Do the Fixer Upper Math

Do The Fixer-Upper Math

Renovating homes has gotten a boat load of publicity over the past few years as a great way for prospective real estate investors to make great money over a short period of time. Hopefully, you’ve taken that message with a grain of salt as renovations can often take a lengthy period of time and selling the home for a big profit is never a guarantee.

In fact, as any real estate investor will tell you, a few quick calculations will give you at least a rough idea of your chances for profit, be it large or small. Doing these quick and dirty calculations will not only give you that forecast of the future but determine whether a particular investment is worth the hassle, a step that many real estate investors skip that deserves adequate attention.

Target Your End Value
You can never, ever use the amount of money you put into a particular piece of real estate as the basis for a price increase. If you bought the home for $100,000 and did $20,000 worth of work to it, you are never guaranteed to get $120,000 out of it. The real estate market simply does not work that way and recognizing that is the first step towards pegging down an accurate end sale price for your profit calculations.

An appraiser is your best resource at pegging an end sale value as the appraiser will be able to tell you the kind of value you will add to a property with a given renovation. If you are going to add a certain amount of square footage or a finished basement or any other improvement, take what the home will look like after you are done and compare it against other similar homes that have recently sold in the area.

That is the only way to determine the kind of value you might receive and an appraiser will keep you grounded in reality when your head starts swelling with the prospect of potential profit.

The Big Minus
Of course, those renovations cost money and you will have to calculate every piece of dry wall, every nail and every hour of labor that you think will be necessary to get a home to the level you need it to be at. After those costs, you have to factor in transaction costs like your realtor’s fee, closing costs, potential property taxes over the course of your ownership and loan fees that some real estate investors neglect to think about.

Your expenses are not limited to the amount of money you put into renovations, giving you much more to think about than lumber and nails when you are calculating potential profit. This can be a complicated process and getting expert help from someone that has been through the process once or twice before will be invaluable towards projecting potential profit.

Is It Worth It?
This is the big question that some real estate investors forget to ask themselves as they pursue a potential investment. If your profit window is extremely tight and your potential profit may be $10,000, perhaps that investment is not worth the hassle of renovating the home, putting it on the market and finding a new buyer. You have to decide for yourself what your time is worth but just because there is profit to be had does not mean that your time is best spent on that project. Everyone’s threshold is different so determine yours and you will go a long way towards picking out projects that you will ultimately be successful with and enjoy.

These simple steps can save real estate investors from getting involved with properties that they are simply not ready for. Think about all of the costs before ever getting involved with an investment and learn to value your time. Doing the math is one thing, but using it to make an informed decision is what separates the real estate investors that fail and those that ultimately thrive.

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas.

Picking Out The Perfect New Town

Moving to a new city or state will always be a difficult transition, no matter what kinds of precautions you take. Bundling up all of your worldly possessions into one big van and setting them down on the doorstep of a new home in a strange city will always be at least a bit of an awkward experience. However, picking the right city can be the difference between struggling mightily and simply working through the transition.

In most cases, relocations are specific to the area surrounding a particular office or location. That narrows down the choices quite a bit which can be more blessing than curse when trying to wade through the multitude of cities that all want the tax dollars and spending money new residents bring with them. So how then do you go about making at least the preliminary steps towards picking out a new town?

Know What You Want

No search was ever completed without at least some kind of criteria to narrow down the possibilities. That goes for web searches and it goes for finding a new home for you and your family. What kinds of amenities do you want to have within reasonable driving distance? Some things to consider include proximity to major transportation hubs, entertainment options nearby, the quality of a particular school district and access to highways and major roads.

While the list could probably go on forever as to the kinds of amenities people look for in a potential new home, odds are that you already have in mind the best case scenario for your town and committing to getting those thoughts on paper will develop a list of criteria quicker than you might think.

Another helpful tip can be to prioritize your desires so that when reality comes in and tells you that you can’t have the perfect set of amenities, you know what is most important to you. Armed with that information, you can then dive into the deep ocean that is the internet to do some preliminary research on prospective areas.

Pursue Resources On Important Criteria

If you put the quality of local schools at the top of your list, pursue web sites that have information on the various school districts in the area you are looking at. SchoolMatch.com is one such site and there are countless others that will give you breakdowns on the quality of different districts. If you have personal contacts in the area, this is the time to use them as they will often have insight as to the quality of different districts.

