Category: Mortgage

The Changing Face Of Property Investment

global property investmentsProperty is one of those things that is seemingly always cited as a great opportunity for investment. Housing, after all, is one of those things for which there will always be a demand. The President of the United States demonstrated over the course of his career that with a small loan (of a million dollars no less) that one can become a billionaire. However, scrutiny of these claims suggests that Donald Trump did not use his ingenuity and hard work to build the empire that he ostensibly relinquished control of when he took office earlier this year. The fact is that Trump simply did not have the connections or the capital to finance some of the projects that started his career as a developer. This demonstrates that the market can be tough when you are starting out. As a point in fact, Trump declared bankruptcy four times in 1991 and 1992 alone, with a further two bankruptcies, in 2004, and most recently, in 2009. A lot of people will not have the contacts to start building hotels in Manhattan when they are in their twenties. However, there is nothing wrong with slowly and honestly building a portfolio that modestly begins with a single property. Deciding exactly what property that should be is the difficult part.

The first and most important step to investing in property though is the initial financing that you need to source to get your start. If your father is not an immensely wealthy real estate developer, you will probably need to look to banks or other lenders to help you out. Trying to get a mortgage for an investment is different to seeking one so that you can buy the house in which you intend to live. The checks that will be carried out will be more precise, and you will need to provide detailed business plans before you can expect to be met with approval. You also need to worry about the fundamentals. If your credit rating is not as good as it could be, you may want to think about waiting a while before trying to start a portfolio. There are lots of ways to improve your credit rating like paying off your existing debts and demonstrating an ability to effectively and quickly paying off your future ones. However, until this is done, a new venture may be unnecessarily risky. Something as simple as registering on the electoral roll in your area could increase the chances of being accepted for a loan. The fact remains that when you take on a loan, you become personally liable for paying that money back with interest. If your investment fails or does not give you as great a return as you’d hoped, you could be in a particularly difficult financial situation. It is, therefore, crucial that you carefully consider each investment on its merits before taking on such a massive responsibility. You would not be the first person to bankrupt themselves as a result of ambition.

However, if you are pretty sure that you have enough money to make a move in the markets, and you will have enough left over in case it fails, you need to start looking for different types of property in which to invest. One option, and perhaps the most common, is buying residential properties to sell or rent. One particularly lucrative option is student property investment. Students often get loans to support them while they are at college and not able to work full time. They will, therefore, have the money to pay for accommodation, which, after all, is a necessity. It is a good idea to think about investing in student properties because there will always be a constant supply of new students. Each year, a group will graduate, but a new group will join to replace them. However, it is not just students that represent a good target demographic for rental properties. Millennials are now being described as Generation Rent. A lot of young people grew up or left college during the economic downturn that started in 2008. They have struggled to find jobs that pay well enough for them to be able to start thinking about a mortgage. In fact, a study conducted last year found that the share of 18 to 34-year-olds who own their own homes has fallen to a thirty year low. These people have no other recourse but to rent. If you own rental properties, you could claim your stake of a massive and expanding market. If you invest money in affordable, safe, amenable housing, you could attract lots of potential tenants who are still striving to start their careers and develop some sort of financial certainty and independence. The reality is that a lot of buy to rent properties are not that expensive and with such demand, getting a loan should not be too hard since you can prove the viability of your plan.

The issue of gentrification is one of which you should be aware of though. In the United States, perhaps the most obvious recent example is the change that has taken place in Brooklyn. Whereas areas like Greenpoint were once home to mostly immigrant communities, Brooklyn now has rents that are comparable to Manhattan because so-called ‘hipsters’ started to move to these areas. They become fashionable, and the rent went up as a result. It is a simple economic model. If a landlord realizes that their property suddenly has more value, they will charge more for it to take advantage. This sort of social change has been harshly criticized in the past because many areas lose the identity that they once had. The small, independent stores and businesses that allowed the local people to survive are replaced by chains and major corporations, therefore outsourcing the profits too. However, if you buy lots of property in an area that you anticipate will become gentrified, you could make immense amounts of money. The only problem is that it is quite difficult to anticipate where people will want to live next. Knowing that is the secret to making good investments.

How Much Should Your Home Down Payment Be?

financial quakeWhen you’re buying a home one of the biggest considerations is your down payment. Depending on the loan you are getting, you may have a specific requirement for how much you want to put down. That’s the minimum for that loan, though, and doesn’t mean you can’t put down a larger amount. But should you? That’s a choice only you can make. Before you decide on what level of down payment you want to consider, take a good look at your finances and be sure that any down payment amount you choose won’t leave you in financial peril.

