What To Look For In A Fixer-Upper
Buying fixer-uppers has been a common investment technique for many years. These days, with millions of foreclosed homes available at bargain basement prices, fixer-uppers can be an excellent choice for buyers who are shopping for a home to live in, as well as for real estate investors.
Fixer-uppers are properties in need of repairs. They may be liveable in their present condition, or they may need quite a bit of work before they can be occupied, but in either case, there are some very important considerations when choosing the right property to help insure that you can achieve your personal objectives.
1. The Location
It used to be pretty rare to find a fixer-upper in a nice neighborhood, but the housing crisis has changed that. Today, fixer-upper properties are readily available in many of the nicer neighborhoods, especially in those states that have been hit hardest by high rates of foreclosure.
Don’t be impatient. Look around your chosen area carefully before making a final choice. It’s very important to be familiar with the local market. Choosing the right location will result in better property appreciation, and more demand when you are ready to sell, or better tenants and higher rental rates.
Avoid locations that have too many vacant properties, locations that have too many other investors in the area, or are places that you would not want to live yourself. Investor over-crowding tends to increase your competition and will therefore reduce your profits.
2. Know The True Market Value.
A property is not always a good deal just because it is a fixer-upper. Don’t let anyone sway your judgement about a property simply because it’s a fixer-upper. Just because a home has been foreclosed on does not automatically mean it is a good deal. Good deals are made through knowing what the true market value is, then negotiating a price that is as far below the true market value as possible.
3. Find A Fixer-Upper Project That You Can Handle.
Whether you are planning to live in the property, fix it up to sell or fix it up to use as a rental property, the most common mistake is that of taking on a project that is beyond your ability to handle.
I’ve done dozens of fixer-upper projects, including managing them for other investors. The biggest problem I’ve seen consistently is investors who take on projects that are bigger than they can handle. This leads to cost over-runs, projects that take too much time, and even running out of money and another foreclosure. I’ve seen numerous projects that were never finished after the buyer got over budget and ran out of money.
It’s easy to rationalize a project before you start, and inexperienced investors often believe that they can renovate an entire house in 4 weeks, working only on weekends in their spare time. That is a common mistake.
One biggie I suggest is to avoid any fixer-upper that needs walls moved in order to be functional. Moving walls and things like staircases can create unexpected problems unless you are planning to use a contractor who has adequate experience and a crew that can get the work done correctly. I’ve seen projects that began well and got totally out of hand and over budget after the investor decided to make extensive changes to the original floor plan.
If you choose a fixer-upper property in a desirable location, keep your rehab budget and necessary work within your ability to control, and you have a good renovation plan that you can stick with, you should find yourself owning a great property at a below market price. That means you’ll have some positive equity or a positive cash flow right from the start. And after all, that’s the main reason why you should consider buying a fixer-upper.
Can People Avoid Foreclosure?
Many people emphasize on the fact that once you’re not able to afford your mortgage payments, your property will inevitably be foreclosed on. Because of the devastating penalties foreclosure can produce to an individual’s life, most people will do literally anything to avoid it. There are actually many reasons that make your lender issue a foreclosure notice for you, and most of them are a direct consequence to your uncalculated actions. However, in today’s conditions, the rules have changed a bit. With the economic instability we’re living by, it’s becoming harder than ever to have control over our financial lives. For people asking if it’s even possible to avoid foreclosure, I’ll reply that it definitely is, but only if you follow these tips:
1- Ignorance isn’t bliss:
I keep saying to people that ignorance is not the way to go when you’re facing financial issues. If you think that you’re going to outsmart your lender by ignoring them, then soon you’ll realize that you’re only hurting yourself. The number one reason people fall into trouble is because they ignore signs when they clearly see they’re coming. If you want to have all the options open to you, you need to act as soon as possible.
2- Don’t be afraid to ask:
Another key thing to avoiding foreclosure is to talk to your lender about possible alternatives. If you’ve acted as soon as you were not able to pay your mortgage, then there will definitely be many options left that you could choose from. Try to contact your lender and explain to them why exactly you are unable to afford any further payments. If they find out that you’re really honest and not just making things out, then they will be more than happy to offer you alternatives such as: forbearance, short sale, period extension, tax reduction…etc.
3- Solve what’s causing the problem:
If you are facing foreclosure, then there must be something wrong with your finances. While sometimes things could be way over your head (like job loss, death, loss of second income), most of the times it’s something that you have control over. You need to seek a debt relief expert who will make sure that you spend your money only on things that you and your family can’t survive without. If you learn how to spend rationally, then you’ll be able to avoid many financial problems and not just foreclosure.
