Posts tagged "real estate"

Trying to obtain a mortgage for buying a home today can be incredibly challenging even for those with good credit and it could become even more difficult before it gets easier. This has many home buyers turning to seller financing which can bring many benefits but also comes with its fair…

An incredible number of Americans have suffered damaged to their credit scores in the last few years while lending standards for home loans have become increasingly tougher. This doesn’t mean that you should give up on buying a new home by any means. Begin rebuilding your credit now and you could see your credit scores rebound and be able to buy a new home and get a mortgage sooner than you think.

There may be nothing you can do about recent bruises to your credit but what you do from here on out can make all the difference in your financial future and that of your loved ones. Love it or hate it, your credit is likely the most valuable asset you have.

Good credit isn’t just about the negative items you have. Often it is a matter of not having enough good credit to outweigh the bad. Negative credit will eventually fall off your report but rebuilding your credit is likely going to require establishing new lines of credit.

The good news is that banks have recently reported relaxing credit standards for consumer loans and credit cards. Those who have been hit the worst may find applying for secured credit cards and loans or in-store financing the easiest route. Just make sure that you manage it wisely and don’t get further in the hole.

To establish enough new credit to qualify for a mortgage loan you will need at least 3-5 accounts. The length of time they are open and high credit limit are important too. Just don’t apply for too much credit or you’ll lower your credit score further.

If you are still coming up short know that some select mortgage programs will accept alternative credit. This means carefully documenting your rental payments and utility bills, not just with receipts but a paper trail showing how you paid them.

Foreclosure properties still offer huge discounts for home buyers looking for new residences, vacation homes and investment properties but are you really prepared for the potential work involved?

Recent figures from RealtyTrac show the top 10 states for foreclosure discounts compared to regular selling prices ranging from 47% in Louisiana to 36% in Georgia but these bargains often come with a price. Even $10,000 foreclosure homes can turn out to be teardown and new construction projects running up tabs well over $100,000.

It’s all about how much discount on the front end is worth the potential work lurking after closing.

Do you know how many tens of thousands of dollars it will cost to teardown a foreclosure if you find too many problems after you buy? How much more will it cost to rebuild?

Even if your work is limited to rehabbing properties or what appears on the surface to be a little clean up and cosmetic makeover how much can you handle yourself, do you have enough cash reserves to account for overages and carry the overhead?

This all means cash money out of pocket unless you are using an FHA 203 (k) rehab loan, Fannie Mae HomePath financing or qualify for another type of rehab mortgage loan.

Make sure conduct thorough inspections and get multiple quotes from contractors. If you plan to resell after fixing up your foreclosure you need to know the ‘subject-to’ value or ARV, as well as which improvements will yield the best ROI and increase the actual appraised value.

If buying a home as a residence or rental property is it wiser to just buy a home which has recently been remodeled and be able to finance the improvements and enjoy the peace of mind of a brand new property look, feel and smell?

by Allan Weiss

The National Association of Realtors’ chief economist was recently quoted as saying that the recovery is happening though not at a breakout pace.  

My problem with this statement is that it is very hard to accurately generalize about this market.  The dynamics are a complicated mixture of pervasive economic forces and locally specific forces.  For example, interest rates tend to very similar across all US markets.  This is also true of mortgage underwriting policies government tax breaks and the general mood of the economy.  To some degree, it is also true of the strategies of the large banks regarding what to do with their distressed properties.  If a national bank has a policy to aggressively market and sell foreclosed properties, this can affect many markets across the US.  

However, bank policy about foreclosed properties is also where individual market dynamics begin to come into play.  The concentration of distressed properties varies quite a bit by local market and depends on where people were most economically hit during the worst of the recession, where people tended to refinance and take out equity and where there was a high level of purchasing at or near the peak.  You can see how these rates have varied with this heat map.

Ultimately, price is determined by our old friend supply and demand.  The variables that go into supply and demand these days include how many foreclosed properties are on the market, how many other properties are on the market and how many qualified buyers are actually bidding on properties.  However, supply and demand does not complete the picture as well as it has in the past.  This is due to so called “shadow inventory”, meaning the number of properties that are or will be in the banks’ hands that have not yet hit the market.  If the banks flooded the market with these properties, prices would sink like a stone.  This is why its not nearly the whole story to talk about a “recovery”.  There cannot be a deep recovery until these properties once again are owner occupied.  This could be a long way off. 

Investing in real estate can be incredibly profitable but it can also be frustrating for real estate investors who rush in to wing it without getting the right real estate education and not knowing where the pitfalls lay.

Watch out for these 4 common killer mistakes real estate investors make…

1. Underestimating Property Management

Becoming a landlord may be way better than any job you have had before and owning rental properties may pay a lot more. However, this doesn’t mean being a landlord is stress free or fun. At some point you are going to want to hire a property manager. Plan ahead and factor this into your cash flow so it doesn’t bankrupt you later.

2. Not Addressing Maintenance Issues Promptly

Dealing with repairs can be a pain and it is often tempting for real estate investors to skimp where they can to maximize cash flow today. Unfortunately, this often comes back to bite you. The problems can quickly expand and become far more costly than if dealt with right away and constant patching versus replacing just means wasting more money in most cases. Don’t let deferred maintenance drag you down.

3. Not Carrying Proper Insurances

No one loves having insurance and we all know that it rarely pays out as much as you want, when you want it to. However, this is not something for real estate investors to skimp on. Even if you don’t take out a mortgage and aren’t required to have it, it could save you big time later. This applies to both title and hazard insurance. Remember, protecting your capital and equity must be your first concern.

4. Not Accounting for All Closing Costs

As with all things in life, closing costs are generally always more than you hoped or expected and your net paycheck is less. A few dollars or even a few thousand dollars may not sting most of the time but being careless with your math can quickly put you in the hole and lumber you with dead weight properties you can’t get rid of.

April is new homes month. And one of the virtues of a newly constructed home is the savings that come from reduced energy and maintenance expenses.

Data from the 2009 American Housing Survey (AHS) offer proof. The AHS classifies new construction as homes no more than four years old.

For example, for routine maintenance expenses, 26% of all homeowners spent $100 or more a month on various upkeep costs. However, only 11% of owners of newly constructed homes spent this amount. In fact, 73% of new homeowners spent less than $25 a month on routine maintenance costs.

Similar findings are available for energy expenses. On a median per square foot basis, homeowners spent 78 cents per square foot per year on electricity. Owners of new homes spent 65 cents per square foot per year.

For homes with piped gas, homeowners spent on average 53 cents per square foot per year. Owners of new homes spent 38 cents per square foot per year.

These data highlight that a new home offers savings over the life of ownership due to reduced operating costs. This is one of the many reasons that the current system of appraisals needs updating to reflect the flow of benefits that come from features in a new home.

“Occupied, Unoccupied, Preoccupied”

Nearly two dozen companies that manufactured government-issued trailers for storm victims after Hurricane Katrina have agreed to pay $14.8 million in a proposed class-action settlement of claims that the temporary shelters exposed occupants to hazardous fumes.

Plaintiffs’ Gerald Meunier said Tuesday that the agreement could benefit tens of thousands of Gulf Coast residents who lived in travel trailers provided by the Federal Emergency Management Agency after hurricanes Katrina and Rita in 2005.

Meunier said 21 trailer makers or their insurers will pay to resolve the claims without any admission of wrongdoing.

A court filing Friday asks U.S. District Judge Kurt Engelhardt to give his preliminary approval to the deal, which would be the largest mass settlement of claims over formaldehyde levels in FEMA trailers so far. The chemical, commonly found in building materials, can cause breathing problems and is classified as a carcinogen.