Putting 20% Down

Among your down payment options is choosing to put 20% of the purchase price down on the purchase of your home. This option is often chosen because it generally avoids the requirement for you to pay Private Mortgage Insurance (PMI). However, not everyone has this level of down payment, and there are times when it pays to keep money where it is and not pull it from savings or other investments to use it for a down payment. In some instances, you could actually lose money by trying to avoid PMI with 20% down.

5% and 10% Down Loans

For people who don’t have a 20% down payment or don’t want to put that much money down on their home, 5% or 10% as a down payment is relatively common. Most people with good credit will qualify for these types of loans through various banks and credit unions, along with other types of lenders. Paying PMI will be required as a part of these types of mortgages, but in a number of cases, this PMI amount will not be high. With a low PMI and the ability to leave money in the bank or in investments, this can be a chosen option for many buyers.

FHA and the 3.5% Down Requirement

When people choose a Federal Housing Administration (FHA) loan, the minimum amount they can put down with good credit and solid income is generally 3.5%. In some cases, an FHA loan may require them to put down more than that, such as 5%. The money they put down can be from their own funds, or it can be a gift from someone else, but it cannot be from a loan. There will be PMI required because of the small down payment, but this can allow people who do not have a lot of money to purchase a home so they no longer have to rent.

No Money Down Loans, Like USDA and VA

In some cases, the Veteran’s Administration and the USDA offer loans where a person doesn’t have to put any money down. There are specific requirements for these loans, and the seller of the home may be asked to pay closing costs in the transaction. Additionally, good credit is generally required, and for USDA loans, there may be specific areas in which the property has to be located. This can be a hindrance for someone looking for property under these types of loans, but the lack of a down payment can also make them attractive to some buyers.

Putting a Larger Amount Down on Your Home

Another option is to put much more than 20% down on a home. Some people do this on investment properties, but there are also people who choose this option for their primary home. They may do this to reduce the size of their mortgage payment, get a mortgage with a shorter term, or otherwise get more favorable offerings from their lender. They may also have money available to them that they aren’t investing, so they want to use it in a way they feel is wise. Paying more down can be an option for people with higher levels of income or savings.

No matter which option you choose for a down payment, it’s often best to consider a variety of options. Then you can make the right decision based on your specific needs and situation. There is no right or wrong choice when making a down payment on a home, because everyone has different circumstances. The ‘right’ down payment choice is the one you’ve thought about, understand, and that works for you.

Invest In Paradise

invest in heavenAre you thinking about investing in property? If you are, you should consider buying a holiday home. People who invest in property often oversimplify the equation, missing out key details. For instance, they might just think about how much it costs to buy the property. But they should also be taking into account maintenance bills as well as the legal costs of actually buying the property in the first place. That’s why when you do buy property you need a lot more in your account than just the deposit.

One of the ways to make property investments easier is to look into buying a holiday home. There are numerous benefits of this type of investment. First, you will be able to use the property yourself and get enjoyment from it, even while it is making you money. Second, you can buy a property in a luxury location, driving up the rent you can charge as well as the overall price if you do decide to sell. Third, it’s easier to keep those maintenance bills under control. So, let’s look at the steps you’ll need to take investing in a holiday home.

Choosing The Location

There are plenty of different locations to consider when you choose to buy a holiday home. For instance, you could purchase one on the west coast of California. Orange County is a beautiful picture perfect paradise that tourists flock to year after year.

However, you do want to be careful when buying real estate that you don’t purchase somewhere too far. It needs to be in a location that either you love traveling to or that is close enough for annual trips. The reason for this is that you could have business that needs attending to at the property. Of course, there are always options to skirt around this issue if you have your heart set on a far off location for your holiday home.

Accounting For Maintenance

The best way to handle maintenance is to buy a home in a gated community or a holiday community. In areas like this, maintenance is often covered by local services in the area. As such, with a basic fee, you can always make sure that your holiday home is ready for new guests. That brings us to one of the most important aspects of investing in a holiday home.

Renting It Out

Renting out your holiday home is a great way to quickly make back whatever you paid for it. That’s why you might want to consider buying a more expensive property. This way you’ll be able to charge more in rent and attract high-end guests who can be trusted to look after the property during their stay. Spending a couple of million on a holiday home might seem like a risky investment at first. But when you realize you can rent it out for a couple thousand a night, you’ll see it’s the perfect opportunity.

