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Financing Your First Investment Property by Gerri Detweiler (Credit.com)

by by Gerri Detweiler (Credit.com)

 

(Very interesting article!  Investing in Real Estate is a great way to diversify your portfolio.  Call me to discuss my experiences...David DiGioia (704) 506-6434)

When it comes to buying a real estate investment property, the first deal is the hardest. I know this from personal experience. I kept talking about buying a rental property for several years until my husband finally took the initiative, found a property, and made me buy it. From a hotel room in Texas, where I was staying on business, I nervously signed a contract and committed myself to buying a “bread and butter” house in Florida. Thanks to rising real estate values, the house has appreciated substantially…leaving me to wish I had bought ten more!

 

I know that financing your first investment property can be daunting. It scared me — and I have a mortgage broker’s license, for heaven’s sake! But as they say, it’s usually the things we don’t do that we regret later in life. So if concerns about financing your first property are stopping you from getting started, here are some tips:

Check your credit early for mistakes and items you may need to address. Once you review your credit report, do not take any drastic action without first consulting with an expert. In particular, don’t close old accounts or pay off collection accounts right before trying to get a loan. Either action may hurt your credit score rather than help it.

If you are not eligible for a loan based on your credit or other qualifications, look for an investor partner to go in on the property with you. There are many others out there wishing they owned more real estate who lack the time and/or expertise to find and buy property. There are also “hard money” or private loans for good deals. The interest rates are high but can be worth it if you can refinance or sell the property in a relatively short period of time.

Decide What You Are Buying

All things being equal, second homes may offer better financing, but it will depend on where the property is located and what you intend to do with it. Talk with your tax advisor about how you plan to use the property to decide whether it would be better to buy a second home or an investment property. I am not a fan of stretching the truth on applications. If you are buying an investment property, call it what it is. Whatever you do, don’t buy a property where someone talks you into saying you will live in it when you won’t. There are illegal scams that solicit “straw buyers,” and these can get you into hot water.

Understand the Numbers

Investors have different goals. Some want to buy a rehab property, fix it up, and sell it quickly for a big profit. Others specialize in pre-construction, which means they put a contract on a home or condo in a development before it is built and then sell it for a profit, sometimes before they complete the purchase! Others will buy a home they can rent out, and are happy to break even or make just a little money each month, expecting appreciation to be the pay off. Still others want to buy a vacation home in an area they want to visit. They may use it from time to time and rent it out the rest of the year for a profit. Whichever approach you decide to take, make sure you understand the numbers, including the cost of financing, a down payment, advisor fees, repairs, etc. Be realistic about whether you can afford to make the mortgage payments for as long as it may take to find a buyer or a tenant.

Now that you see the possibilities, here are the steps you will want to take to make things move smoothly:

1. Gather Your Paperwork

Be prepared to provide copies of: two month’s worth of your bank statements, investment account, and retirement account statements (all pages; not Internet statements); the last two pay stubs if you have a regular paycheck job; driver’s license and Social Security card; and bankruptcy, divorce or separation papers, if applicable. If you are self-employed, you may be asked for some or all of the following: business license or occupational license, letter from your CPA establishing two years’ self-employment, last two year’s tax returns, business bank statements, and/or business financial statements.

2. Assemble Your Team

You will want an accountant who understands investment property tax strategies; a realtor or real estate attorney who can help you make sure you use the properly worded contract and include the right contingencies; a mortgage professional with experience in investment properties; an attorney who understands asset protection to help you form the right structure for holding your investment property (often a limited liability company or LLC); and an experienced insurance agent. I strongly believe all of these professionals should invest in real estate themselves since investment property transactions have special nuances.

Advisors with investment property experience can help identify potential problems before they happen. One of the big ones: holding investment property in your own name, warns Rich Dad Advisor Garrett Sutton, an attorney and author of Own Your Own Corporation (Warner) How to Use Limited Liability Companies and Limited Partnerships (SuccessDNA). By doing so, you expose your real estate and personal assets if a lawsuit arises.

3. Get Pre-Approved

Before you start house-hunting, get pre-approved for a loan through a mortgage broker or lender, and request it in writing. That piece of paper can be very helpful when you negotiate the purchase of a property since it gives the buyer greater assurance that you won’t tie up the deal and not qualify.

