Dressing Up Your Home for Sale

If you’re looking to sell quickly, you must have the better-looking home in the bunch.  Your home must have curb appeal to the widest clientele. When that first potential buyer drives up and parks at your curb it won’t take long for them to form an opinion and you’d better hope it’s favorable.

Realtors know that a buy or don’t buy decision is frequently made with that first impression; If the initial opinion of your home is favorable, potential buyers will continue their walk through thinking positive thoughts.  They will be looking for reasons to reinforce their positive feelings – reasons to purchase your home.  It will take something really negative to knock them off this track.

The rationale for this is simple.  The buyer comes into the house, sees the beautiful design setup of the décor and thinks “WOW! This house looks beautiful!  I must have it” It doesn’t matter how the new owner will change things around and it will  probably never look that way again, but that doesn’t matter.  The buyer believes it will look that way forever and that’s what counts.

If however the first impression is negative, the buyer goes through your house with a mind-set that says, “Nope, Not Me, Next!”

Buyers will universally see only what’s in front of them.  For example, your home may boast the best show stopping entry with hardwood floors, wood trim, solid oak doors, marble columns and more, but if the floor, walls and doors are all painted over with dreary paint, that’s what the buyers will see, the dreary dull paint, not the quality beneath.

Dressing your home is adaptable to the particular property as well as the budget of the owner.  It can be as simple as de-cluttering a house or as extensive as a partial remodel and custom staging.  It all depends on the condition of your home and what you’re trying to portray.

What Do Your Want Your Home To Say?

Concentrate on clean lines, open space and what costs less but makes the greatest impression. You can dramatically improve any buyer’s first impression of your property with simplicity.  By doing so, you will automatically increase your chances of selling quicker and attaining a higher price.

Remember don’t rely on the buyer’s imagination.  You have to transform what the buyer views first from something that’s poor or mediocre to something that looks great.  When that buyer walks in, he or she won’t have to imagine what your house could look like if this were landscaped or that were painted.  It will be spelled out for him or her – no imagination required.  Instead of what all it could be, you’ll be showing what it is.

How to Dress Your Home for Sale?

Here are the least expensive ways to dress your home At-A-Glance.

1. De-clutter all rooms.  Clutter becomes a visual headache.  It becomes the centerpiece for everyone who walks through your home and detracts from the purpose potential buyers came there.  Streamline kitchen counters, remove personal mail from table, discard old newspapers and arrange the rest in a nice little pile where no one can see it.
2. Remove personal collections.  Family photos, religious collections, and the rock collection should be packed away for your next home.  You never know what could turn potential buyers off; your home must appeal to everyone.
3. Let the light inside.  Remove dark curtains and drapes and open all blinds.  You want as much sunlight streaming throughout the house to appear open and friendly.

Assuming you don’t have to rehab anything, just stick with the basics.  Paint, flowers, and landscaping; do these simple things and it will make a world of difference to every potential buyer.

Consider Lease/Purchase When Buying or Selling

Rent to own has been around a long time. It is also sometimes referred to as Lease with Option to Buy or Lease to Purchase, but all terms mean the same.

For many individuals this is an attractive means of purchasing a home. Say for instance, you have credit issues that won’t be cleared up for a year or so. It’s best to find a Seller who is willing to write a Lease to Purchase Contract. This way you can go ahead and move into your own home and settle in with your family.

A portion of each month’s rent will go towards the purchase price of the house. How much depends on the terms of your contract. A good negotiator might even be able to get 50% of the rent to go towards the purchase price of the house.

Normally, in Lease to Purchase Contracts, the Seller will want money down on the home.

This gives them some assurance that you are a serious buyer. This money can also be used as a “Deposit” should you eventually decide against purchasing the house. It can cover damages that you and your family may have done to the property. These are all issues that should be addressed in your Lease to Purchase Contract.

Certain properties are more feasible for the Lease to Purchase Contract:

1. Homes that need repairs
2. Homes that have little or no equity
3. Homes located in less desirable areas
4. Homes that are For Sale by Owner

There are also Buyers who are more likely to be drawn to this type of sale:

1. Buyers with poor credit
2. Buyers involved in a divorce
3. Buyers who don’t have a lot of cash set aside for a down payment
4. Buyers who are self-employed

Info for Sellers to Consider

If you have a home to sell and have had it on the market for more than 6 months, you might want to look into the Lease to Purchase option. By allowing this option, you greatly expand your market of homebuyers. Your pool of buyers goes from a pond to a lake.

