Over the past few years, real estate investors, hungry for break-even or positive cash flow rental properties, purchased income properties out of state. California investors bought houses in Florida, Texas, and Oklahoma. Florida investors purchased houses in Louisiana. Texas investors purchased in Las Vegas. Many of these investors made millions of dollars because of the appreciation in hot markets.
On the other hand, in 2005, some beginning investors lost their hard-earned investment capital or only made a meager profit because they failed to do their homework on the out-of-state area’s real estate market and customs.
If you ‘re thinking about buying investment properties in a different state than you’re accustomed to, beware of these five surprises.
Surprise # 1 - ‘These (extra) costs are the norm in this state!‘
Besides extra closing costs like pricey surveys, common in Florida but rare in California, other surprise costs included higher transfer fees and taxes. Property taxes in Florida cost much more for investors in Florida than in California. On the other side of the country, out-of-state investors were shocked by California’s state tax held in escrow: 3.8% of the property’s SALES price, no matter the actual profit made. In other words, an investor who made a quick profit of $20,000 on a fast flip could have more than the profit held until the next year’s income tax filing.
Surprise # 2 - ‘You can’t lease this property!‘
New home developers and many Homeowners’ Associations (HOA)s prohibit property owners from leasing their properties. Some of these restrictions got passed, without the investor being notified, during the property purchase phase. You must read the fine print to see if any clauses prevent the rental of the property. Home builders, to keep the value of the neighborhood up, added restrictions requiring the purchaser to occupy the home as a primary or secondary residence.
Surprise # 3 - ‘This house will only rent for $750 per month, not $1200!‘
This was one of the top mistakes made in 2005. Large real estate investing groups, selling out-of-state properties to local investors, inflated the rental income. Because so many houses were purchased in a limited area by investors, a rental glut lowered the expected income. This created hardships for investors who suddenly had to pay out hundreds of dollars a month instead of reaping promised profits.
Surprise # 4 - ‘You can’t sell this house, now!‘
Some investors who couldn’t rent the out-of-state property decided to sell because the values did rise significantly while the house was built or during the purchase time. However, many investors were stunned when they were told they couldn’t sell the property within the first year after purchase. Restrictions prohibiting real estate investors from quick-turning their properties is a trend that is growing increasingly popular with some developers.
Surprise # 5 - ‘Houses don’t appreciate 30% per year here!‘
Perhaps you’ve attended or been invited to a high-power investment seminar that promotes out-of-state real estate investing. Some of these ‘investor clubs’ really are promoters who receive kick-backs in real estate commissions, property management fees, mortgage loan fees, and even fire insurance premiums. They tell stories of huge appreciation gains, which are probably true. However, not all areas enjoy significant appreciation–year after year.
Don’t make the costly mistake of not fully researching the complete market customs and restrictions in the area where you’re thinking about investing. If you can’t afford to go check out the area in person, choose another area that you can visit.
Copyright ? 2006 Jeanette J. Fisher
About the Author: Jeanette Fisher offers FREE “How to Start Real Estate Investing Teleseminar,” free ebook, “The Truth about Making Money Flipping Houses” http://doghousetodollhouse.com
Tags: Clauses, Home Builders, Homeowners Associations Hoa, Income Tax Filing, Investment Capital, Investment Properties, Meager Profit, New Home Developers, Positive Cash Flow, Property Owners, Property Taxes In Florida, Purchaser, Quick Profit, Real Estate Investors, S Real Estate, S Sales, State California, State Tax, Surprise Costs, Texas And Oklahoma
You might be looking for “How to make a zillion dollars in 3 months”, well, you won’t find that here but if you want some practical tips, you came to the right place. Read on …
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn’t want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow ’strict’ foreclosure ? the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don?t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the ‘right of redemption’. This legal claim will let them have a particular amount of time in which to ‘cure the loan’. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There’s no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold ‘as is ‘, or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you’ll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves ? besides wearing various other hats.
The property does not need to be free of every little fault, but you’ll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you’re searching for a ‘fixer-upper’ and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a ’short sale’ deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO ? real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say ‘Hi’ to Donald Trump for me!
