Real Estate Investing University

by Sameer S Panjwani

There are some basic strategies and tactics that you can use to sell your home faster than most on the market and get a great price at the same time.

The first thing anyone usually does when they’ve decided that they want to sell their home is set their price! You do not want to price your home out of the market or price it so low that you find yourself with a smaller profit than what you’re entitled to. Scout around the homes for sale in your area, check out the rates, compare your homes with others and then decide how much you can ask for.

Next, you’ve got to get your home ready to show. The best way to start is to pretend walking into the house for the first time and looking at it from a buyer’s perspective - look at the walls, the carpet, the window sills, counter tops, look at every nook and corner - is it good enough for you? Look for any unsightly blemishes that yells out to you, nail holes, chipped paint, stains in the sinks or commodes, spoiled wallpaper, bathtub stains, chipped tiles in the bathroom or shower, dirty blinds, etc. Once you’ve spotted them, have them fixed. Clean every inch of your home including the windows inside and out.

Next, get rid of all the clutter. You may be comfortable with the way your home looks and feels, but prospective buyers would want to see your home fitting in with their lifestyle and their furniture. If you’ve got several pieces of unused furniture which take up more space than needed, put them away. Your house needs to look spacious.

Do not forget to look through your basement and attic just like you did the living space of your home. Check for anything that may turn off the buyer and repair or replace the problem.

And finally the exteriors! This is the very first thing a buyer will see when they pull up to your home. What do you see? Are there oil stains in the driveway or garage, is the pavement or sidewalk cracked, how do the rain gutters appear, and do you have any moss on the roof? Get all of them fixed. Check your garden and remove anything from the yard that is not pleasing to the eye.

Once done, you are ready to place your home on the market and see it sell faster than the others.

List Homes for Sale / Rent Online at ChoiceOfHomes.com. Website url: http://www.choiceofhomes.com

by Steve Majors

Let’s get REAL about something - and quelch the LIES you have been told about Real Estate Investing¡­

What I am going to reveal to you are some basic truths about Real Estate investing - truths that may totally affect the Real Estate investments you have now - and certainly I intend to modify the way you do Real Estate investing in the future.

Let’s get right to it - and into the heart of the real estate investing issue¡­

You have been programmed all your life to become what you are today - from school, friends, relatives and, yes, your parents.

Recent studies show that you are who you are now, more from what you learned prior to age 8 than in anything else you have learned since.

Now, that may surprise you, but it is true that what you learned at the earliest ages affects the way you make Real Estate investments today, and the type of Real Estate investing success you will have going forward!

Yes, that’s a bit shocking¡­

You see, if you grew up in an environment where you heard things like ¡°We can’t afford it¡±, ¡°Be sure you have saved enough and have the cash to buy it (i.e., never use credit)¡± or numerous other phrases that you now hear yourself saying (you know what I’m talking about - those times you catch yourself “becoming your parents”¡­), it is because of your early programming (from 0-8 years) and what you were told about money, success and life in general.

That is controlling your current income - and your success - or lack of it…

The things you were told at that early, most influential age, are now creeping out and affecting how successful you are in business, in life and yes, in your Real Estate investing.

THERE IS GOOD NEWS

The greatest thing about this fact - as horrible as it seems - is that you can change the ‘programming’ - you have the power to do it!

You can reprogram yourself in any way you want - have anything you want - do anything you want¡­

All it takes is simply to ‘reinstall’ the right kind of thinking.

And, it is easier than you might think!

One of the best ways to do that is to get a CD audio set from someone you like to listen to - someone that thinks positively and speaks of the life you want to live. Many home study courses are available (yes, including mine) that are designed to inspire and motivate you, while they teach you the methods and secrets of real estate investing.

Purchase one - listen to it, over and over - until you hear yourself speaking that way, too.

You see, we are all simply creatures of habit and environment - if we allow junk to get into our heads, all we will ever say is junk coming out.

If all you listen to is the bad stuff in life (like the TV news, most ‘talk radio’ shows, those TV ‘real life’ shows that end up in fights - you know the ones¡­, and even violent movies where the language is nothing you’d ever expect to hear from your own lips¡­), that is exactly what you will wind up sounding like!

It is true - ‘you are what you eat’ - and that counts just as much for what you put in your ears as it does for what you put in your mouth!

If you spend your time around ‘bar people’, you’ll speak and act like them. Not that there’s anything wrong with that, as long as you made a conscious thought that it is what you want, but I think you’d be much more successful at Real Estate investing if you were listening to a successful person teaching you about Real Estate Investing!

Now, let’s get right to the point about the various methods and concepts you have learned about Real Estate Investing¡­

You may call yourself a ‘real estate investing expert’, but if you have to get up every morning and wonder where your next check is coming from, you aren’t making real estate investments, you are being employed in a Real Estate Investing JOB!

Yes, that’s a hard-hitting statement.

You see, I want you to ‘get real’ with yourself and simply admit it - Real Estate investing is when you put money into a Real Estate investment and then get some money out - ‘real estate investing’ defined¡­

Yet, it seems that most people I meet want to attend my real estate training or purchase my real estate courses that have to do with ‘No Money Down’ (NMD) ¡°real estate investing¡±¡­

Now, that kind of talk just proves the point - you can reprogram yourself to speak a different language - even if it doesn’t make sense!

