Four Key Issues You Must Research Before Choosing Your Next Investment Home
by Chris Le Roy
In the investment property industry, it is a common story shared about the new property investor that thought he had done the right research on his investment home only to find that the investment homes he had been comparing were not of similar specifications and the consequence was that he lost out financially in a big way. There are four key features that your research must assess before you take the step in purchasing your next investment home.
All investors can be prone to making poor decisions and suffering a financial loss, but you can avoid this by simply researching the investment markets and the properties you are interested in.
Not only do you need to take the time to research (research ....... and then research some more) every potential property, but you must ensure that your research is comparing 'apples with apples'.
Once you have decided on the appropriate estate for your investment, the most important facts to check are the building specifications of every potential investment property.
Key Issue 1: The most obvious issue that you need to be aware of are the size of the block of land and the square meter area of the investment house.
Advertising descriptions need to be read carefully and all aspects of the advertising carefully analysed and understood to minimize confusion. Let us take two real world examples and assess what they are offering:
HOUSE A: Bellevue Estate - $430,000 Location - Lot 21 Grandview Drive
This expertly designed 200 m2 home on a 720 m2 block in the Parklands Estate is an ideal family home. With an outstanding family room and an additional alfresco dining area off the family room, this will give your family lots of living space.
HOUSE B: Bellevue Estate - $400,000 Location - Lot 30 Petite Court
All hands up who want a massive 15 sq m outside dining area. If you live in the tropics, then who wants to live inside. This spacious 184 m2 home, situated on a 460 m2 block, is designed with this fantastic outside dining area, this is the Number One tropical home for the family.
Q1. Do These Descriptions Describe The Same Investment Home?
Q2. Will both of these Investment Homes Offer The Same Rate of Return?
Q3. Do they contain the same Features?
Well in reviewing the two descriptions you do find that they have common factors:
They are both in the same estate and have four-bedrooms, a main bedroom with ensuite and a double car garage, but these properties have very different rental appeal and financial growth potential.
When comparing these two properties and taking into consideration that one is a 200 sq m house on a 720 sq m block, priced at $430,000 and the other is a 184 sq m house on a 460 sq m block, priced at $400,000 - it's easy now to see the REAL value!
Yes, it may cost you $30,000 more but look at the extra land value and house space you're getting with HOUSE A compared to HOUSE B!
With this information on board, it is up to you to decide on your price point and investment philosophy.
I mentioned earlier there were Four Key Issues that you need to research when choosing an investment home and the First Key Issue was to look at the size of the property and also the size of the home.
Whilst there are many issues that need to be considered when choosing the right investment property, there are three other key issue points of comparison that should be considered and they are:
Key Issue 2: Assess the Nominal ceiling height - Be aware of the ceiling heights - do they vary. There is no industry standard and they can be from 2.5 to 2.7 meters. Building the ceiling heights .2 of a meter higher adds to the building costs and also to the aesthetic and practical appeal of your property to potential tenants.
Key Issue 3: Review the TURNKEY inclusions - this area varies a lot from building company to building company. Some of these are:
* Number of Power Points * Number of TV points * TV antenna * Number of Phone Points * Dishwasher * Venetian blinds to windows * Letter box * Remote control garage door * Automated irrigation systems * Security Screens on windows & external doors * Turf & landscaping * Fences * Sealed Driveways
Key Issue 4: Assess the Building & the Quality of the Fixtures and Fittings - The quality, guarantee and warranty vary greatly in today's market. It is essential to ask the question and ensure that you always receive documented evidence of the guarantees and warranties provided by the building company.
With a home investment property, 'added extras' will translate to a higher rental return but always ensure to calculate the value of the extras vs the rental return into your financial planning.
Never rush into buying your investment home. Always take the time to consider all the factors impacting on you potential investment and this will ensure that you will make the right decisions on what to buy and improve your potential return on investment!
About the Author
North Haven Homes is one of Australia's premiere builders of new homes and investment homes. To find out more about buying a new home or an investment home simply visit
Townsville New Home Builder or to see their current range of new home packages, simply visit Townsville House and Land Packages
Wednesday, September 17, 2008
Presented by Lorenzo Myers, Real Estate Investor, Entrepreneur
Owner Financing? Should You Sell Without a Down PaymentBy Andrea Carangelo
I have been asked many questions with regard to selling a home with Owner Financing.
One typical question I am asked often..."I am selling my home and offering Owner Financing, but having trouble finding a good candidate with a good down payment. Should I take a chance and allow a buyer to put no money down?"
I tell my potential clients that it is never a good idea to sell a home without a down payment from the buyer. You want the buyer to invest some of their own money into the home. If they have their own money involved, they are more likely to take care of the home, keep up with maintenance and pay the bills associated with home ownership.You want the potential buyer to show some commitment to the home.
How many times have you come across a rental property only to see it run down? That renter had no equity in the home. They would not be loosing any of their own money, therefore; might not care about the property or it's condition. What are they loosing? They can walk away and find another place to live, leaving you with the responsibility of upkeep and making any repairs needed.
If you intend on selling this mortgage note down the road, you want the buyer to have some equity in the home from the start. The more equity your buyer has, a contract buyer is more likely to purchase the note.
Example:A home is selling for $100,000 and the potential buyer can put down $20,000. This buyer is already starting with a 20% equity position. A contract buyer likes to see that.