Tags: Amount Of Time, Arsenic, Definite Time, Demeanor, Familiarity, Foreclosure Procedure, Foreclosure Proceedings, Foreclosures, Homework, Legal Claim, Legal Processes, Lending Institution, Mortgage Holder, Notice Of Default, Possession, Possessions, Quick Profit, Real Estate Investor, Right Of Redemption, Zillion Dollars
Over the past few years, real estate investors, hungry for break-even or positive cash flow rental properties, purchased income properties out of state. California investors bought houses in Florida, Texas, and Oklahoma. Florida investors purchased houses in Louisiana. Texas investors purchased in Las Vegas. Many of these investors made millions of dollars because of the appreciation in hot markets.
On the other hand, in 2005, some beginning investors lost their hard-earned investment capital or only made a meager profit because they failed to do their homework on the out-of-state area’s real estate market and customs.
If you ‘re thinking about buying investment properties in a different state than you’re accustomed to, beware of these five surprises.
Surprise # 1 - ‘These (extra) costs are the norm in this state!‘
Besides extra closing costs like pricey surveys, common in Florida but rare in California, other surprise costs included higher transfer fees and taxes. Property taxes in Florida cost much more for investors in Florida than in California. On the other side of the country, out-of-state investors were shocked by California’s state tax held in escrow: 3.8% of the property’s SALES price, no matter the actual profit made. In other words, an investor who made a quick profit of $20,000 on a fast flip could have more than the profit held until the next year’s income tax filing.
Surprise # 2 - ‘You can’t lease this property!‘
New home developers and many Homeowners’ Associations (HOA)s prohibit property owners from leasing their properties. Some of these restrictions got passed, without the investor being notified, during the property purchase phase. You must read the fine print to see if any clauses prevent the rental of the property. Home builders, to keep the value of the neighborhood up, added restrictions requiring the purchaser to occupy the home as a primary or secondary residence.
Surprise # 3 - ‘This house will only rent for $750 per month, not $1200!‘
This was one of the top mistakes made in 2005. Large real estate investing groups, selling out-of-state properties to local investors, inflated the rental income. Because so many houses were purchased in a limited area by investors, a rental glut lowered the expected income. This created hardships for investors who suddenly had to pay out hundreds of dollars a month instead of reaping promised profits.
Surprise # 4 - ‘You can’t sell this house, now!‘
Some investors who couldn’t rent the out-of-state property decided to sell because the values did rise significantly while the house was built or during the purchase time. However, many investors were stunned when they were told they couldn’t sell the property within the first year after purchase. Restrictions prohibiting real estate investors from quick-turning their properties is a trend that is growing increasingly popular with some developers.
Surprise # 5 - ‘Houses don’t appreciate 30% per year here!‘
Perhaps you’ve attended or been invited to a high-power investment seminar that promotes out-of-state real estate investing. Some of these ‘investor clubs’ really are promoters who receive kick-backs in real estate commissions, property management fees, mortgage loan fees, and even fire insurance premiums. They tell stories of huge appreciation gains, which are probably true. However, not all areas enjoy significant appreciation–year after year.
Don’t make the costly mistake of not fully researching the complete market customs and restrictions in the area where you’re thinking about investing. If you can’t afford to go check out the area in person, choose another area that you can visit.
Copyright ? 2006 Jeanette J. Fisher
About the Author: Jeanette Fisher offers FREE “How to Start Real Estate Investing Teleseminar,” free ebook, “The Truth about Making Money Flipping Houses” http://doghousetodollhouse.com
Tags: Clauses, Home Builders, Homeowners Associations Hoa, Income Tax Filing, Investment Capital, Investment Properties, Meager Profit, New Home Developers, Positive Cash Flow, Property Owners, Property Taxes In Florida, Purchaser, Quick Profit, Real Estate Investors, S Real Estate, S Sales, State California, State Tax, Surprise Costs, Texas And Oklahoma
If you are looking for good returns over time, and a lower risk investment strategy, then investment in real estate is a good path to follow. Worldwide real estate markets are following an upward trend, that are creating exceptional returns for investors which has led to more people getting involved in this sector, and pushing gains even higher.
One of the reasons why investment in real estate is so attractive is the fact that as well as the appreciation in value of your asset, you can also take tangible benefits from it over the lifetime of your investment.
There are a number of different strategies that you can follow when investing in real estate. Most simply, you can just sit back and watch as the value of your own home increases over time, and then sell it at a profit when you are ready to move on. Downsizing is a popular option for seniors who no longer need a family home when they retire, and would rather take advantage of the value of their property.