A bunch of ‘gurus’ have told you over and over again that ‘No Money Down’ is real estate investing - even though you learned at an early age that ‘invest’ means to put money into something and get money out (see http://dictionary.reference.com/search? q=invest for other definitions - none of them say ‘No Money Down’…)

Now, it’s not that ‘NMD Real Estate investing’ is all bad - heck, my students and I make several thousand dollars from these types of ‘Real Estate investing’ transactions every year, too.

Just don’t lie to yourself and say they are ‘real estate investments’, we know very clearly that these are simply ‘earned income’ from one portion of your real estate investing business - the real estate ‘job’ portion - earned while in transition from your ‘corporate job’ to your ‘real estate investing job’ and on the road to true Real Estate Investing.

In other real estate investing articles, I cover some of the methods and techniques you, too, can explore while moving from your ‘corporate job’ to your ‘real estate investing job’ and you’ll learn some insider secrets for taking that leap quickly.

Steve Majors - The Lazy Investor Profit from Real Estate Investment articles, real estate investing information and news from one of the most creative investors on the planet ~FREE MEMBERSHIP & real estate training course~ http://SteveMajors.com

About the Author

Before his wild success in Real Estate investing, Steve Majors fixed stereos, was a radio DJ and owned several successful businesses. Completing 40 deals his first year in real estate investing, he now teaches others the secrets of Real Estate investing with his very own LAZY methods (minimum effort = maximum results). Profit from articles, news and information from one of the most creative investors on the planet! http://SteveMajors.com

by Dave Hazlehurst

More and more people are selling their property privately as a way of saving money on estate agents commissions. These commissions can be very high- often as much as 4% of the sale price. By selling your property privately online you can market your home and close the deal for as little as £49.

In this article we shall guide you through some of the key things to do if you decide to sell your home privately.

See your property through the eyes of your potential buyer

In order to give yourself the best chance of making a private sale, think carefully about the type of people who might be interested in buying your home and talk about things that might interest them on viewings.

For instance, if young families come to see your home make sure you know about local schools in the area. And if young professionals come round talk to them about transport links.

Sales Price

Before you decide to sell your property privately, decide what your bottom line price would be and what price you would ideally sell for.

Use an Online Private Sales Site Like Property for me.co.uk

This is a national private sales site that allows you to advertise your home to its ten thousand registered potential buyers for as little as £49.

Selling Tips

* Allow enough time to create an inviting temperature and warm the house up.

* In the winter switch on table lights and light the fire, if you have one, to create a cosy atmosphere.

* Try to ensure there is a parking space available for the viewer on arrival. If possible leave your drive clear. This provides an impression of no hassle parking and space.

* Flowers around the house will create a fresh atmosphere

* Try to avoid cooking immediately before viewings so that you avoid any lingering smells

About the Author

Property for me.co.uk (http://www.propertyforme.co.uk) is a private sales site covering the whole of the UK designed to help you save money in estate agents commission fees.

by Sabrina Hinds

Dear Real Estate Agent,

Even if I didn’t read the news I’d know exactly when the real estate market in my area is hot.

Why? The number of phone calls from agents looking for me to sell my condominium to their clients increases drastically. Usually I admit, my responses are curt, especially since these calls are usually unwelcome interruptions.

So many of those calls are unpleasant that I am taking the opportunity to tell you about the one different call that I received. This call not only resulted in my allowing the agent to visit with me, I now consider her my agent and plan to continue doing business with her and referring her to my friends.

Three Steps To Obtaining a Home Owner’s Interest When You Cold Call

1. Be friendly and let it come out in your voice. The only reason why I initially paid attention to the caller was that she really sounded pleasant. That was it - she sounded like the type of person I couldn’t be rude to even if I wanted to be. Frankly she sounded like she expected a friendly interaction - and that’s just what happened.

2. Don’t be intrusive. Make an approach like, “I’m a real estate agent and wondered whether I could speak with you a moment about whether you have short-term plans for placing your home on the market.” Also, pay attention to background noise. If you hear a baby, or cutlery clicking - take a hint! Don’t try to make conversation - I’m probably busy.

3. Introduce yourself more fully once the purpose of your call has been established and you have permission to continue. While maintaining your pleasant demeanour, be businesslike and demonstrate that you know what you are doing. For example my agent was able to quickly prove her familiarity with condos similar to mine in the area. Her confidence made me want to maintain contact with her for possible future transactions even though I was not ready to place my home on the market.

I’m sure if you follow these steps, it’ll make the home owners you call on much less cranky, and generate more goodwill and more new business for you.

About the Author

Sabrina Hinds is a home owner weary of dropping everything to rush to the phone only to be assaulted with unexpected questioning. She suggests that real estate agents try the tip offered at http://hop2url.com/GetReferrals to obtain lots of new business as an alternative to cold calling.

by Rhiannon Williamson

It’s no wonder that the majority of homeowners dream of one day being able to pay off their home loan and live a life free from the shackles of interest rates, home finance and worries about meeting the monthly mortgage payments because the largest expense the majority of us take on in a lifetime is our mortgage and each month our home finance payments take a substantial chunk out of our take home pay.