If you’re concerned about whether you will get your money eventually, then know this: You can ask for whatever terms you wish in your contract. If you’re looking for cash flow, then ask for a sizeable down payment. Often a buyer has cash to spend but their credit is flawed. Stipulate in your contract what portion of the down payment will go directly to the seller should the buyer default on the contract.

Another consideration is this: In most Lease to Purchase Contracts, the property is returned to the Seller if the Buyer defaults in any way. This way you get your house back and can resell it. Usually, there will not be any significant damage to the property because the homeowner believed that the house would be theirs someday. For this reason, there may even be improvements to the property.

For both the buyer and the seller, Lease with Option to Buy can be an attractive proposal.

Are Short Sales Your Path to Riches?

There are millions of properties today approaching foreclosure and homebuyers and investors are seeking the best deal towards pursuing short sales.  Our current real estate market has no doubt seen better days and investors know short sales are a sure path to big profits.

In a conventional home sale, the property is sold for enough money to pay off the existing mortgage or mortgages, and to pay the sellers’ closing costs.  When the mortgage amount plus closing costs equal more than the selling price, the sellers are “short” the amount needed to close the sale.

Sellers with sufficient financial resources can use money from other sources such as savings, to pay the amount they are deficient and complete the sale.  Sellers unable to do this may convince their lender to accept a loan payoff that is less than the amount owed.  A “short sale” refers to a sale where the lender agrees to accept a reduced loan payoff.  Some lenders call this a “workout.”

Wondering why a lender would agree to accept less than full payment?  Today most lenders will accept a BIG deduction because their books are full of foreclosed homes or homes steadily approaching that phase.  These lenders would prefer to clear the loan from their books, even at a loss.  When a borrower becomes delinquent on loan payments the lender is often faced with a foreclosure procedure, which is very costly.

Negotiating with the lender can be difficult. Many lenders will not consider a short sale until the property is marketed and the sellers are sure they cannot sell for enough to pay of the loan off completely.

Anyone purchasing a short sale will need a lot of patience.  This process usually takes time and will require persistent savvy negotiation on the part of the sellers and their agent.

You probably will have difficulty negotiating the price on a short sale property than on a property where the sellers are making a profit.  But even though the lender will want the highest price possible to minimize their losses, they usually have a strong motivation to sell.  If they didn’t have an urgent need to sell NOW, they would just wait for the market to improve.

Working with Pre-Foreclosures Before the Auction

Would you rather wait in line or beat your competition to investing in a foreclosure?  Pre-foreclosures are properties that have missed several payments and are facing foreclosure but everything is pending.  I’m sure you’ve seen those signs on the side of the road – “We Buy Homes For Cash” or “We’ll Buy Your Home Any Condition.” Those signs are from investors looking for those homeowners who’ve missed some payments and those suffering from stress not knowing what to do.

So how do you find pre-foreclosed homes?  The courthouse.  When homeowners become delinquent on their mortgage payments the lender must send a notice of default.  These notices must be filed at the courthouse and their all public record.

Homeowners who have received a “notice of default” are in deep trouble.  They are about to lose their home along with any equity they hold.

If you choose to market and advertise your services you’ll definitely need a team to start your venture.  A real estate agent will be your most valuable asset in targeting properties for investments.

Direct Mailings: you’ll need a database of names and addresses assembled to start contacting those homeowners facing foreclosure.

Marketing: what’s your message?  Come on too strong and your mailings will get tossed; miss the message and your mailings will still get tossed.  You need to let them know you’re there to help relieve the burden and give them a second chance.

Buying Homes with No Money Down – Fact or Fiction?

Home Buying bargains are everywhere but just when you think you know everything you learn there’s fact to buying with no money down.

Imagine purchasing a home and your local county city or state funds your down payment and closing cost?  Well it’s true; while some may need to meet eligibility guidelines, such as occupation or salary there are some neighborhoods zoned for revitalization programs that offer you a great deal on the price of a home and benefits that include down payment and closing cost assistance.

Now just because you hear phrases such as “Revitalization Zone” don’t begin to panic.  While some homes may be in undesirable neighborhoods and are more or less fixer uppers there are others that are complete gems.