While that example works well for school district criteria, there are also sites out there for nearly everything else you can think of. If at the top of your list is entertainment, look up local chambers of commerce that will be more than willing to extol the virtues of their particular town.

If a particular kind of house of worship is important to have nearby, there are countless mapping programs that will locate them for you and give you a leg up on what neighborhoods you might want to pursue. Personal contact is perhaps the best and quickest way to get this kind of information, but that is not always possible for those moving long distances. The web is full of information and with your priorities at hand, you can cut through must of the junk to get data that is pertinent to your search.

Moving over a long distance will always be a bit of a jarring experience getting used to new surroundings, but doing research on various areas to at least get an idea of what might be best for you will help your realtor immensely. There will always be hiccups along the way and communities that look good on paper but bad in real life, but developing at least an idea will put you quickly on the path towards determining that and hopefully finding the community that fits you and your family perfectly.

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas.

Avoid These Eight Mistakes When You Buy Or Sell A House

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By : Gary Torrell    99 or more times read
For most people, buying or selling their primary home, vacation property or rental property can be among their most important and expensive business transactions. This article offers advice to avoid some common mistakes, but does not cover the process and challenges of obtaining a loan to buy the property, which is often a critical step as well.
    1. Rely Exclusively/Primarily On A Broker. Real estate brokers are often helpful. They are experts at suggesting the initial asking price, marketing the property, and finding potential buyers. However, since brokers typically get paid only if a sale closes, they are biased towards closing the sale. This bias influences their advice, recommendations and guidance. Almost always, brokers will try to convince the buyer to offer more, the seller to accept less, and both parties to agree on key terms, so the sale closes and they receive a commission. For this reason, do not rely exclusively or primarily on the broker for objective advice, especially with the availability of online tools and experts to assist you.
    1. Sign Real Estate Contracts Without Consulting A Lawyer. Most real estate contracts come on pre-printed forms prepared by broker associations, such as the California Association of Realtors (“CAR”). While the CAR forms contain the minimum legal terms necessary, they are also designed to protect the broker from potential liability and ensure the broker receives the commission. You should retain a lawyer to review and revise the contracts and advise you of the meaning and legal consequences of the key terms.

      We often advise clients to negotiate changes to the standard CAR contracts, and reasonable changes are often accepted. The broker will want the seller to sign an exclusive listing agreement, which is often quite generous to the broker. A qualified lawyer can help you negotiate better terms in the contracts. Beware of any broker who discourages you from having a lawyer review the contracts before you sign them. Although there is a cost to retaining a lawyer, that cost will pale in comparison to the large sum paid or received in this significant transaction. Using a lawyer will also minimize the potentially disastrous consequences of signing contracts you do not fully understand, or contracts that do not protect your interests.

    1. Retain Third Party Vendors Based Solely Upon The Broker’s Recommendation. Brokers often have relationships with third party vendors, including mortgage brokers, lenders, home inspectors, building contractors, appraisers, insurers, home warranty companies, and escrow and title companies. Brokers often refer buyers and sellers to vendors that are supposed to act in your best interest, but are often grateful for the referral and want to help the broker receive the sales commission.

      Many broker referrals are competent and acceptable, but you need to check their references and see whether another vendor may better protect you and/or provide the same service at a lower cost. For example, most brokers are affiliated with specific escrow and title companies and prefer to work with them, but you can save $500-$2,500 (or more) by price shopping independent escrow and title companies, which typically charge less than broker-affiliated companies. Often, the broker-affiliated escrow and title companies will match the lower price.

    1. Skip Or Pay Little Attention To A House Inspection. For buyers, a thorough house inspection is a key step in deciding whether to close, insist on repairs, and/or renegotiate the sales price. Almost always, you should not retain a home inspector recommended by your broker or rely upon prior home inspections. Instead, retain and pay for your own inspection by a reputable, licensed building contractor with at least ten years’ experience as a general contractor.

      Regardless, be sure to keep in mind that almost every inspection contract provides that the inspector is not liable for most errors or omissions. This means if the inspector misses something, the buyer may have little recourse against the inspector. Moreover, realize the inspector typically does not open up the structure to see the “bones” of the house. Rather, s/he only looks at what is readily visible. Be present during the inspection and ask the inspector questions as you follow him or her through the house. If the inspector offers a more thorough inspection at a higher cost, get it, because without it, you may not discover an expensive repair is needed until after you buy the house and the home warranty has expired.