A more aggressive way of taking an income from real estate ownership is to develop properties. By buying a run down home, and redecorating and improving the building, you can turn it around for a quick profit which you can then reinvest in more projects.
More ambitious investors will consider the possibility of full scale construction projects, and certainly taking a building from ground level through until completion is ultimately very satisfying both on a personal and financial level. Construction is not for the faint hearted through, as hands on project management will take up a lot of your time and requires very specific skills, so amateurs need not apply.
Although it requires greater investment of your time as well as money, building a portfolio of rental properties offers some of the best returns of any real estate investment strategy. Aside from the long term appreciation in the value of the properties that you own, you can also enjoy a consistent stream of rental income from your tenants that should easily cover any outstanding mortgage payments on the property.
Whatever method of real estate investment you choose to follow, it is important to realize from the start that profit is not guaranteed, nor is it ever easy money. If you are developing properties, you should take into account the cost of any work that you carry out, and maximize your margins by doing as much of the work as you can yourself.
With the easy availability of credit from a variety of sources, it has never been easier to get the seed money to use in order to get your real estate investment off to a start.
About the Author:
Mark Estates is a freelance writer who frequently writes for such sites as the real estate investment site sharkbaitsoftware.com and the California Online Housing Market.
Tags: Amateurs, Consistent Stream, Construction Projects, Downsizing, Home Increases, Investing In Real Estate, Investment Strategy, Level Construction, Maximum Profit, Project Management, Quick Profit, Real Estate Investment, Rental Properties, Risk Investment, Scale Construction, Seniors, Tangible Benefits, Term Appreciation, Upward Trend, Worldwide Real Estate
You might be looking for “How to make a zillion dollars in 3 months”, well, you won’t find that here but if you want some practical tips, you came to the right place. Read on …
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn’t want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow ’strict’ foreclosure ? the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don?t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the ‘right of redemption’. This legal claim will let them have a particular amount of time in which to ‘cure the loan’. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There’s no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold ‘as is ‘, or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you’ll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves ? besides wearing various other hats.
The property does not need to be free of every little fault, but you’ll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you’re searching for a ‘fixer-upper’ and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a ’short sale’ deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO ? real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say ‘Hi’ to Donald Trump for me!
Tags: Amount Of Time, Arsenic, Definite Time, Demeanor, Familiarity, Foreclosure Procedure, Foreclosure Proceedings, Foreclosures, Homework, Legal Claim, Legal Processes, Lending Institution, Mortgage Holder, Notice Of Default, Possession, Possessions, Quick Profit, Real Estate Investor, Right Of Redemption, Zillion Dollars
Over the past few years, real estate investors, hungry for break-even or positive cash flow rental properties, purchased income properties out of state. California investors bought houses in Florida, Texas, and Oklahoma. Florida investors purchased houses in Louisiana. Texas investors purchased in Las Vegas. Many of these investors made millions of dollars because of the appreciation in hot markets.
On the other hand, in 2005, some beginning investors lost their hard-earned investment capital or only made a meager profit because they failed to do their homework on the out-of-state area’s real estate market and customs.
If you ‘re thinking about buying investment properties in a different state than you’re accustomed to, beware of these five surprises.
Surprise # 1 - ‘These (extra) costs are the norm in this state!‘
Besides extra closing costs like pricey surveys, common in Florida but rare in California, other surprise costs included higher transfer fees and taxes. Property taxes in Florida cost much more for investors in Florida than in California. On the other side of the country, out-of-state investors were shocked by California’s state tax held in escrow: 3.8% of the property’s SALES price, no matter the actual profit made. In other words, an investor who made a quick profit of $20,000 on a fast flip could have more than the profit held until the next year’s income tax filing.
Surprise # 2 - ‘You can’t lease this property!‘
New home developers and many Homeowners’ Associations (HOA)s prohibit property owners from leasing their properties. Some of these restrictions got passed, without the investor being notified, during the property purchase phase. You must read the fine print to see if any clauses prevent the rental of the property. Home builders, to keep the value of the neighborhood up, added restrictions requiring the purchaser to occupy the home as a primary or secondary residence.
Surprise # 3 - ‘This house will only rent for $750 per month, not $1200!‘
This was one of the top mistakes made in 2005. Large real estate investing groups, selling out-of-state properties to local investors, inflated the rental income. Because so many houses were purchased in a limited area by investors, a rental glut lowered the expected income. This created hardships for investors who suddenly had to pay out hundreds of dollars a month instead of reaping promised profits.