Now it’s time to dive in! You’ve heard of “analysis paralysis?” It’s a disease I, and many other would-be investors, suffer from. Fortunately, I have a spouse who drags me out of it from time to time. While you don’t want to dive in blindly, if you have done your homework and have found a good deal, at some point you have to just go for it. If you can’t seem to take the plunge, ask financial advisors to help you make progress, get involved with your local real estate investment club, or find an investor who can act as a sounding board.

“The biggest deadly deal disaster of all is hiding behind analysis because you are afraid to pull the trigger on the deal,” warns Peter Conti, author of The Real Estate Fast Track: How to Build a $5,000 to $50,000 per Month Real Estate Cash Flow. “At a certain point as an investor you will need to step forward in the deal and commit.”

You’re Cleaning Your House Wrong! Here’s Why By Jamie Wiebe

by By Jamie Wiebe


It’s that special time again. Time to throw open the windows, bust out a mountain of cleaning supplies, blast some Beyoncé, get into a zone, and start working on making your home spick and span.

But hold on, hasty home cleaner: Before you get started, we need to tell you how to clean. Yes, we really do. You probably think you know all there is to know—after all, you’ve been doing this all your adult life, right? But it turns out that creating a gorgeous, dust- and grime-free space is a lot trickier than it looks, especially if you’re not hip to professional cleaners’ sneakiest tactics.

So we did the dirty work for you. Here, we’ve rounded up eight ways you’ve been tackling spring-cleaning all wrong, according to the pros—and how to do it right.

1. Dry mopping

What’s the best way to get all the dirt and crumbs out of the way before you wash down the kitchen or bathroom floor? Dry mopping (aka “dust mopping”) might seem to make sense, but you’re better off busting out the Hoover. Trust the pros on this one.

Vacuuming removes two times more debris, says cleaning expert Donna Smallin Kuper. And you want as much debris as possible out of the way—otherwise it will just get spread all over your kitchen when you wet mop. And that will make getting rid of it the next time even harder.

2. Not emptying the vacuum receptacle

Before you dig out the vacuum for your spring-cleaning escapades, get rid of the evidence from the last time you cleaned. All of it. If your dust buster’s canister or bag is more than half-full, empty it before you start sucking.

A too-full vacuum makes a much less efficient cleaner, meaning you might have to go over your living room two or three times just to remove your dog’s latest layer of hair. Emptying the bag at the start (or if it gets too full midcleaning) means much less work for you.

3. Going rogue

Cleaning might not seem like a science, but it’s certainly simpler if you treat it like one. If your lemon floor cleaner says you need only 1 tablespoon per gallon, follow that instruction. You’d be amazed (or perhaps not) how many people think more is always better.

“If more worked better, they would recommend more,” Smallin Kuper says. After all, it’s in their interest to sell more product. So why would they tell you to save when they could tell you to splurge? Because their stuff is made to work a certain way.

Pay attention when you read (not skim) the manufacturer’s instructions, and follow them closely to save yourself time, sanity, and money.

4. Using paper towels and rags

Ditch the paper towels—and don’t use rags in their place.

Microfiber cloths are far more effective at removing dirt and grime than cotton cloths, and you can pick up these miracle workers in every shape and form—including gloves that fit over your hand for easy general-purpose dusting to varieties specifically designed for cleaning electronics or wood floors.

As a bonus, microfiber clothes catch dirt and dust (and even bacteria!)between their superthin threads, letting you clean most surfaces without the need for chemical cleaners. Of course, heavy-duty stains may require some additional work, but as a general rule you’ll be cutting costs in your cleaning cabinet.

5. Not wiping down your light bulbs

Cleaning your old bulbs isn’t just an aesthetic- or allergen-related requirement. It actually helps you keep your home cheery and bright—and your electricity bill under control.

Dirty light bulbs emit 20% less light than clean bulbs, Smallin Kuper says. And that’s not just wasted light—it’s wasted energy.

Before cleaning, make sure the lights are turned off (no shocking surprises here). Use a dry microfiber cloth to clean off your bulbs—water or cleaning sprays can affect the electronics—and enjoy the sudden rush of brighter light when you flip the switch.

6. Storing things in cardboard boxes

Boxing up your seasonal odds and ends? While it might be tempting to use the pile of leftover moving boxes accumulating in your garage, you need to a trip to the store.

