realty: October 2012

Friday, October 26, 2012

What Happens In A Real Estate Recession

The residential real estate market is in a recession. Arguably, it can also be called a depression. The market has hit rock bottom. There are many more homes on the market than there are buyers. People are panicking and not making any investments because of the economy. This will trickle down into every aspect of the economy until the entire nation is in a full blow recession.

Real estate investors who were really raking in the money during the high times are now seeing the market at rock bottom. Many real estate investors have given up real estate investing and have turned to other investments. However, there has actually never been a better time to invest in real estate than right now, for two reasons.

The first reason is that a real estate recession causes homes to plummet in value. They will rise again, but it will take a few years. In the meantime, a smart investor who is looking for a long term investment, can purchase real estate and either rent it out to other individuals who need a place to live or live in the property. If the property is vacant land, it can just be left alone. There is much more real estate for sale than there are buyers. This means the prices are lower than if there were more buyers than homes. Take advantage of this fact and buy something.

The second reason why this is such a great time to purchase real estate is because of the low interest rates. The interest rates for mortgages have never been lower than they are right now. And because people are not buying homes and have pretty much saturated the refinance market, lenders are desperate to make loans. If lenders cannot make home loans, they go out of business, plain and simple. They are willing to make a lot of deals that they were not willing to make 20 years ago. Even people with less than stellar credit can get home loans, so if you think your poor credit is going to stop you from getting a home, think again.

Smart investors are thinking of this market as a reason to buy. Real estate is a tangible asset and something that everyone needs. We all need shelter. If you do not want to live in the home yourself, you can rent the property to other individuals. If you choose to rent to tenants, you might want to institute a rent to own policy in which part of the rent the tenant pays you goes towards the down payment of the property when the tenant is able to purchase the home. There is a time limit on this and this gives a tenant more of an incentive to pay their rent on time as well as take care of the property.

If you are looking for a home in which to live, this is a great time to buy. You can get a lot more bang for your buck, especially in upscale neighborhoods that were hit hard by the recession. And because the interest rates are so low, you will be surprised at how much you are able to afford. A real estate recession is tough, but this is a good time for smart investors to buy low and wait out their investment for the long term.

Lisa Jones is a seasoned realtor affiliated with RE/MAX Bryan-College Station. She offers a one-stop source for real estate services and information about Bryan-College Station Real Estate. Visit her homepage for a complete list of real properties college station, and you just might find the home you have been dreaming to have.

What To Look For In Real Estate Investment Today

You have probably already figured out that the real estate market is in a little bit more than a slump. Some call it a recession while others call it a full fledged real estate depression. Housing starts are lower than they have been since the early 1970s and foreclosures are at an all time high. There are many more sellers than buyers and housing prices in some areas has actually plummeted.

There are some people who purchased their homes at the height of the boom when everything climbing sky high that actually owe more on their homes than the value of their home. Because of this, many people have opted for foreclosure rather than pay for something that is not worth the money at the current time. The crash in the real estate market is not new. In the 1970s, it was also a very bad market for quite a few years and many people, especially those in the trades, were out of work.

The difference between then and now, however, is the interest rates. Back in the 1970s, the interest rates for home mortgages were at 18 percent. People not only could not afford to buy homes because of the bad economy, but also because of the fact that the rates were so high. In the early 1980s, when the interest rates dropped to 12 percent, people went wild. New housing was booming as was everything else. If someone put their home up on the market at noon, they would have it sold by 4 p.m. It was a sellers market through and through and remained that way for a few years. A lot of people made money on real estate investing during those times, especially new home builders.

The real estate market is always fluctuating, just like the stock market. You should not be frightened to own real estate. To the contrary, you should be frightened not to own real estate. Real estate is not only a solid long term investment that usually always pays off big, but also something that you actually need. As you need a place to live, it is better to pay your own mortgage than that of someone else.

If you are looking for real estate investments today, look for foreclosures. Better yet, look for short sales that have not yet reached foreclosure. In a short sale, you can save the owner from going into foreclosure and usually pick the property up for a lot less money than it is worth. You can offer low and even offer to allow the seller to stay in the home, for rent, for a while longer so that they can get their bearings.

You can find short sales by looking on the docket of the county clerk court list. A judge has to issue an eviction notice in order for a foreclosure to commence. This means the bank has already gone through the court system. You can find this information out at the county courthouse. Anything that goes through the court is public record. The judge issues an order for the sheriff to serve eviction papers through the court system.

