Real Estate Nation of Kings - RENofKings.orgIs a Real Estate Home Business Right For You? Real estate investing can be one of the most lucrative types of investments you can do. However, it can also be one of the most expensive and stressful investments you can get into. This is something that needs to be known and understood by aspiring investors. It's not all excitement and money! There's also plenty of work involved as well as the potential for huge losses. There may be some problems grasping the ins and outs of real estate investing but all in all, it is a business concept that is easily understood. Basically you buy a property, fix it up, or sit on it until the market increases, and then sell it for a profit. With the exponential growth of home based businesses nowadays, real estate investing can be an ideal way to start your own business and earn money from the comfort of your own home. A real estate home business is a viable option for someone looking to work at home and be their own boss. A real estate home business should definitely be considered by individuals wanting to earn money from home because of its massive income potential. However, a real estate business is definitely not for everybody. There are quite a few requirements and a lot of hard work needed to start and build a successful real state home business. And one of the most important factors to consider is the actual home business owner himself... In other words, you have to take into consideration your strengths and weaknesses. Would you really enjoy real estate investing? How much do you know about this type of business venture? Do you really have what it takes to compete in this fast paced and aggressive environment? Real estate investing for beginners is not always the easiest thing to do. Therefore, you need to KNOW that a real estate home business is, without a doubt, right for you before getting started! To decide whether real estate home business is a good fit for you, here are a few tips that you should consider. From here, you will be able to get a little better understanding of whether or not you are fit for this kind of business. 1. Do your homework Before you start making moves and setting up your real estate business, it is important to do your homework first. That means learning everything you can about buying and selling real estate, and figuring out what you will need to get started. Keep in mind that in this case what you don't know definitely can hurt you! Real estate can be very complicated and it entails a lot of research and learning to get all the information you need. 2. Hone your communication and negotiating skills In real estate investing communication is very important. You need to be good at communication with buyers and sellers. Negotiating skills will also help a lot for getting the best prices on your properties both when you are buying them and when you are selling them. 3. Start slow Most new business owners jump right in full force without a good plan, the necessary resources or long term goals. However, that is a recipe for disaster. You need to start slow and make sure everything is in order. That doesn't mean that you should wait forever and never get started. You do need to take action but don't put everything you have into your new business without a solid plan and set goals. Now, after reading this article, if you still think a real estate home business is right for you then go ahead and start taking the necessary actions to make your dreams come true! Remember, there is no better time to start your own business than right now! Homeowner Loans, Remortgages, and Other Ways to Save Money During Hard Financial Times These days money is tight for many people and it can be very difficult to afford every day cost of living as well as a high mortgage payment. There are a few things you can do if money is an issue and you need a quick fix. One is to take out homeowner loans against your property. This can be a great way to be sure you have the extra money needed for living as well as giving you longer repayment periods and keeping your payments as low as possible. You will obviously want to be sure you have homeowner insurance in case an unexpected disaster happens and you lose everything. Another thing you can do to lower your payments is to look at remortgages, which is where your current mortgage is moved to another lender with a better deal. This is a great way to save money during difficult financial times. A loan modification is also a very good alternative to foreclosure if you have come to a point where you think that is your only option. If you are struggling to make your mortgage payments a loan modification should be considered because it can be a win-win situation for you and your bank. While we are on the subject of saving money, there's a somewhat related topic I wanted to cover quickly in case you are desperate for quick cash... If you suddenly need money right now because an emergency or something else totally unexpected popped up then a payday loan could be just the thing to help you out. This is also called a paycheck advance and it's basically just a small, short-term loan to cover your expenses until your next payday. They are legal and regulated in most states but in some states payday loans are illegal so make sure you check into this before applying for one. You should also be very careful because payday loans typically have high APR's and can be hard to pay off, especially if you are already in a financial bind. However, if you need the money now and you are out of other options they can be something to turn to if necessary. Real Estate Investing... The Art of the Short Sale If there ever was a time to buy real estate, it's now. According to some experts, this is the best time to buy since the Great Depression. Not only that, but there's no end to desperate sellers out there who just want to get rid of their problem - called a house! There's one problem, though. Especially if you're considering buying residential real estate, there's probably a loan in place. That loan might be bigger than the value of the house! It's often at least as much as the value of the house. So, how can you get a deal when someone has a loan on the house you want to buy that's at least 10% over the real value of the house? Enter the Short Sale. What is a Short Sale? A short sale occurs when the lender who lent the money on the house you want to buy accepts less than the remaining principal of the loan as payoff for the loan. To really understand this, let's look at an example. Suppose Mr. and Mrs. A bought a house and paid $220,000 for it. Let's say they had $20,000 for a down payment, which resulted in their loan being $200,000. Unfortunately, Mr. A lost his job and fell behind on his payments. Then the recession hit, and made matters even worse by devaluing what Mr. and Mrs. A can sell their house for. Let's say their house lost 15% of its value. So now they can sell it for slightly less than $190,000. They're only two months away from being foreclosed on, and they desperately want to sell their house. They're willing to lose all their equity in the house. They