One cleaning mistake Smallin Kuper frequently sees is “storing things in cardboard boxes in the basement, attic, or garage instead of waterproof, insect-proof plastic bins.” Mold, termites, or just dampness after a rainy spring can damage your precious belongings. Pick up some heavy-duty plastic boxes instead.

7. Not decluttering first

We see you eyeing that dust rag. Wait! If there’s still a layer of clutter around your home, don’t even think about cleaning.

If you don’t pick up things first, you’ll be making multiple passes through a room, putting toys on the couch to clean the floor, pushing them in the corner to clean the couch, then realizing the dirty toys left another layer of dust, which requires another quick cycle.

Make sure there’s nothing out that shouldn’t be visible. Only then do you have our permission to start cleaning.

8. Spraying the glass

Cleaning glass-framed artwork or mirrors? Here’s a less-than-obvious tip: Make sure you’re spraying your cleaner onto the cloth, not the glass itself.

“The cleaner can drip or spread into the frame and damage the artwork,” Smallin Kuper says.

We’re sure you’re quick with your hands, but it’s better to be safe than sorry—especially when it comes to high-value artwork.

You’re forgiven if nothing makes you like cleaning. But with some help from the pros to smooth out the onerous process, hopefully you can start having a little bit of fun while you’re ditching the dust.

We’ve all had that crazily obsessive-compulsive neighbor who keeps his property in pristine, showroom condition, keeps a stern eye on the whole street, and never hesitates to walk over and scold you about your broken shutters while you’re trying to drag groceries in from the car.

Maybe you’ve wondered what happened to cause your neighbor to get so uptight in the first place. Our guess: He’s tried to sell a house before. And he got burned by the comps.

When you’re getting ready to put your house up for sale, your Realtor® will likely run a comparable market analysis (or CMAs, aka “comps”). Comps are usually a good thing—the information can really help you price your house right.

But what happens when good comps go bad?


How comps work

First, a little background. To find a comp, a Realtor looks at homes in your area comparable to yours that sold recently. So if you have a three-bedroom, the Realtor will probably come back with the three-bedroom one block over that sold last month. She’ll be armed with the sold price, the list price, and other salient facts.

In theory, all that info can be used to decide a good list price for your house. But the reality is that collecting methods might not be perfect.

“Don’t believe the hype that all CMAs are created equal,” says Aaron Seekford, a real estate broker in Arlington, VA.

When comps work—and when they don’t

If you’re lucky enough to be living in an eerily perfect place that reeks of the 1998 classic “Pleasantville,” you probably won’t run into any trouble. Congrats! But if your hood is unusual or a little rough around the edges—or your home is a one-of-a-kind, and maybe not in a great way—comps might send you traveling down the wrong road.

Price your home too high due to those inflated comps, then it simply might not sell. Your Realtor can drop the listing price—again and again, if necessary—but then buyers might wonder if something’s wrong with the place. Price it too low, and your home will probably get snapped up right away—but you’ll walk away with less than you could have netted. Either way, it’s a bummer.

So you need to know the different comp-skewing dangers and how to deal with them.

So what are the trouble areas?

Living adjacent to crime or run-down areas: In my area people like to say there aren’t really bad neighborhoods, just bad streets. And it’s true. I live on a great block, but the people living two blocks over aren’t as lucky—and the houses there sell for much cheaper.

Having the best house on the block is rarely a good thing (we’ve talked about it before), and this is especially true in those up-and-coming areas. You just know you have what it takes to turn the nabe around, but you might pay for it with a bad comp.

“Most pros will adjust the analysis by pointing out the lower-priced homes and tax values,” Seekford says. But the only real way to tell how a neighborhood works is in person. “[They] would have to drive by the surrounding neighborhood, looking at the higher sales on your street versus the other blocks.”

Your Realtor should do this. But if you think she hasn’t, flag it.

The other house was next to a toxic waste site: OK, hopefully your house isn’t anywhere near a federal Superfund site, but you get the idea. What happens if the comp house sold for dirt-cheap because it was next door to something awful?

“ON CMAs, I often like to include a section of what I call ‘Other’—like if the home is located next to a mill or waste treatment plant,” Seekford says.

When you’re looking at your comps, make sure they factor in all the nearby things—good and bad.

