20 Dec 07 5 Things You Can Do To Make Money in Real Estate
If you're new here, you may want to subscribe to our RSS feed. Thanks for visiting!
1. Buy and HOLD – Hold onto your property and over the years it will lose value, gain value, lose value and gain value again. The real estate market is cyclical and traditionally sees a 5-6% average annual increase in value. How’s that for an investment you are making small monthly payments on?
2. Location, Location, Location – Real Estate is local and then even more local. Areas within cities gain more value than other areas within the same city. Research your way to a great real estate investment and refer to surefire tactic #1 after you do purchase a new home or real estate property.
3. Buy When You Are Ready – Being ready doesn’t mean that you want or even need a new home. Buy a home when your credit is good, there are low interest rates and the market is a buyer’s market (like right now). Buy a home when you plan on holding onto the property and try your best to put down a considerable amount of money. Higher down payments coupled with a good credit rating scream lower interest rates and payments.
4. Rent Your Property out and Break Even or Create a Little Cash Flow - Refer to surefire tactic #2 (location) and #3 (buy when you are ready) and rent your low monthly payment investment to a good family with good credit history. Then you will need to refer back to surefire tactic #1 and HOLD. Keep in mind that in some markets today, it is very hard to purchase a new home and breakeven, or to cash flow the property without a large down payment.
5. Buy a Foreclosure or Short Sale Home – A good way to make a little extra cash and boost your equity is to profit off someone else’s misfortune. It’s unfortunate that people lose or cannot afford their homes but you will do yourself a favor by buying a home the bank doesn’t want and the homeowner unfortunately can’t afford. Read over surefire tactic #3 (be ready), #2 (Location), #1 (HOLD) and #4 (if renting is your goal) once again and be sure to research and get professional advice.
Surefire tactic tip #1 - Don’t Listen to The Media! – The media isn’t always right and doesn’t always report what you need to hear. I’m not saying the media lies, I’m just stating that sometimes they paint broad strokes and don’t always consider surefire tactic #2 (Location) and the rest of the surefire tactics to make money in real estate. It’s difficult to analyze data and report on every location throughout the United States so listen to your local experts and let them tell you where and when to buy a new home. You never know, your real estate agent might actually have your best interest in mind!
Surefire tactic tip #2 – Get Off the Fence! - If you are ready to buy a new home, can find a great deal, have researched location and plan on holding – buy a home now. It defies all logic to think that demand will increase or supply will decrease by waiting to buy a new home. If no one buys a new home they won’t be sold. Do us all a favor and buy a new home if it’s right for you.
Surefire tactic tip #3 – Don’t Add to Our Current Dilemma – If you can’t afford a new home and don’t want to ask or do a little research to ensure that you buy a new home that works for you-you should rent. Rent a home or condo until you are ready to buy; when you do buy – don’t get into a loan program that will put you in a bad situation after the interest rate increases as they told you it would.
Tags: federal reserve board, Homes for Sale, interest rates, new homes, rate increases, real estate investment
19 Dec 07 The New Combo Loan
Any home loan over 80% of a homes value requires that the homeowner takes out a mortgage insurance policy. Traditionally, a Combo Loan has been a term used to describe the process when a home buyer takes two loans out on a property to avoid mortgage insurance. The first loan is typically at 80% of the homes value; the second loan makes up the other 20%, or the percentage that is left over after the down payment. This loan is also commonly referred to as an 80 – 20 loan or a 100% financing loan.
More recently, lenders are using the term Combo Loan to describe the process of bundling all or most of the consumer’s dept into one large loan with a low interest rate. This loan would include the home loan(s), car loan(s), and credit card debt; other consumer debt may also be included. The benefit to the consumer is that their debt is consolidated into one or two monthly payments, it becomes preferred debt and they lower their monthly bills. Another benefit of a Combo Loan is that it doesn’t affect the consumer’s credit rating the same as other popular consolidation programs.
There are several Combo Loan programs available. In most cases, the Combo Loan program is setup so that the borrower makes two monthly payments or takes out two different loans. One loan is setup on a 30 year payment plan and the second is setup to be paid over 15 years. There are many more options available so before considering a Combo Loan, be sure to seek advice from a qualified professional. Make sure you weigh the benefits against the costs as these loans are not for everyone. Often, consolidating debt into one loan can free up extra money each month which will allow you to save more or put more money toward your current debt.
Tags: 80 / 20 loan, combo loan, debt to income, eighty twenty loan, financing, home loan, mortgage loan, preferred debt
12 Dec 07 Solution to the Real Estate Market… is it Deserved and Will it Work?
As many of you know the federal government recently implemented “The Bush Sub-prime Bailout” a new program meant to decrease the amount of future foreclosures. The idea is to encourage banks to voluntarily freeze interest rate increases on sub-prime loans set to balloon next year; the freeze would last for up to five years.
The problem I see with the plan is the qualifying criteria: only homeowners who are less than a month behind on their homes repayments, received their new home mortgages in 2005, 2006 or 2007 and whose interest rates will not reset until 2008 are eligible.
I believe that the plan will ultimately only help a small group of people, and that the impact will not be as big as it is perceived to be. Not only are many Americans convinced that this help will not be enough and will not affect enough, but we are split 50/50 as a nation on whether or not the homeowners deserve the assistance. Many believe that the called “irresponsible” homeowners should not receive any government assistance and many others believe that if you’re going to help some homeowners, you have to help all.
Whatever the outcome, I’m positive that, as usual, everyone will not be happy. I don’t oppose helping homeowners out because an increase in foreclosures will likely negatively affect me too. I’m fine with this new program as long as it helps a lot of people that need help. It doesn’t seem like that is going to happen and I’m not sure if I support the program.
Do you agree with it and support it? Why or why not?
Why don’t we create a program that will help more people, one with fewer restrictions? A program that may truly help stimulate our fading real estate market.
Be sure to stop by and search New Homes in Phoenix Arizona on New Homes Section.
Tags: american, Bush sub-prime bailout, federal government, forclosures, homeowners, new homes, subprime loan crisis