I know that many people think that there will be no way for them to avoid foreclosure. However, with the right education and awareness, you will be able to avoid it and improve your financial as well as your overall life.
Home Selling – FSBO – The #1 Secret to Thousands of Dollars of Free Advertising to Sell Your Home
Thousands of home sellers are already taking advantage of free internet advertising to find buyers for their properties. You should do this also to maximize the number of people who view your home’s online listing.
There are too many ways to get free advertising on the internet to discuss them all in one article. Also, there are just as many ways to get advertising that are not free but are very inexpensive.
The thing to keep in mind is that even free ads have a cost: the cost of the time it takes to post advertisements. This will be either your time or the time of someone you hire for the job.
The #1 way to receive the most traffic viewing your home’s website is to list your home in Craigslist.
Free Classifieds
There are hundreds of free classified ad sites online. You can get a lot of traffic to your home-for-sale website by posting ads on just the top ones, however.
The number one free classified site in the world is Craigslist, which has local pages in every major and mid-size city. If you choose just one free classified site to advertise your home for sale, this is the one.
By doing a FSBO sale you have an advantage on Craigslist since they do not like their free service to be used too much by commercial organizations like realty companies. Put in your ad that is is “for sale by owner” and it will be very well received.
How to Create a Home Listing on Craigslist
There is something of an art to this, so you want to seek out help or advice. You must first create your Craigslist account and give what they want. Then you simply write a compelling description just like you would for any other real estate listing. Stress the positive but don’t use extreme language. Just the facts, please.
You can upload four free photographs to your Craigslist home listing, so be sure to do that and pick four great ones.
You will need to post a new ad every two days to keep it fresh. This will get you the most traffic.
My experience tells me that free Craigslist ads, when combined with other internet marketing techniques, can yield a large number of interested buyers for your home-for-sale website. Be sure to make it part of our Total Web Marketing Strategy.
If you want to sell real estate fast then you should learn the power of video in making home sales.
Investing in Real Estate Vehicle for Wealth Building
Real estate is one of the best vehicles of building wealth. Historically real estate has outperformed other asset classes like stocks or bonds, and is reasonably predictable and less volatile. There were times when real estate went down and there were times where it went up but on an average it has given a sizeable annualized return Development report, the price of an average single-family home has gone up from $22,300 in1968 to $206,100 in 2003, an increase of 824% in a span of 25 years
There are many ways to invest into real estate. With 100 percent financing options, low interest rates and good credit it’s fairly easy to get started. Numerous articles and books have been written about investing in real estate and success stories are a plenty.
Here, in a nutshell, are some of the most important reasons for investing in real estate.
Appreciation. Traditionally real estate has been viewed as a “buy and hold” type investment vehicle. Real estate has recovered from cyclical declines and regional corrections and it may continue to do so in future, primarily because of tight supply and demand. Land is finite and housing is a necessity. According to the U.S. Census Bureau: the nation’s population is projected to increase to 392 million by 2050 – more than a 50 percent increase from the 1990 population size. These factors presents a bright outlook for real estate investors. The fact that land is finite, and population is growing will cause most real property to rebound even if there is a market decline.
Properties can be bought and held for appreciation provided one has the staying power. To avoid occasional declines, a smart investor should buy properties below market value by using creative acquisition techniques and realize a gain by quickly turning around and selling for a reasonable profit. Of course, properties bought below market value can be held for cash flow and long-term appreciation as well.
Leverage. Leverage in real estate means making money on borrowed money. The power of real estate resides in using “other people’s money.” One can buy a property with zero down (100 financing) and make a profit upon sale as if it had been paid off entirely. Let’s assume you decide to buy a duplex worth $500,000 with 100 financing. Income properties have been appreciating at an average of 7 percent per year. With a 0 percent down your property at the end of the first year is worth $535,000. At the end of the second year, it’s worth $572,450. By using leverage or borrowed money to purchase a larger income property, you have increased your profit by $72,450 in just two years. A 14.49 percent return on a borrowed amount of $500,000. This is the power of leverage. Leverage coupled with appreciation can yield high profits.
Tax Benefits. There are numerous tax benefits of owning real estate, gains from sale of primary residence up to ($250,000 for single, $500,000 for married filing jointly) is tax-free. IRS allows taking deductions for depreciating real estate assets. Legitimate expenses like interest, depreciation, insurance premiums, management fees, legal fees, repairs etc are all tax deductible. You only pay taxes on net profits.
Real estate investing is an extremely rewarding process, but it needs perseverance and knowledge to achieve success. There are several proven techniques to make quick money but the key to success resides in buying properties below market value and selling them at the market or higher market price. Great deals can be found in foreclosures, fixer uppers, distressed properties and auctions etc.