Another way to find out about foreclosures is to contact banks and mortgage lenders for foreclosure listings. You will only find out about already foreclosed upon property. You can also put an ad in the paper stating that you are looking for people going into foreclosure and work with them in this manner. The short sale is one of the things you should look for when investing in the real estate market today.

Monday, October 22, 2012

Rental Properties: 10 Ways To Increase Income

What if you want better cash flow from your rental properties? You can't just raise the rents arbitrarily. If tenants leave, income goes down, not up. There are other ways, though, including the ones listed below.

1. Install coin-operated washing machines. Even if you don't have the money to do this yourself, you can find a company that will do it for you, and share the income with you.

2. Rent extra parking space. When I got tired of a renter's extra car, I just started charging a weekly fee. Then I didn't mind so much.

3. Raise the rent. Okay, we did dismiss ARBITRARY rent hikes as a cash-flow solution, but check on the rates for similar units. Are you renting at below-market rates?

4. Rent storage sheds. Especially if your apartments are small, your renters may need a place to store their things. Don't let them spend their money elsewhere. Put a few sheds on the property.

5. Enforce late fees. It is perfectly fair to have a fee for late payment of rent, and guess what? Those who are chronically late usually don't even mind - they just don't look at these things the same way as others.

6. Offer improvements for rent increases. If it's worth $25 more monthly rent to a tenant, install that dishwasher. Even on a credit card you'll pay less than that per month for it.

7. Install vending machines. If your rental properties are large enough, others will do this for you for free, and give you a share of the income.

8. Rent by the room. A four-bedroom house might make more money if you include all the utilities and rent by the bedroom. This has made a lot of fortunes for investors in college towns. It does mean a lot of management, however.

9. Rent-to-own sale. Usually there's a non-refundable deposit, and higher than market rents in these deals. When renters change their minds, as they often do, you got the deposit and better cash flow. This is great when poor cash flow makes you want to sell. You either sell or get the better cash flow as you repeat the process.

10. Reduce expenses. Every dollar of expense you cut goes straight to the bottom line. List every expense of your rental properties, and look at them one at a time. How can you reduce them?

Thursday, October 18, 2012

Rent To Own Is The Win-Win Scenario

If you are a renter who is tired of paying someone else's mortgage and want to own your own home, there are many ways to buy a real estate; one of them is Rent to own (RTO) option, a means of acquiring ownership over time without taking on debt. The renter agrees to lease the home for a pre-determined time usually from one to three years. There may be an up-front consideration fee. The seller allows the buyer to lock in a monthly price for the property till it is paid off. This is a way to settle on something that is right for you even if you are not in the position to make an immediate purchase. A lease purchase can make your rent money work for you instead of making your landlord rich.

Similar to a rent to own for a TV you can have a rent to own for a piece of real estate. In this case most sellers that are willing to do this (and there is not many) will want a non refundable deposit on the property, then you pay the landlord rent until you can purchase the property. This is similar to a lease option as well, except all you pay is rent. The deposit is much less than an option and you do not pay the taxes or the mortgage, since you are still a renter. The benefit of doing this is you get into your home with the intention of buying the house at a later date. A rent to own agreement, where the money goes directly to the payment of the home, could be saving you a lot of money in the long run.

This type of agreement works well with those who are new to the housing market or have made a job transition. It also is positive for anyone who needs to strengthen his/her credit or pay off an obligation to qualify for a home purchase. Another advantage to a rent to buy situation is that if you compare how much rent money is applied monthly to the home price, even if it is only 25-50%, it will still be much more money paid on the principal of the house than if you had taken out a loan for it. If you look at how much money goes to the principal payment of a home with a typical mortgage loan, you will find that most of your mortgage payment in the beginning is just paying interest on the loan. The best part about this is that with a rent to own home, you get to live in the home you want to buy while you work on fixing your credit up.

The biggest drawback to this is quite often the agreed upon price is a future price of the home. If you have a house that is valued at $350,000, a rent to own price would look closer to $370,000. That might seem like a rip off, but a lot cheaper than a rent to own with a TV where you would pay 2-3 times the price of the TV over a 5-year period.

This creative process of how to buy a rent to own house is becoming more and more popular because it creates a "Win - Win" scenario. The Buyer is able to get into a home with limited money and credit, and the Seller is able to get a fair price for their home and get it sold more quickly.

Sunday, October 14, 2012

5 Things You Should Know Before You Flip A Property

1. Money is made at the buy, not the sell of your flip. When flipping a house your money is made at the purchase not at the sell of the house. So, many times people buy a house with the intensions of making a huge profit only to find out that they could not make any money after all the renovations because the purchased price of the house was too high. When you purchase your property you need to be sure that you buy the house with enough money to make renovations, have carrying cost, and add about 5 $6,000. Now, cost is at $147,000, and that is if everything goes as planned. Profit is under 10,000 dollars. The mistake was made at the purchase at the home, not the sell.