You might suggest that a potential buyer secure a personal loan for the down payment. Can they receive a loan from a relative? Do they have a credit union or can they borrow against their 401 ? In some cases, you can receive a hardship withdrawal from a 401 for the down payment towards home purchase and not have to repay the sum withdrawn.
They then give you the money for the down payment. This option gives you the cash down payment, the buyer has the commitment to the home and a contract buyer will see equity.
Before making any final decisions, please make sure you have a good real estate lawyer to help you. Protect yourself.
AC Associates helping individuals across the United States reach their financial goals.
We offer a free program to Home Owners on how to sell their home by offering Owner Financing and provide the support necessary to become successful.
Purchaser of Owner Financed Mortgage Notes, Deeds of Trust, Lawsuit Settlements, Life Insurance, Lottery/Contest Winnings and Seller Financed Business Notes.
AC Associates has expanded to include Purchase, Refinance and Home Equity Loans on Residential and Commerical property to help people in obtaining the Amercian Dream of owning a Home or Business.
http://www.acassociatesusa.com/
Article Source: http://EzineArticles.com/?expert=Andrea_Carangelo
I have been asked many questions with regard to selling a home with Owner Financing.
One typical question I am asked often..."I am selling my home and offering Owner Financing, but having trouble finding a good candidate with a good down payment. Should I take a chance and allow a buyer to put no money down?"
I tell my potential clients that it is never a good idea to sell a home without a down payment from the buyer. You want the buyer to invest some of their own money into the home. If they have their own money involved, they are more likely to take care of the home, keep up with maintenance and pay the bills associated with home ownership.You want the potential buyer to show some commitment to the home.
How many times have you come across a rental property only to see it run down? That renter had no equity in the home. They would not be loosing any of their own money, therefore; might not care about the property or it's condition. What are they loosing? They can walk away and find another place to live, leaving you with the responsibility of upkeep and making any repairs needed.
If you intend on selling this mortgage note down the road, you want the buyer to have some equity in the home from the start. The more equity your buyer has, a contract buyer is more likely to purchase the note.
Example:A home is selling for $100,000 and the potential buyer can put down $20,000. This buyer is already starting with a 20% equity position. A contract buyer likes to see that.
You might suggest that a potential buyer secure a personal loan for the down payment. Can they receive a loan from a relative? Do they have a credit union or can they borrow against their 401 ? In some cases, you can receive a hardship withdrawal from a 401 for the down payment towards home purchase and not have to repay the sum withdrawn.
They then give you the money for the down payment. This option gives you the cash down payment, the buyer has the commitment to the home and a contract buyer will see equity.
Before making any final decisions, please make sure you have a good real estate lawyer to help you. Protect yourself.
AC Associates helping individuals across the United States reach their financial goals.
We offer a free program to Home Owners on how to sell their home by offering Owner Financing and provide the support necessary to become successful.
Purchaser of Owner Financed Mortgage Notes, Deeds of Trust, Lawsuit Settlements, Life Insurance, Lottery/Contest Winnings and Seller Financed Business Notes.
AC Associates has expanded to include Purchase, Refinance and Home Equity Loans on Residential and Commerical property to help people in obtaining the Amercian Dream of owning a Home or Business.
http://www.acassociatesusa.com/
Article Source: http://EzineArticles.com/?expert=Andrea_Carangelo
Presented by Lorenzo Myers, Real Estate Investor, Entrepreneur
| Pros of Buying Foreclosures |
The buying of foreclosures is a potentially profitable method of Real Estate investment. The pros of buying foreclosures in many cases outweigh the cons.
A foreclosure is the term that is used when a homeowner falls behind on his mortgage loan payments and the lender who holds the mortgage takes legal action to recover the property. Although there are other circumstances that might lead to a foreclosure, falling behind at least two full monthly payments is the most common reason. There are several laws that have been enacted in various states that protect the rights of the homeowner in the case of foreclosures.
However, if the homeowner is not able to make up the amount owed and foreclosure is initiated, he stands to lose any equity he might have in the home. The lender will eventually sell the property to another buyer in a public auction and the homeowner will be evicted. This is, perhaps, the biggest advantage of buying a foreclosure property. The home owner is facing a serious loss if he has any equity in the home at all. He is going to be very open to any type of deal that allows him to cut his losses as much as possible.
It stands to reason that the home owner is not going to be in a very sound financial position. If he were, he would not have fallen behind in his payments in the first place. This means that he is quite willing to negotiate some kind of deal that allows him to come out of the situation without losing everything. The potential buyer will most likely be getting the property at considerably under the market value. This creates an ideal situation for flipping the property.
It is usually better to deal with the homeowner directly whenever possible, but foreclosures can almost be bid on at the public auction. The bids are usually sealed bids and the winning bidder will be expected to come up with the bid price quickly. The homeowner might have to be actually evicted, but despite this, it is often worth making bids as the possibility of getting the property at a price way below market value is good. Another method of purchasing foreclosures is called REO. This stands for Real Estate Owned properties. These are properties that have not been sold at the auctions and are now owned by the lender.
Lenders will be willing to unload the properties at a very reasonable price. They are mostly interested in recovering the loan balance or as much of it as possible. They are in the business of lending money, not managing Real Estate and will want to unload the property as quickly as possible. The pros of buying foreclosures can be summed up by the fact that the properties can be purchased by an investor at a price below market value. This is the perfect situation for a buy low-sell high transaction.
View FSBO homes at FSBOAmerica.org. Article Source: http://EzineArticles.com/?expert=Raynor_James |
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