Good luck with your own holiday home investment. Take the right steps, and you can easily make your next fortune on a home in paradise.

Increase Real Estate Value With Cost-Effective Improvements

real estate valuesIt goes without saying that there are ways in which you can make smart investments and ways in which you can make dumb ones. Investing your money in real estate is a smart investment. It’s a great way to tie up your money in a physical asset that can increase in value over time.

Generally speaking, all real estate investment earn money over time, as the market tends to always increase in value. However, there are ways you can speed things up and improve the value of your real estate investment in a short space of time.

How? By making home improvements. But, not just any improvements, cost-effective ones. You want to make improvements that don’t cost a lot of money but can add serious value.

Here’s how to do it:

Look For The Best Value Option

No matter what work you want to carry out on your property, always look for the best value option. This could mean looking for an option that uses different materials, but costs less.

As an example, say you’re building a garage – which is a great way to add value to the property – you have different materials to choose from. There’s the regular brick and mortar, then there’s steel. Most people go for the first option because they think it’s more traditional. However, the metal building cost per square foot is a lot less than this option. So, in this scenario, steel is the best value option. You still get a garage, it’s still sturdy and strong, you just pay less – simple.

Apply this tip to all your home improvements too. Say you want to replace your roof with a more modern structure, weigh up the material options and find one that offers the best value.

Try And Cover The Cost Of Labor

Often, it’s not the actual improvements that cost a lot but rather it’s the cost of labor. What I mean by this is that paying for someone to come in and make the improvements could cost a lot of money. So much so that it could prevent you from making a profit on your investment.

Bearing that in mind, what you should do is try and cover the cost of the labor yourself. Try and carry out the home improvements yourself or with the help of friends/family. You won’t have to pay any labor costs, and it could save you a fortune. Now, you’ll earn more from the improvements you make yourself, as they don’t cost as much.

Of course, there are probably some home improvements that you can’t make yourself. In which case, you will be forced to hire some outside help. But, refer back to the first point; find the best value option. Look around for a contractor or handyman – or whoever you need – but choose one that offers the best price as well as a proven track record of quality service. Even if you can only do one or two improvements yourself, you still save some money.

It’s all about finding cost-effective ways to improve your home and increase its value. Now, you could sell it earlier than you intended and still make a sizeable profit.

Why Flipping Houses Is A Good Business Opportunity

flipping house for financePeople who flip houses sometimes have a bad reputation because the work that they do necessitates that they be rather ruthless. To buy a house and quickly try to renovate it so that it can be sold for a profit is not an easy job at all, not least because so many factors in the success or failure of the enterprise are out of the person’s control. For instance, if someone was to buy a house and start pouring money into it to get it to the point that it is marketable and then the economy started to suffer, that person could potentially lose lots of money. It is not just shifts in the country’s economic well-being that can be a factor though. There is so much paperwork and legal fees that have to be processed to buy and then sell a house. Also, sourcing all of the materials and redesigning an entire house is something that some people spend years doing (although with the intention of creating a home rather than a profit). If you flip houses, you have to do it all much quicker. However difficult it may be, here are a few reasons why it is a great way to make money and something that you may want to consider doing:

It is not always the case that shifts in the economy are necessarily going to work against you. While it may seem rather callous, property foreclosures offer a good business opportunity. If you can buy a house as cheaply as possible, that gives you a greater chance of making a profit. Another good thing about the recent financial crisis was that it has lowered mortgage interest rates. This means that more people will want to take out mortgages, which means that there will be more potential buyers. Besides, the market is good right now. There are lots of people who are thinking ‘I want to sell my house fast’, a fact demonstrated by 5.71 million existing homes being sold last month, up from 5.47 million in February of this year. You always have to be aware of the rate of inflation, but right now is the best time to buy, renovate and sell houses in several decades.

Do not let anyone tell you that it is easy though. The sweat equity of flipping houses plays a big part in your final profits. If you do lots of the work on the property yourself, you can cut down on costs, but if you do not have the time or the skills and choose instead to hire outside labor, you can quickly see your future profits disappear. If you are not as handy with a tool belt as you’d like to be, you should consider trying to find contractors with whom you can negotiate a deal. If they work for a lesser rate, you could perhaps guarantee them work for several years.

Finally, to make money flipping houses, you have to be patient. Do not buy a house unless you are confident that it is the perfect one. Do not accept the first quotes that you receive from contractors and do not try to sell the place as soon as it is finished. Timing is everything.