Keep in mind, the term “revitalization” is based on neighborhood economic development needs not its cosmetic assets. A little time and patience and a quick drive to inspect the neighborhood are well worth buying a home with the benefit of financial assistance.

Many programs require the home buyer to remain in the home for a specified time. This is just assurance to make sure the new home buyer will stay for a while to help “revitalize” the area.  This helps to narrow the field when they turn their noses up to flipping the property.

You may be surprised to find what lurks around corners; diamonds in the rough that require no money down from you.  Of course, you won’t find these programs advertising that phrase, “No Money Down” and this is why most people do not seek out these grant programs.  Research home buying grants or better yet ask your realtor to help decipher the various grant programs that you’ll qualify for.

How to Buy Bargain Properties at Auction

So you want to invest in profitable property or simply buy a new home at a bargain price? If so, you want to consider property auctions.

Properties sold at auction are often owned by mortgage lenders after repossessions, former council / housing association homes or have being empty for some time after the owner passed away.

In each case, the owner has put the property on auction for a quick sale and this can lead to some great deals on the market value.

Finding an auction

As auctions tend to cater for property professionals, rather than the general public, advertising and awareness of auction houses is limited.

A good place to start is looking through the telephone directory, yellow pages or searching on Google or Yahoo.

Another good tip is to keep an eye out for For Sale signs outside homes. Where the board says ‘for sale by auction’, call the telephone number provided. You will either get through to an estate agent acting on behalf of the auction house, or you will get through to the auction house directly.

If you get through to an estate agent, ask them for the contact details of the auction house. The estate agent may be reluctant to do this, so it is worth being persistent.

Once you are able to make contact with the auction house, ask to be put on their mailing list. Although there is likely to be charge for this, you will begin to receive details of properties due for sale.

Before you bid

Having identified the property that you want to buy, you will need to arrange finance. For most people this will mean approaching a mortgage lender and it is important to do this in advance of the auction.

Remember once you win a bid, you are legally bound to purchase the property and you need to be able to pay within a set number of days.

The mortgage lender will require a basic valuation of the property, but it is advisable to invest in a full survey as the property may be at auction due to structural problems, which the basic survey would not pick up.

Before bidding for your desired property, you may want to attend a few auctions to get a better idea of the experience.

Winning your bid

Set yourself a price limit, but do not get carried away and bid beyond it. Having had a valuation done, you will have a good idea of the market value and should not go above the amount agreed with your mortgage lender.

If your bid is successful, you will be legally bound to purchase the property and will need to put down a 10% deposit of the property’s selling price. You will be asked to sign a contract, which you would have seen before the auction and the seller will be legally bound to complete on the day.

Finally you will need to pay the remainder of the selling price within an agreed period, such as 28 days.

Congratulations, you have just picked up an auction deal!

How to Build a Profitable Property Portfolio

As more and more of us look for better ways to secure our financial future than investing into stocks and shares or relying on our government to provide for us in our old age, so interest in purchasing property as an investment asset is increasing.

After all rarely do careful investments made into real estate lose a purchaser money, whereas all too often investments made into pensions companies or on the stock market fail to come to fruition – is it any wonder therefore that more people want to know how to build a profitable property portfolio?

Here are ten top tips that expert property investors abide by when looking for property that they can do up and resell or rent out for profit.  If you want to learn the tricks of the trade then read on…

1)    Speak to letting agents and do your own research, find out how much rent you think you can comfortably get from a given property type in a given location.  With that figure confirmed and in mind never pay over 100 times more than the monthly rental figure for a property.  I.e., if you’re sure a property will return you GBP 700 a month do not pay more than GBP 70,000 for that property and you will then achieve a good rental yield.

2)    Understand and harness the power of OPM – other people’s money!  Never over commit your own personal wealth to a pure investment property, instead use loans, mortgages and credit facilities and put down the smallest deposit possible.  Preserve your own wealth at all costs.

3)    Don’t invest in future potential, invest in real potential.  If an area is considered to be up and coming because in the future it will benefit from better infrastructure never bank on the investment being made…just know that if an area has already arrived and a particular property is already profitable, the future prospects for that property are already assured and make a far better bet than speculating to hopefully, maybe, potentially one day accumulate!

