One of the best things you can do for your self is getting a pre-approval

Getting a pre-approval for mortgage financing before you start to look for a home is the best way to go, whether you are buying a property to live in or as an investment

If you want a get a clear-cut sense of how much you are eligible to borrow then you want to get a pre-approval. A pre-approval will also assure you of a locked-in mortgage rate for a set period of time, so there is no risk of any interest rate increases while you are house hunting. When you use a mortgage broker, the broker may be able to obtain a longer pre-approval rate hold.

Remember that the property you intend to purchase – along with your supporting information (such as income, down payment and employment history) will have to meet the financial institution’s criteria to be approved for lending. An important note to remember is that a pre-approval is not a guarantee of financing, and does not eliminate the need to make a conditional offer. When giving details to your mortgage broker or agent be truthful, you don’t need to have your deal held up because you gave inaccurate information.

Hans

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A good way to locate distressed properties is to go down to your local city hall and visit your city or county building code enforcement agency.

Introduce yourself, let them know that you are in the business of real estate investing. Tell them you are interested in distressed properties and that you rehabilitate these properties. Discuss with them their files on condemned buildings or properties that have multiple violations.

Don’t be shocked when they have no problem showing and discussing this information with you.

Once you have this information contact the owners and discuss possible deals.

This post is going to go into a new category titled “Ways To Locate Bargains”

Hans Anderson

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When is a condo not a condo?

When looking for a condominium, be aware that different buildings may have very different types ownership.

Freehold Units

Most condos are freehold strata units, where typically you have fee simple ownership of your unit. The land as well as common areas are owned collectively by all the owners. With most freehold condos, you pay monthly strata fees for upkeep.

Leasehold Units

Here you have a lease from a landlord for the right to use the unit for a specific number of years. Many leaseholds are created for 99 years, and you may only purchase your unit for the part of the lease that remains.

Co-op Units

With this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have a leasehold interest in your unit. You usually pay monthly dues to the co-op board to cover the building’s taxes and upkeep.

Condo buying tip

Monthly condo fees can affect how much home you can afford. By choosing a property where the monthly fees are just $200 lower, you can boost your purchasing power by $18,000.

Hans Anderson

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Becoming a Real Estate Rehabber by Alexis McGee

I’ve been talking a lot lately about the “Investors Flip Feast” going on right now. With an Investor’s Flip Feast you contract a great deal with a homeowner and then assign your contract to another investor for a quick finder’s fee. It’s a great way to get started in foreclosure investing without needing any of your own cash or credit.

Once you’ve mastered “assigning deals” to investors for quick paydays, you are ready to make some serious money in real estate by buying a property at a discount, fixing it up, and selling it on the retail market. This is also known as “rehabbing” or “retailing.” This is a great way to see the results of your work immediately and build wealth quickly. It works in any market, any time. And it is working especially well right now with all the great fixer foreclosure opportunities everywhere around us.

Our many foreclosures.com successful rehabber clients focus on fixing up “entry level” family properties and make $30,000-$60,000 or more on every deal. Doing two or three houses like this a year can provide great extra income for college and retirement expenses, while doing six or more deals a year can provide you with a great living and be your ticket to firing your boss.

Cosmetic vs. Structural Repairs

When looking for a great property to rehab, keep your eyes open for fixes that will make a big difference, but not necessarily cost a lot. Less really is better in the retailing business. Look for houses that need cosmetic changes such as:

· New paint

· New carpet

· New fixtures

· New landscaping

· Minor clear termite repairs

Until you become an expert at rehabbing, avoid properties with structural problems such as foundation issues or severe dry rot. Major rehabs can be extremely profitable, but you must refine your job-costing skills first or you can get stuck in a money pit.

Buy It Right and Everything Else Falls in Place

It’s often said that real estate investors make their money when they buy, not when they sell. This simply means that when you get in for the right price, you are guaranteed to profit when you get out.

So what is a good deal? You want to have at least a 30% margin PLUS repairs to ensure that you make enough profit. For example, if a house in perfect condition will be worth $200,000 fixed up, you must get it for $140,000 LESS the cost of repairs. If repairs are minimal and only $20,000 then you need to buy it for $120,000. In this scenario, when including repairs, you are actually buying the house at 40% off.

Out of that 30% margin, 15% goes to buying, holding, and selling expenses and 15% goes to your profit. In the same example, your 15% profit on a $200,000 retailed house will net you $30,000. The higher the resale, the more money you make. If the house is smaller than $200,000, I pencil in a minimum of $30,000 flat (rather than 15% percent) to make sure I get my minimum payday for my time, effort, and risk.

Also remember that the bigger the repairs, the bigger the discount (I’ve been known to buy at more than 50% discount on bigger projects). Remember, you’re dealing with motivated sellers–typically fixer uppers–which means the houses you buy will NEVER be in perfect condition.

Make Sure You Get it Right

To make every deal as profitable as possible, you must prepare in advance and estimate all your costs properly. The biggest risks in rehabbing property are:

While you can make a great deal of money in rehabbing, it can be frustrating and time-consuming if you don’t do it right. On the other hand, you don’t have to deal with tenants, you can see the progress being made every day, and you’re updating housing and improving a neighborhood. It’s rewarding to drive by houses you’ve bought, rehabbed, and sold. And your new neighbors love you.

If rehabbing houses interests you, try doing one or two while maintaining your current job. If you enjoy it, and it makes you enough money, perhaps you might try going full time as an investor. Fixing up houses for new buyers is one of the most satisfying things you can do in real estate, and the most profitable.

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Hans Anderson

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