Surprise # 4 - ‘You can’t sell this house, now!‘
Some investors who couldn’t rent the out-of-state property decided to sell because the values did rise significantly while the house was built or during the purchase time. However, many investors were stunned when they were told they couldn’t sell the property within the first year after purchase. Restrictions prohibiting real estate investors from quick-turning their properties is a trend that is growing increasingly popular with some developers.
Surprise # 5 - ‘Houses don’t appreciate 30% per year here!‘
Perhaps you’ve attended or been invited to a high-power investment seminar that promotes out-of-state real estate investing. Some of these ‘investor clubs’ really are promoters who receive kick-backs in real estate commissions, property management fees, mortgage loan fees, and even fire insurance premiums. They tell stories of huge appreciation gains, which are probably true. However, not all areas enjoy significant appreciation–year after year.
Don’t make the costly mistake of not fully researching the complete market customs and restrictions in the area where you’re thinking about investing. If you can’t afford to go check out the area in person, choose another area that you can visit.
Copyright ? 2006 Jeanette J. Fisher
About the Author: Jeanette Fisher offers FREE “How to Start Real Estate Investing Teleseminar,” free ebook, “The Truth about Making Money Flipping Houses” http://doghousetodollhouse.com
You might be looking for “How to make a zillion dollars in 3 months”, well, you won’t find that here but if you want some practical tips, you came to the right place. Read on …
To the newbie real estate investor, foreclosures can look temptingly attractive. Who wouldn’t want to make a quick profit of 50% or more? But whether a foreclosure deal is really sugar or merely sweet-tasting arsenic depends on a list of complex factors.
Foreclosure is an officially permitted process in which a mortgage holder repossess a property due to failure to pay on a loan. Some states in the U.S. allow ’strict’ foreclosure ? the borrower has a definite time in which to bring the debt up to date, after this, the title reverts back to the lending institution.
You want to stay out of any legal processes going on concerning a property. Don?t get tempted to jump in and help the current owner in hopes of partial or whole ownership, this is suicidal. Pick another great deal. Never fall in love with a property. You have to maintain a business-like demeanor in all your dealings.
Be sure you understand that in many foreclosure proceedings, a borrower might have the ‘right of redemption’. This legal claim will let them have a particular amount of time in which to ‘cure the loan’. That is, they are allowed to make back payments, shore up credit, etc., and then they are allowed to reclaim property title to, and the possession of, the property. Beware!
As soon as the foreclosure procedure is complete, or at minimum unavoidable, you may initiate an action plan to obtain the real estate. Watch for transactions in which, at least, a Notice of Default has been given out.
Public sales on foreclosed possessions are common but can be complicated. Always do your homework before actually making a bid on a property. There’s no alternative for gaining first hand familiarity of the physical state and legal standing of a property.
Be sure to take into account that foreclosures are sold ‘as is ‘, or, in its present condition. Contrasting other property sales, no warranties are made available and no title insurance approved.
At least, you’ll be required to have a professional inspection carried out, even if you are a well-informed investor. Some investors are, of course, qualified inspectors themselves ? besides wearing various other hats.
The property does not need to be free of every little fault, but you’ll want to be aware of the roof - does it or does it not need to be replaced, that the plumbing is ok, there are no severe foundation cracks, or possibility for flooding, etc. If any of those are there, they can be satisfactory if you’re searching for a ‘fixer-upper’ and are prepared to invest the time and funds to make repairs. Mark down your offer for that reason.
Soon you will hear about a ’short sale’ deal. That is, this comes about when a lender is prepared to allow lower cash settlement for a property than is outstanding on the loan now.
And yet another kind of foreclosure situation is the REO ? real estate owned (by the lender). Usually these are properties that were auctioned but no one bought them. You can, potentially, get an extremely good deal, but you will need to exercise extreme caution and keep your eyes wide open.
Ok, so bear in mind to follow a line of investigation. Have a systematic inspection done and complete a satisfactory title search. Any key defects or impediments in the form of tax or other liens have to factor big in your strategy.
Real estate, like other endeavors in life, requires diligence and a grasp of the fundamentals to be successful. Learn to tell the difference between a good deal and one to walk away from without losing your shirt in the process.
All things considered, real estate investing is still the best game in town. So go out and make your fortune and say ‘Hi’ to Donald Trump for me!
