Real Estate and Wealth Building What Do You Need to Know Before Buying Real Estate

Everyone wants to get a bargain when they buy real estate. I’ve NEVER met anyone who said, “I hope can find property to buy today and pay the owners a lot more than it is worth.”

But what you may not realize is that not everyone is trying to sell their property at retail market value.

I know that may sound a little crazy when you first hear it. But the fact of the matter is that people sell real estate for a lot of different reasons. And sometimes those reasons mean that a quick sale is more important to them than selling for a high price.

The most critical factor in real estate purchases is finding the “true value” of a property.

Once you know the value of a property, you’ll know whether you are getting a bargain or a money pit.

After you’ve figured out the true value, there are other things you will need to consider:

* after repair value – what will the property value be after needed repairs?

* the comparative market analysis – how does the property compare to similar properties?

* gross rent multiplier – is this property worthy of further research and consideration?

* capitalization rate – what is the valuation of a rental property?

* vacancy and credit loss – what if you have no tenant?

* gross potential 1ncome – what will your potential fully-occupied rental income be?

* and much more…

There’s a saying in real estate, “You make your money when you buy a property, not when you sell it.” Don’t make the mistake of buying a money pit. If you educate yourself and buy correctly, you can follow the footsteps of others who have generated their fortunes by buying real estate wisely.

Remember: It’s important to know both the market value of any property you are considering as well as its’ personal value to you.

And now, I’d like to invite you to determine your own destiny. You, too, can build wealth with real estate, and I’m here to show you how.

When is the Best Time to Buy Real Estate

Think it’s not a good time to invest in real estate? Think again! A combination of factors are now in alignment, making this market one of the best in recent history for real estate investing.

  1. Investors are jumping back into the market – Yes, many investors have been on the sideline for the last year and a half, sitting on their cash and waiting for signs of life. But signs of life are appearing everywhere, and now is the time to get back in the market, while prices are still low
  2. Prices are unlikely to go any lower – Real estate prices in most areas have hit bottom, and the only direction they can go is up. The smartest investors are already grabbing good deals again. What does this all mean for real estate investors like you? More opportunities to reap huge profits.
  3. Banks want to get rid of properties… FAST – Even though foreclosure rates are slowing and the housing market is springing back to life, banks still haven’t processed all their foreclosure properties. They are looking to unload these properties – quickly!
  4. Low interest rates – Interest rates have dropped again, and may go even lower. Rates are coming back down as government programs pump more money into housing and banks try to get their cash working again.
  5. Tax credits – On November 5, 2009, congress voted to extend the first time home buyer’s credit until April 30, 2010. This is spurring a new round of buying and selling, and has created even more opportunities for investors.

The recession continues to create opportunities.

We’re still feeling the effects of a bad recession. The last year has seen record numbers of people hunkering down and waiting for the storm of economic woes to pass. And many of the pundits and self-proclaimed experts out there are telling us it’s a risky time to buy and invest in real estate.

This simply isn’t true. It’s always a good time to buy real estate, when you find the right deal. This is what the real estate tycoons know, and this is why they are in the market in a big way. And this is why the smart money is in real estate investing right now, especially now that it looks like we’re coming out of the recession.

The recession means more foreclosures.

The long unemployment lines we see on the evening news are filled with something different: highly successful people in three-piece suits that never dreamed they would end up unemployed. And what’s worse, many of them are facing foreclosure.

Financial hardship will force families from the comforts of an overpriced home into smaller, more affordable homes, town homes or apartments. This means there will be incredible opportunities in housing as some families move down the property ladder, and others move up.

This gives the investment buyer many opportunities for profit. Not only will there be more short sales, there will also be opportunities to work with homeowners who just want to get away from the stress and burden of having a home that they can no longer afford.

So when is a good time to be a real estate investor? Right now!

How to Buy Real Estate With No Money Down Today

The market is so beneficial for home buyers now everyone wants to learn how to buy real estate with no money down. And with the recent subprime lending scandal that contributed to several large financial institutions facing collapse, and in no small measure to the current financial crisis, you may think that your dream of real estate investing is gone forever.

That’s not true though, and there remain several viable options, allowing many first time homeowners to get into their own home, the first step on the real estate investing ladder, and making it possible for investors to access finance for investment properties.