4)    Don’t make it personal – an investment is a pure profit making enterprise therefore don’t get emotionally attached to any particular property, remain as objective as possible.

5)    When letting property let it unfurnished because you will have enough to cope with getting the rent out of tenants and keeping on top of property upkeep without having to locate someone to fix a leaking washing machine or replace a broken crockery set.

6)    Seriously reconsider plans to renovate and refurbish to sell on for profit.  Unless you’re a builder and an interior designer and you have friends in the trade to help you and get you materials at cost you will end up paying more than you intend to pay and eating away at your profits.  Yes money can be made from renovation property but it is far easier to make money from rental property!

7)    Learn all you can from the wealth of brilliant books that have been published by property investors and real estate millionaires.  You can bet your bottom dollar that all those who give seminars on making money from real estate are actually making their money from you attending their seminar – whereas if a successful property portfolio owner has committed their knowledge to print you cannot afford to overlook their wisdom.

8)    Do hands on research – get out on the streets, visit letting agents and estate agents, look at property prices, rental rates, the popularity of a given area and only when you are certain about a location and a property type should you make a commitment to buy real estate.

9)    If you do your homework and keep revising your facts and figures you should be confident in your own decisions and not be swayed by others who might say your plans will never work.  You have to have dreams and ambitions and visualize all your hopes and hard work coming to fruition.  Keep your feet on the ground and don’t be swayed by the negativity and limitation of others.

10)    Be financially pessimistic.  Always underestimate your returns and overestimate your outgoings that way at best you’ll be spot on with your earnings and at best you’ll be rewarded for practical and careful budgeting.

Condos May not be the Best Real Estate Investment

Purchasing a new residence involves many issues and condos may be on your radar. Before you buy, keep in mind there are disadvantages to condominium ownership.

Condominiums are simply a collection of units in a structure or structures. All property on the interior of the unit is yours with few limitations. Everything outside of the unit, however, is considered to be in the common areas and subject to administration by the homeowners association for condominium communities. As with any bureaucracy, this can lead to problems.

1. Parking – One of the biggest pet peeves with condominiums is parking. While this may sound petty, it becomes a big issue over time if a particular situation occurs. One would think a condominium comes with assigned parking. In many developments, however, this simply isn’t the case. Instead, parking is on a first come, first serve basis. Over time, this situation can become extremely aggravating. With guests in the neighborhood, you may eventually find it difficult to getting parking!

2. Restriction – Condominiums are all about uniformity. If you prefer to express your individuality, the rules of a condominium may drive you insane. Since people live close to each other in condos, there has to be a number of rules to keep the peace. Many condominium associations, however, seem to go overboard with rules and one can often feel like a prisoner. You may be restricted from having pets, particular types of material in your units, renting to others, making noise outside during certain times and so on. Before taking the plunge on a condominium unit, you absolutely must read the rules and regulations for the association.

3. Association Fees – Homeowners’ associations need money to keep the gardening up and so on. As a unit owner, you are responsible for paying monthly homeowners’ association fees. Before taking the plunge, you need to make sure you understand the current fees. You should also look back in time to see how much the fee has risen over time. Paying an extra hundred bucks or so a month probably will not kill you, but what if the monthly fee is five hundred dollars?

The decision to purchase a condominium can be a complex one. While there are distinct advantages, the devil is in the details. Make sure you understand what you are getting into before taking the plunge.

How to Build a Financial “Moat” With Real Estate

Ages ago, people lived in elaborate and magnificent castles that were often protected by moats.  A moat is a wide, deep ditch dug around a castle to prevent enemies from overtaking the castle.  By surrounding the castle with water, moats served as an effective deterrent and provided the castle with the security it needed to prosper.

Today, many of us live in our own plain and simple financial castles that are much more vulnerable than the castles of yesterday.  Not only do our financial castles not have any sort of moat for financial security, many real estate investors do not know how to build a moat to accumulate wealth and retain it.

Why do most people today not have a financial moat?  Why no financial security?  Why are most people so financially vulnerable?  We live in a culture that has brainwashed us into thinking that we should be paid per hour of work.

If you are like most people, you have to work for a living. If you don’t work, you don’t get paid. You see, most people have “linear” income.  So while linear income may be the way most people earn their paychecks, it is also the reason many of us cannot afford to retire. This type of income continues only as long as you continue to work.