    1. Rely Solely On The House Inspection Report. Even a good house inspector may lack expertise in architecture, geology, drainage and engineering. If the house inspection report, the lack of expected building permits for improvements, the age of the house, your own observations, or other disclosures suggest there may be something wrong with the structure or the land, retain and pay for a separate engineering report, architect’s report, soils/drainage/geology reports, or other expert reports prepared by a qualified specialist before you close and within the contingency period in the sales contract.

      Ironically, these specialists tend to overstate the risks they find, but provide much more detail than a general inspection report. Have the seller or broker obtain the permit file from the local building and safety department, then have a contractor or architect review it to make sure all the improvements were permitted. Unpermitted improvements can be a nightmare for a buyer.

    1. Neglect the Title Report and Title Insurance. For most home sales, a title company will issue a title report (which shows recorded liens and encumbrances), and issue title insurance. You should carefully review the title report yourself, or hire counsel to do so, and have the title company obtain copies of all recorded easements and encumbrances and make sure you understand their effect. If the lot is irregular or hilly, it is usually better to obtain an ALTA title insurance policy, which offers more coverage.
    1. Neglect Dispute Resolution Provisions. The CAR forms have provisions regarding arbitration (instead of court litigation) to resolve disputes. If you are a buyer and do not have a written agreement with your agent/broker, you will not be entitled to insist on arbitration to resolve disputes with your broker. Since disputes often involve buyers, sellers, agents/brokers and/or inspectors, the same dispute resolution procedures should be put in all relevant contracts.
    1. Pay Little Attention To Contingency Periods In The Purchase Contract. The main contract contains specific conditions to the buyer’s obligation to buy the house (e.g., the buyer must obtain financing, approve the condition of the house, and acknowledge the seller’s written disclosures) and specific time periods within which the conditions must be satisfied. These contingencies allow a buyer to cancel the sale and obtain a refund of his or her deposit. Many buyers and sellers expect their broker to follow up on these important conditions, and parties often fail to act within the express contingency periods or fail to get the contingency period extended. It is the buyer’s responsibility to act timely and have the contingency period extended if necessary, or else you may lose your deposit and/or be pressed to close on the purchase.

Please note many other issues can arise in any real estate transaction, but if you avoid the common mistakes described above, you’ll be way ahead.

Author has over twenty-five years of real estate legal experience representing buyers, sellers and lenders.

 

Find The Lowest Rate

So you’ve got your new home picked out and you’re ready to embark upon the long process of securing a home loan and ultimately taking ownership of your dream home. Armed with that excitement, you take to the Internet in hopes of uncovering a hidden interest rate nugget, that low rate that other people have overlooked and that you have found through persistence and effort. Well, as you embark on that trip, there are some things to keep in mind during the pursuit for the lowest interest rate possible.

There are probably thousands of web sites offering financial data that can be pertinent to your search, so it is important to quickly cut through them all and pick one that seems to be at least somewhat reputable and has easy-to-access information. You’ll probably want to focus your search on a 30-yeark, fixed-rate mortgage to get a barometer of the interest rate climate initially.

There are many sites out there that will go into detail on interest rate fluctuation but finding one with graphs that can show you the trend of that rate over time will provide you with a great piece of ammunition when trying to determine what the short term market might do and what kind of interest rate would, in the end, be a good one for the time frame you’re looking at.

In addition, there are scores of financial articles written every day about the state of the real estate market and doing some reading on the current state of the market will help you greatly in your pursuit for a low interest rate. Sites like the Wall Street Journal online and other respected newspapers usually publish their full financial sections online. Google News and other outlets can additionally offer a slew of recent financial articles with a search or two.

Each loan has its own special set of financial aspects, so comparing them can be difficult at first glance. Thankfully, there are sites out there that will do it for you and doing a search for financial loan comparisons will give you a few good results. By putting in some information about you and your financial status, you can get some loan offers back that are tailored to your situation and can be compared against each other. This is a great step to help save time that might otherwise be spent deciphering the many loan options available through a multitude of lending agencies.

Finally, be thorough in your search. If you are truly looking to get a full picture of the loans available to you, contacting your local institutions (banks and credit unions) is a great step in the process and sometimes the added benefit of supporting local business or having a nearby branch office can make up for an interest rate shortcoming. It is up to you to assign priority to something like that.