just want out. You see the house and compare it with other houses that have sold in the area. You decide the house is worth $180,000 tops. You contact Mr. and Mrs. A, and they're willing to let you have the house for that. There's just one problem…their lender. Here's where the idea of the short sale enters the picture. You contact the bank and tell them you would like to buy the house and that you're willing to pay all cash. (Whether you're borrowing that cash or not is not the issue. It's all cash to the bank.) You fax them your analysis of neighborhood prices and tell the bank that you're willing to pay no more than $150,000. That's a $40,000 hit for the bank, but guess what? If they repossess the house and have to resell it themselves, they're going to be losing a whole lot more. So after going back and forth, the bank decides to let you have the house for $165,000. You're happy because you just bought a $190,000 house for $165,000. That's about 85% of its real value. And when the market comes back, which it will, you're set to make a real killing. Mr. and Mrs. A are happy because now they can finally start moving on with their lives and get a fresh start. The bank is happy because they've got a non-performing loan off their books and also because they didn't quite take a complete bath on this loan. That's a short sale and that's how they work. Now, let's look at a few details. How to Find Short Sales to Do This is actually easier to do than it was even five years ago. Used to be there weren't that many foreclosures so finding them took a fair amount of advertising on your part. Now, unfortunately, there are a ton of foreclosures. There's also a lot of foreclosure advice online to help you out. The first thing you need to do is to decide what part of town you want to invest in. Then you need to get in your car and ride that part of town just to become familiar with it. As you ride around notice which real estate agents are active in that area. If you're going to do a short sale, you need to come across as a real investor, not a "wanna-be" and not a tire kicker. So, the next thing you should do is to call a few of those agents, tell them you're interested in the area, and ask them if they have any properties with desperate sellers. You can be sure they do! Arrange a meeting with the agents you liked and who seemed to be the most professional. Sit down with them and tell them what you do. It used to be that most agents hadn't even heard of a short sale, but nowadays it's a fairly common thing. So, if this is your first deal, you don’t necessarily have to tell the agent that, but for goodness sake, don't lie. That will come back and haunt you. There's no sense in having the agent drive you around like they do home buyers who are looking for their next residence. Just tell the agent that you will honestly honor their commission on whatever property you decide to buy and see if they will give you a list of houses that are in foreclosure or are about to go in foreclosure. Next, drive around and look at those houses. Call a few other agents while you're driving so you can get a feel for the general prices. When you find a few you want to see the inside of, contact the agent who directed you to the house. Always honor the agent! They can be an enormous resource to you. Now, when you find a possibility, get the agent to do what's called a competitive market analysis for you. Then talk to the agent about getting the lender to do a short sale. From that point forward, it's all paperwork. Get Your Ducks in a Row Before you go filling out offers and bidding on houses, you need to make sure of a few things. One, how are you going to pay for the house? A lot of first time investors use the equity in their own house to get started. Do you have enough equity to pay for the house outright? Or do you need to supplement this with a loan. If you need a loan, you'll want to talk with a banker before you actually see any houses. You don't want to waste your time, and you don't want to waste other people's time. Ask the banker how fast they can close on the loan once you locate the house. A lot of lenders who are doing short sales expect a quick closing. As a matter of fact, a quick closing is a real selling point for them and gives them a reason to discount the loan even further. Another thing you need is a general knowledge of the costs of repairs, or at least someone who you can get to go see the house and give you some estimates. Often houses that are in foreclosure or are nearing foreclosure are in disrepair. Look at it like this. If the sellers could pay to fix the leaky roof, they could probably pay the house payment. Before you buy the house, you want a rough estimate of how much it's going to cost to fix the house up. You don't have to renovate it, but you do have to bring it up to the normal standards of the neighborhood. What's Your Exit Strategy? Chances are you're not buying this house to live in yourself, although you could. Chances are this is an investment for you. If that's the case, you need to figure out in advance what you're going to do with the house. Do you want to just flip it for immediate cash? Well, that's easier said than done, unless you're in a particularly hot neighborhood, or unless you're willing to sell the house at a discount. You can do this, by the way, if you get a great deal from the lender. But if the deal's not that good you could end up losing a few thousand by flipping it immediately. If you're going to flip it, then how much work do you need to do to it and how long will that take? Don’t forget to figure in the cost of your loan during that time. Most likely, you're going to either rent the house or offer it up for a lease purchase. Both of these are excellent exit strategies in today's market. You can rent it until the market comes back, then you can sell it for a huge profit. Or, you can lease purchase it now to someone who can't qualify for a loan just yet. Either way, if you buy the house right, you make out like a bandit! Conclusion Short sales are not really that hard to do. You just have to know your numbers before going forward. Don’t let emotion rule you. Don't buy a house for more than you decided to. Just fix a maximum price then negotiate. If the lender goes for your deal, then great. If not, then that's fine, too. You just move on to the next potential deal. There are plenty out there! This Isn't Real Estate Related but It's Still a Good Business and Finance Tip... When you are low on money it's very important to look for ways to save money wherever possible. That includes paying less for auto loans when you are looking in to buying a car. Not everyone who buys a car will get the same interest rates and fees, but getting the least expensive rates for the auto loan is not extremely difficult if the buyer shops around and does some comparisons between several lenders. You should also try to get a car warranty if possible to cover unexpected damages to the car that might not show up right away. That might be something that can be negotiated into the deal with the car dealership, and it might end up saving you a lot of money. |