1. If you are an attorney, you get paid whenever you represent a client. If you don’t provide legal services, you don’t get paid.
2. If you are a teacher, you get paid when you teach our children. If you decide not to teach, you don’t get paid.
3. If you wholesale or retail houses, you get paid when you flip a house to another investor or sell it to an owner occupant.  If you quit wholesaling or retailing houses, you don’t get paid.

The real test is that if you are let go by your employer, your income definitely stops.  This happened to many people in the last few years, who discovered they were not secure; they only had the illusion of security.  Working for a company is fine, but you must understand it will never give you security.

That’s how linear income works. You receive income when you work. Usually you earn just enough income to pay your bills.  When your income stops, you’re on the brink of disaster.  In fact, if you’re like most folks, you’re no more than two or three paydays away from a serious financial catastrophe.

OK, so how do we start to build the moat that will provide us with financial security?

You start digging a ditch around your financial castle with “residual’ income.  A complete change happens when you start earning residual income.  Residual income means you continue to earn money for a long time.  When you do something right just one time, you get paid over and over again for what you did.

a. If you write a hit song, you get a small royalty every time the song plays on the radio.
b. If you write a book that becomes a best seller, you receive a regular royalty check from your book sales.
c. If you’re already a multi-millionaire and had a few million to invest in quality stocks and bonds, you now get a regular dividend check.

Residual income sounds nice, doesn’t it? Unfortunately, most people have trouble developing a residual income.

Why?

We can’t sing or write music. We don’t know the first thing about writing a book, much less how to go about having it published.  And I really can’t remember the last time someone came up to me and told me they had a few million dollars sitting in their checking account waiting to be invested.

However, there is hope.

There is another way to develop residual income. There’s a way to get monthly checks so that we can do the things we want in life.  So that we can achieve our dreams.  And best of all, almost anyone can develop this residual income that will give you the financial moat you need to accumulate and retain your wealth.

It was only after my wife asked me how many properties I had kept for ourselves at the end of 2004 that I realized that my “buy and sell” plan was making us very good money, but it would not make us wealthy.  I realized I had to keep buying and selling properties to keep making the money.  So I launched a strategy that complemented our buy and sell strategy.  The approach is to buy properties at substantial discounts, rehab the properties, and then rent them out.   And the best part is that the tenants pay for my properties. Once the properties are paid for, I will continue to have rental income for the rest of my life.

But what about tenants and toilets, you ask.  Well, everything has a price and you’ll have problems with your tenants.  But you have options.  You can (a) develop a system to minimize your problems with tenants, (b) retain a realty management company to deal with the tenants or, (c) offer seller financing to your tenants so they become owners and they no longer call you.

Personally, I like the buy and hold strategy for two principal reasons.  First, I continue to accumulate assets or rental properties.  Second, I will continue to receive residual income for the rest of my life whether I continue to rent the properties or elect to use a seller financing approach so I deal with a buyer/owner and not a tenant.

The more properties you accumulate, the more residual income you receive.  And the more residual income you get, the wider and deeper the financial moat you will build for yourself.  The wider and deeper your financial moat, the more difficult it will be for circumstances to penetrate your financial castle.  You will have the security you need to truly prosper.

False Rumours on New Law Affecting Owner Financing

I’ve received a number of emails from people claiming that House Bill 1728 will eliminate owner financed deals to once every 36 months.

This is patently FALSE.

Become an informed citizen and read it yourself:

http://www.govtrack.us/congress/bill.xpd?bill=h111-1728

This bill aims to include owner financed deals within the definition of “Truth in Lending” law. I’ve always instructed in my courses and seminars that you should comply with Truth in Lending, which requires just a few simple disclosures.

The bill also would, in theory, make a person who sells a home a “mortgage originator”. This would require compliance with RESPA, which I’ve always instructed in my courses and seminars that you should comply with anyway.

Finally, the bill would require that you actually qualify your buyer. It prohibits, “lending without due regard of the mortgagor’s ability to repay”. Duh! Only a fool would put someone in an owner financed house deal without checking their income, debt and credit.

All in all, there’s nothing to worry about here for investors, it’s just a matter of compliance with some federal rules and a couple of disclosures.  If you don’t want to get licensed as a mortgage originator in your state, then have someone who IS licensed originate your loans and charge his fee to your buyer.

Any comments or questions are welcome.