Conventional Finance

Conventional finance takes into account your credit score, with the minimum threshold being in the region of 527 having been approved, as well as your debt to earnings ratio, and any equity or investments you may have to contribute, even your 401(k).

The thing to remember with conventional finance is that the better your credit score, the better the interest rate will be, since the financier will see you as a better risk option. The solution? Clean up your credit score before applying for conventional finance, or, because they don’t have a prepayment penalty, refinance once your credit score has improved.

80 / 20 Loans

An 80/20 loan option to finance your real estate investments is actually two mortgages, generally only available to property investors with a credit score of 620 or higher. The good news about this loan is that unlike conventional loans, no Private Mortgage Insurance, or PMI, is added to your monthly installments.

Grant Programs

A little known funding method for real estate investments, there are actually over a thousand grant programs, available to most income groups. Doing a little digging, and finding out if your real estate investment dreams qualify for grant financing can save you a lot of money!

Low Money Down

Aside from these no money down routes to real estate investment, there is low money down options, or 3% down loans, usually available to people with credit scores above 620, although they are available through methods other than conventional loans that make it possible for most people to qualify. If you decide to choose the low money down option, the 3% payment could be a gift, or you could save for the down payment yourself.

New Developments

Often, early stage real estate developments will sell lots for a minimal holding deposit. This lot becomes yours, with the balance of the agreed payment becoming due only months, or years, down the line. Property speculators have been known to make a lot of money buying these lots on release, and then selling them, at a tidy profit, before the full payment becomes due. The trick to this kind of real estate investing is to identify developments that will be popular, and where the demand will be high.

Real Estate Investing is For Everyone

Whatever your financial position and means, the dream of real estate investing is within reach. Speak to a financial advisor, realtor or mortgage specialist to find out what your best options for realizing your dreams.

Remember, the bottom line with real estate investing, whether you chose a no money down option or a low money down option, is that your money is being used to purchase an asset that will continue to gain value for the rest of your life.

Property is a perpetually popular investment choice, for ordinary people, as well as investment companies and the very wealthy for a reason – it’s safe, offers a tangible asset that is guaranteed to offer a return on your investment over time.

What is the Best Way to Buy Real Estate

There probably isn’t any question asked of me more often then if now is a good time to buy real estate. It’s my opinion that everyone in the investment community knows that there are more distressed assets for sale now than in recent memory. And I am not talking about only distressed real estate assets. I’m talking about distressed assets in every asset class.

The question isn’t whether or not it’s a good time to buy real estate, because absolutely it is. The questions is, “what real estate should you buy and how should you buy it?”. Are you as an individual in a position to purchase that real estate yourself, or would you be better off to go in with other people?

There are some pro’s and con’s to going in with other people. First, you may or may not have control as you would have by yourself. But that might be good if you’re not an experienced expert in acquiring, improving and disposing of real estate assets. Aligning yourself with people who are experts might just be the best thing that you can do. Further, buying something by yourself may limit you as to the size of property you can buy. The smaller properties sell for less money, but because there are more people with not very much money to invest, there’s a lot of competition for these single family homes and one to four-unit apartment building properties.

Larger properties have less competition. Consequently, they sell at much more depressed prices because there are not as many people competing for them. Groups of people who pool their money have a much better chance at organizing themselves for acquiring better properties.

The second issue is that in many cases financing is not available to many property buyers. Therefore, more cash is required. If more cash is required, the only way that that could be accomplished is through teams of investors who cooperate together.

Every investor knows that there are distressed properties in the marketplace, but they might not know where to find them. Every professional real estate expert knows exactly where the best properties are, but they don’t always know where the investors are. Matching these two groups of people is the hard part.

Joel began his career as a CPA with the prestigious firm of Price Waterhouse. During his time with the company’s Entrepreneurial Services Group, Joel immersed himself in the real estate syndication business. After reviewing hundreds of partnership agreements and preparing as many tax returns, he left Price Waterhouse in 1986 to start his own syndication firm, raising several million dollars in three short years. By 1990, Joel had built a property management firm of more than 40 employees with a portfolio exceeding $100 million. Joel continues to syndicate real estate and other assets, as well as counseling other promoters on successful syndication strategies. He is also involved in film financing and invests in early stage companies and other deals.