Interest rates are important but while you’ve set out to pursue the lowest rate possible, you might find that there are other benefits you haven’t considered that are important as well. These aspects should also make their way into your loan comparison as things like convenience, reliability and other factors differ from lender to lender. Decide what is important to you and what concessions you would make to accommodate one of those other desires.

Finding the lowest interest rate possible is a noble goal and with the avalanche of online information at the fingertips of anyone with an Internet connection, finding that rate is easier now that in the past. However, as you go through your search, keep in mind that a mortgage is more than just an interest rate and remain open to other benefits that might offset a bit of a higher rate.

This is another original article by Joe Lane, co-owner of The Lane Real Estate Team at http://www.joelane.com/. Are you looking for an experienced Tri City WA Real Estate agency? With 20 years of service based, business experience, Joe and Colleen Lane work hard to serve home buyers and sellers for the Tri Cities of Washington’s Kennewick, Richland, Pasco, and surrounding areas.

Taking a Closer Look at Advantages of Foreclosures

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By : Jacquelyn Marks    99 or more times read

Many people would look at the concept of foreclosures as something so negative. However, what they do not realize is that there are several advantages that people would find in foreclosures than just losing homes, both for the property sellers and buyers.

It is a known fact that when a property has been seized by the state, the bank or a certain real estate agency because the owners were no longer capable of producing payments for the property. It can also be used to settle unpaid debts and loans such as when the owners decided to file for bankruptcy. In addition, because of all these, people tend to over look the positive things that they can actually get out of foreclosed homes and properties.

    • Because of the increase for homes in the United States, the number of possible homes for sale has also increased. This means that potential homebuyers will also have more opportunities to find the houses that they need.
    • Good quality homes will be up for grabs. If you will be going through the foreclosure listings, you will find that there are some houses up for sale, which have been repaired and repainted. The reason behind this is to eliminate the competition through presenting homes that are ready for occupancy. Of course, who would not like the idea of doing fewer repairs on a pre-owned home? Moreover, because sellers would like to sell their properties immediately, they will also be amenable to do some negotiations, and eventually settle for low and acceptable prices.
    • Low-priced homes are indeed an advantage. Since there are many homes that are now available in the real estate market, the prices of foreclosed homes have decreased by at least 35 percent. This is perfect for buyers who are leaning toward buying very affordable properties. The houses will then be sold easily, thus giving the sellers an equal amount of opportunity to pay for all their loans or debts that caused them to give up their homes.
    • Investors have higher chances of acquiring more assets. The influx in the rate of foreclosed homes in the market caused a lot of businesspersons, investors and individuals to turn their views on buying affordable properties as forms of investments. Because who knows, the real estate industry might pick up in a few months or years, and these assets can definitely be worth much more as soon as the market comes back to life.
    • Seeing many foreclosed homes being bought one after the other, the hopes if p0ssibly helping the economy recover suddenly appears to be at arms’ reach. This gives people a more positive outlook on how they can pull this industry back on its feet.

Knowing all these advantages can definitely help convince more and more people about grabbing the good opportunities that foreclosed homes offer. This list can also guide potential buyers and sellers when it comes to how they should sell or buy properties.

Dealing with Foreclosures: Seeking Legal Help

It is not at all surprising that most people fear that giving their homes up for foreclosure would mean that they would be unable to recover and lose whatever is left in their possessions. Although part of it may be true, it doesn’t mean that there’s no way to get through all these without lenders and banks draining them dry of cash and other properties.

Facing foreclosure may mean that you will be giving up the home that you have always wanted for various reasons: You may either be unable to pay for the remaining mortgage payments or settle your remaining debts and other loans. And even after you have surrendered your property, there would still be a possibility that your lenders will still file a case against you because the value of your home is not sufficient enough to complete all your dues.

Bad as this situation may seem, there are in fact positive ways to deal with all these legal concerns. First, you can talk to your lenders to see if your debts can be waived, at least what’s left of them. Second, you have to look for a reliable real estate or bankruptcy lawyer to help you out. More often than not, your lawyer would advise you to file for either a Chapter 7 or a Chapter 11 type of bankruptcy, for you to be discharged off your debts. Now, the kind of bankruptcy you can file will depend on your financial situation.