The comps were based on number of bedrooms, but not square footage: When running comps, the number of bedrooms and baths definitely comes into play. After all, your two-bedroom isn’t the same as the five-bedroom down the block.

But the number of rooms shouldn’t be the only thing that matters. If your home has two master suites and the comparable home has two impossibly tiny rooms, that should be taken into consideration.

“Price per square foot is another excellent tool in pricing,” says Joshua Jarvis, founder of Jarvis Team Realty in Duluth, GA.

Square footage is especially important if you live in an older, less planned community. “It helps in neighborhoods where you can’t find the exact same floor plan,” he says.

No one has sold a home in your neighborhood yet: If you’re the first to sell in a newly developed neighborhood—or your area is coming out of a housing slump—and you’re the first seller out of the gate, that might be bad news for your comps.

“Some sellers are held hostage because no one [else] has sold their home,” Jarvis says. “It’s a weird standoff where the first one that sells loses but blazes a trail for others.”

So you can at least pat yourself on the back for helping out your neighbors, right?

What if your comps don’t measure up?

The information you get should be thorough, but what if the prices seem skewed, or you get the feeling your Realtor isn’t pulling the right comps?

“Challenge it,” Seekford says.

While not all Realtors are going to have an “Other” section, they should include information on location and surroundings, the pricing should make sense, and the Realtor should be able to tell you why she included what she did.

But don’t expect her to give you the green light to ask for loads of money just because your neighbors are living in squalor. Remember: Your Realtor wants to help you get your house sold, but she also has ethics to consider.

“A real estate professional will comment that your street warrants a higher value, but we as Realtors are under a strict code of ethics that do not allow us to comment on neighborhood demographic,” Seekford says.

But if you think that isn’t the problem—and more investigative work should have been done—ask for it. Your Realtor can run the comps again.

 

We, at Realty Executives Unlimited, will complete a FREE CMA (Comparative Market Analysis) for you!  We also go to bat for you with the appraisal company to advocate strongly on your behalf.  Call David and Nancy to schedule a time for your free evaluation...(704) 506-6434.

 

Budding Signs of a Crazy Spring Buying Season By Jonathan Smoke

by By Jonathan Smoke

It’s a season of changes—signs of spring are all around (hey, is that actually a mosquitoin our kitchen?), and we’re quickly going from the slowest time of the year for real estate to the busiest. As we close the books on March 2016, here’s a look at the key trends setting the stage for a crazy spring buying season.

First things first: The economy remains strong. After a turbulent start to the year, the financial markets shook it off and ended the quarter up. Meanwhile, 215,000 jobs were created in March, capping off a strong first quarter for employment and labor force participation growth.


After taking a dip in February, consumer confidence mostly recovered in March and remains near multiyear highs. The number of consumers who say they plan to purchase a home is at its highest point in eight years, reflecting that strong confidence but also significant pent-up demand for home purchases that were delayed or unresolved in 2015.

Unfortunately for those buyers, there still aren’t enough homes—whether newly constructed or preowned.

Listings have grown in February and March, but demand is growing even more quickly, so homes are selling much more quickly. The median age of inventory declined 19 days from February to March. And, nope, this isn’t a California-only phenomenon. Markets such as Rochester, MN; Madison, WI; Durham, NC; and Boston saw their median age of inventory decline by a month!

It certainly helps that buyers haven’t been battling the epic snows of last winter, but this early and rapid start to the spring buying season is also a result of consumers’ real sense of pent-up urgency about sealing the deal on a home. Plus, buyers are still enjoying the advantage of low mortgage rates.

The average 30-year fixed conforming rate ended March almost 40 basis points lower than the end of 2015. (A basis point is 0.01 percentage point.) The lower rate translates into more than 4% additional buying power and/or makes it easier for some buyers to qualify for a loan.

The latest signals from the Federal Reserve indicate a less aggressive stance on trying to increase interest rates in the near term, so rates may indeed stay low—under 4% on the 30-year—throughout the spring.

The tight supply conditions favor sellers, but we estimate that 80% of sellers also intend to buy. Under a sell-and-buy scenario, this is not the year to wait to list.

Displaying blog entries 1-4 of 4

Contact Information

Photo of David DiGioia Real Estate
David DiGioia
Realty Executives Unlimited
17718 Kings Point Dr, Suite B
Cornelius NC 28031
704-506-6434
Fax: (866)476-8652