2. Get an inspection on the home - Get a complete inspection done on your property. By, spending a few hundred dollars on this expense you can save thousands in problems that you cannot see. Foundation, Pest, Wood Rot, Etc... By, getting a full inspection you can rest assured that you know everything that is wrong with the property before it’s too late. In the contact for the house you need to make sure that you have 7 days to have an inspection preformed, and if the inspection finds problems that are going to cost more money that you are willing to spend you can get out of the contract with no penalties.

3. Don't do the work yourself: - Get a contractor or several sub-contractors and have the work done quickly. You need to have you house flipped ASAP, so that you can get it on the market and get it sold. When I started flipping my brother and me did a house together, and we did all the construction. I had a construction background and figured it would save thousands, but it took us over 4 months to get the work done that a contractor could have had the work done in a month. But, we trying to save money on our flip did all the work on our time off and after work, and it just took too long. On our 2'nd flip we used contractors for almost everything and had the house completely flipped with a new roof, new air conditioning, new hardwood, and much more in only 3 weeks. We did not have to spend all our time working on the property and were able to spend that time looking for the next deal. This is how you get rich in real estate.

4. Place the property 1 to 2 percent below market value: If you are wanting to flip real estate and make money the object is to buy and sell the property as quickly as possible, so that you can move on to the next house. If you purchase a house and try to sell it at top dollar to make and extra couple of thousand dollars on your flip, and end up holding it for 6 months you are losing money. Get the house on the market at a price that is going to blow the competition away, and you will sell it no matter what the market conditions. On our second house the market for selling house went down due to the housing market as a whole, and the tightening of the loans across America. We were told that you could not sell a property in this market, but we went ahead anyway and flipped our house. After 3 weeks on the market we had 3 people wanting to buy the house. Why, because we offered it at such a great deal that people wanted to jump on it. That is what you have to do especially if the market is slow.

5. Use a real estate agent - Do not try to sell your house on your own. Harness the power of a real estate agent and the power of the MLS system. When you do a FSBO you are depending on people driving by your house and seeing you sign, with a real estate agent you have someone actively marketing you house to get it sold. Once again this will free up more time for you to look for more great deals. If you want to help the process I have found that craigslist and listing you house in Google ad words help to, but I use these tools with the help of an agent to make sure I have all my bases covered.

I hope this article has been helpful with the basics needs of flipping a house. If you will study and learn you will make money. But, do your homework before you purchase a house, and make sure that you can pull a profit on your deal. Then, make it happen!

Friday, October 12, 2012

4 Steps To Real Estate Investing Success!

Real estate investing is always good and sometimes it's red hot. When it's hot dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.

It's startling to learn that of all those thousands of eager folks who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the "sizzle" and make profiting from real estate sound easy. The truth is that it's simple, but not easy.

Here's a quick plan that will enable anyone to begin building financial independence.

There are basically four steps to investing in single family homes:

1. Buy homes below full market value. Yes, people really do sell homes for less than the home's full value. The key is to understand that most home owners will only consider a purchase offer that is all cash and within 5% to 10% of their asking price.

The successful investor learns to find financially distressed home owners who have no choice but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.

Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all cash offer.

2. How do you find motivated sellers? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, is the one that was proven 75 years ago by the Fuller Brush company; door to door sales.

You are selling your skill as a home buyer to people who must sell. Your are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting you will learn more and buy more homes quicker than any other method. However, most people just won't walk door to door for three or four hours per week. OK, there are other ways.

You can watch public notices for the announcement of foreclosure sales. Meeting with a home owner right after they've received a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce and bankruptcy. You can follow the Homes For Sale listings in your local newspaper or Internet site.

You can telephone the names found in these notices or, and this is the least time consuming, send a postcard expressing your interest in buying their property. It will produce buying opportunities, just not as many as personal contact.

3. After you've found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. A good real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.

The home owner is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.

No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques like, leases, option and taking over mortgage payments. Little or no cash is needed for those deals. You can find plenty of reasonable priced educational material on those subjects in book stores or on EBay. The same education that seminars sell for thousands of dollars.

4. You make your profit when you buy! Never make a purchase until you've carefully determined exactly how you will get to your profit. If you hold it as a long term investment will the monthly rental income more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more desirable property? Have a plan before you buy.

There you have four steps that even a part-time investor can execute in three to four hours per week. What's the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be well on your way to financial independence.