File a Chapter 7 if you are unemployed and if you have no other means of earning enough money to pay for your debts. Once proven in court, your possessions will be put up for sale, which can be done by a court-appointed trustee. On the other hand, if you have a business and you feel that your business is about to go under, file for a Chapter 11 to help you avoid having your properties included in the foreclosure listings. What you also need to keep in mind is the fact that bankruptcy can reflect on your credit standing for a long as 10 years. Therefore, you need to make sure that this is what you really want to do, otherwise, it would be best to look for another way to fix your foreclosure issues.

There is another way to fight foreclosure that does not leave a bad mark on your credit scores. Moreover, this can be done if you will consider selling your property in advance. You may be unable to hold on to your home, but you can surely hold on to the opportunity to be debt free. The money that you get out of the sale of your home can be used to pay off your existing debts and if you have some money left, then you will have a better opportunity to start fresh and to start acquiring new properties for you and your family.

Dealing with foreclosure can also be avoided through preparation. Never let the opportunity of learning everything about how to safeguard your property pass, and all you need to do is to talk to a real estate expert who you can trust for the “do’s and don’ts” in acquiring properties, as well as with a legal representative to discuss the legalities of bankruptcy, foreclosure and acquisition of property.

ForeclosureFreeSearch.com is the leading resource provider for onlineforeclosure listings.

Prepare For The Coming Housing Collapse

The Money Pros are standing by to take your questions.

Q. Can I do a short sale even if I am not at risk of foreclosure?

Marcus Rutkowski

A. Yes. A short sale proceeds just like any other home sale, with one exception: the seller needs approval from the bank holding the mortgage to complete the transaction.

Sellers who are underwater, because they owe more to the bank than their house is worth, or simply won’t net enough from the sale to pay off all the closing expenses, can request that their bank take less than the amount owed.

It is up to the bank to make the ultimate decision to agree on the sale and allow the deal to close.

The Solar Heating Choice For Your Home: Active Systems vs. Passive Systems

 

By : Roby Hicks    99 or more times read

Are you in the market for a solar heating system? If that is the case, then you will be pleased to learn that you have several options. That includes active systems and passive systems.

The Active Solar Heating System

These systems involve the collection and storage of solar energy heat. Fans and other components are used to distribute the heat following its collection. Silicon solar cells usually function as the collector of solar energy’s heat. Solar panels located on a building’s roof are the most common method of utilizing these solar cells.

Main types Active Solar Heating systems

Two major types exist, and vary on the type of material used for the collection and transferring of heat from the solar collector. An air-based system usually includes tools such as transpired air collectors and air room heaters. Meanwhile, water or antifreeze is usually the materials in a liquid-based system.

The power potential of Active Solar Heating Systems

Usually such systems attempt to heat up to three-fourths of a structure’s interior. Is over 100% possible? Yes, this could give you the option of selling extra energy to your local utility company. Another option is to heat both air and water within your home. That will give your Active Solar Heating System the ability to function from January to December.

The Passive Solar Heating System

This type of system could be best defined as low-tech. The particular method of collecting solar energy works by directly collecting warmth from the sun’s rays, and then storing it inside the structure. Heating is always the function of the heat. Windows and excellent insulation are some of the main materials for Passive Solar Heating Systems. After installing a Passive Solar Heating System, you can expect your heating costs to decrease. In fact, you might be able to replace your entire heating system!

Pluses of Passive Solar Heating Systems

Generally, this is the wisest option if you are choosing a solar heating system for a new structure. Issues that impact the efficiency of a Passive Solar Heating System include the positions of the windows on a house, the location of the building, and the amount of insulation contained in the building. These issues can be difficult to change in homes that are not new—requiring much time, effort, and money to alter them.

Important components of a Passive Solar Heating System

One of them is the trombe. This crucial component of Solar Heating Systems is a special type of wall. It contains a sheet of glass in the front of it. The space created between the glass and wall gathers heat. You could also paint the concrete walls black, in order to boost its absorption of heat. Black is the best color for absorbing heat, which will increase your heating system’s efficiency.

However, the most important components of Passive Solar Heating Systems are windows. The windows increase the quantity of sunlight and heat that a home can collect from sunrise to sunset. Typically, the windows are manufactured using a special glass type. The glass can absorb a tremendous amount of heat, and then hold that heat for a long duration.

After considering these above facts about Passive and Active Solar Heating Systems, you will be better equipped to choose one or the other.

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