Can I Sell My Home Online?
There are some important details to know if you plan to sell your home online. I’ve been selling homes online for many years now, and these are some of my best tips to get the attention of the right buyer.
First I’d like to talk about Craigslist.com because it’s often the first online forum that homeowners consider when they set about to market a home online. Craigslist is great, and it is without a doubt a tremendous resource if you live in one of its target areas. However, if you live in a rural area you won’t get as much attention as large urban areas. Craigslist is certainly the best resource if you live in a listed city, but you will have to get more creative if you life outside a major city.
Although I have primarily bought and sold houses in metro areas, my advice to homeowners in the country is to investigate local radio stations, area-wide TV stations, electric power cooperatives and other rural hubs where people gather online, and also printed shoppers and bulletins. Very often you’ll discover that there is an online version of the printed weekly shopper that is distributed by mail or available in newsstands at restaurants and other businesses with walk-in traffic. Sometimes the online version is free if you place a printed ad, or it’s simply less expensive to advertise online only. Pick up the shoppers wherever you go and check out what’s available.
Here’s a tip that might be a little controversial, but it’s worth a try, especially in rural areas – ask area churches if you could put a little notice on their website and in their Sunday church programs. You might find that arrangement works well if you donate a portion of your sale proceeds to the church.
The important thing is to get photos and information in front of as many potential buyers as possible if you want to sell your home online. Sellers in the city have a variety of options available to sell online. Once again, TV and radio stations usually have online classified ads for whole area covered by the particular station. That is a great place to advertise in order to sell your home online. One way to make your ad more like a news story is to advertise an open house, and go ahead and mention some top garage sale items that will be available on the same date, not before. Oh, and it doesn’t hurt to offer refreshments as well. Get people to stop by your place one way or another, and even if the open house visitors don’t develop an interest and make you an offer, they will surely tell friends and family about your home for sale.
By: Leo Kingston
5 Avoidable Mistakes That Swallow New Real Estate Investors
Every real estate investor was at one time a “newbie,” someone who is just stepping out into the world of real estate. Mistakes are made be each of them, some of them detrimental, some of them not so detrimental, and all of them lessons to learn in order to be successful in the real estate investing game. Here are the top 5 mistakes that newbie’s make:
1. Under-estimate the Market
Most newbie’s believe that they can get something for nothing, especially in this economy. They think that most seller’s will willingly give them the property for next to nothing. Does this happen? Do seller’s give properties away? Rarely. Sellers are selling because they want to: a.) sell, and b.) make money. A working knowledge of the value of a property is critical as opposed to the “what I want it for” value of the property. Knowing the market and how to point out flaws in an investment property can be the difference between picking up a great deal and killing a deal on the spot. Making a connection with a seller and coming to a common ground while still maintaining the profit in a deal is very important. Many newbie’s lose out on several properties before they learn this lesson.
2. Neglect to get finances in order.
A fatal fall for many newbie’s is that they do not get their finances in order before making an offer. This includes investors who are purchasing cash – the closing company wants to know where your cash came from, so it must be established in a bank account or a proof of funds letter from your personal banker. If this is something that you do not have lined up, there are several companies out there who offer POF letters that are relatively easy to obtain.
3. Under-estimate Cost of Repairs/Updates
A big pitfall for a newbie is that they do not have a comprehensive understanding of repair and updating costs, or worse, think they can do it themselves. The result? Loss of time to rent or sell the property and going over budget. The best way to fix this mistake is to acquire three quotes from different contractors. The newbie will learn more about repairs, updates and costs. When you’re getting started, no matter if you’re a wholesaler or a rehabber; it is always a good idea to make a connection with a trustworthy contractor in your area. Throw him a few bucks, buy him lunch, or even fill his gas tank up and he will gladly walk you through some of the tuff evaluations.
4. Driving out to look at every single property
New investors often want to drive out and look at every single property that they get a phone call about. This can be very expensive and time consuming. In a year, it is not uncommon for an investor to get leads on 100 – 200 great properties. If they were to drive out and look at every single one, then this would be a 60hr a week job. Don’t do that. Qualify your leads on the phone. Make sure the sellers are motivated, ask about repairs, and crunch the numbers before you decide to drive out. If there is no profit in the deal then why should you drive out to look at it? You shouldn’t!
5. Act too slowly in purchasing.
It is difficult for a newbie real estate investor to act quickly because they do not have the experience or knowledge yet to back themselves up. What often happens is they lose out on great investment properties because they do not “pull the trigger” to make the decision to buy. The loss of potential income is impossible to calculate from this mistake. How to avoid it? Become knowledgeable and confident so good decisions can be made in haste.
By: Dan koch
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