Just think what you could do with all the extra money you would have spare if you didn’t have to meet your mortgage each month! Interested? Well, here are five steps that you could take today to substantially slash your mortgage repayments and the overall cost of your home loan and even speed up your rate of repayment so that the day when you’ve paid off your home finance and are free to live the life you want comes that much sooner.

Step One - Demand Better Service!

As a loyal customer of your mortgage lender isn’t it about time you were rewarded for your financial commitment, for making your regular payments and for being a good, long term customer?

Well, you can rest assured your mortgage lender will not reward you unless you ask for a better deal on your mortgage!

So get on the phone, call up your lender, ask to speak to someone in customer services or the customer retention department and explain that you’re looking around for a better mortgage deal. Ask them for an evaluation of how much you have left to pay so that you can give it to any one of the hundreds of other mortgage lenders out there all willing to give you a better deal.

If you are indeed a valued customer you should receive favourable feedback to your demands and receive details of better offers currently available to you from your current lender.

Remember, if you don’t ask you don’t get and be adamant about what you want!

Step Two - Shop Around.

If step one doesn’t get you the deal you deserve, shop around. There really are well in excess of a hundred lenders out there all seeking new customers who will offer you incentives to take up their mortgage product.

Use the internet to get an idea of rates being offered and special deals available to you. Do remember that lenders will do everything they can to make their deal seem like the most attractive one available and do everything within their power to attract new customers so you need to be shrewd.

Look for any hidden charges or tie in clauses and make sure you evaluate products offered on a like for like basis taking into account all the features of the mortgage offers available.

Step Three - Call in the Cavalry.

Well, not the cavalry exactly but expert assistance in the form of a licensed and regulated fee free independent mortgage broker. In the UK these guys are now regulated by the Financial Services Authority and in the US they should come under the scope of The Responsible Lending Act.

As independent brokers they have access to and understanding of every single mortgage product available and they should be best placed to assist you find a better deal than the one you have now where your repayments will be less, your interest rate will be lower and the amount you repay over the entire duration of your loan is reduced.

Make sure your broker is fee free and remunerated by any company you decide to take a mortgage out with. More importantly than this, make sure they are regulated and licensed correctly and if possible ask for professional references or testimonials.

Step Four - Cut Out All Extras

Mortgage lenders are notorious for selling overpriced add-ons such as life insurance, home insurance, contents insurance, income protection cover…all these insurances have their value of course - but you can bet your bottom dollar that you can every last one of them for a fraction of the price by going directly to an independent insurance house or even seeking the services of an independent financial adviser to find you the best deal available.

You could literally save yourself thousands each year in insurance premiums!

Step Five - Throw Some Money at It

So, you’ve cut your interest rate down to size, reduced your monthly repayments, maybe received a cash lump sum from a new lender and saved yourself thousands on insurance products - now turn all those savings back into your mortgage and repay early.

Make sure you have it negotiated into your new mortgage contract that you can make early repayment or lump sum annual top ups and get rid of the millstone round your neck, free yourself from your largest financial commitment as soon as possible and save thousands in interest payments and enjoy freedom of life once again!

About the Author

Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/

by Rhiannon Williamson

Just because real estate prices seem to have hit a temporary ceiling in many countries around the world, that doesn’t mean that profits from property investments are hard to come by.

Even during a real estate market slowdown, stagnation or depression profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.

1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently. Are prices rising, are prices falling or have they reached a peak. You need to know where the curve of the property market cycle is at in your preferred investment area.

2) Get ahead of the curve - as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains. As a market is stagnating or falling many successful investors target areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.

3) Know your market - who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase. Know what they look for in a property and ensure that is what you are going to be offering them

4) Think further afield - there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. Look further afield than your own back yard for your next property investment and diversify that real estate portfolio for maximum success.

5) Purchase price - set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.

6) Entry costs - research fees, charges and all expenses you will incur when you buy your property - they differ from country to country and sometimes even from state to state. In Turkey for example you should add on an additional 5% of the purchase price for all fees, in Spain you will need to factor in an average of 10% and in Germany fees and charges can be in excess of 20%. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment can become profitable.

7) Capital growth potential - what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? If you’re buying to let out are there any indications to suggest that demand for rental accommodation will remain strong, increase or even decline? Think about what you want to achieve from your investment and then research and find out whether your expectations are realistic.

8) Exit costs - if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey on the other hand property sales are capital gains tax free if the underlying real estate has been owned for four or more years.

9) Profit margins - what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.

10) Think long term - unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment. Real estate is a slow to liquidate asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.

About the Author

Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/

by Dan Lewis

Many people make a major mistake when applying for a mortgage. They are so relieved to get the loan that they fail to pay attention to prepayment penalties in the loan documents.

Prepayment Penalties

With the refinance craze of the last few years, many borrowers have been surprised to find they are locked into their loan with prepayment penalties. Boiled down, these penalties require borrowers to pay fees if they pay off the loan prior to a certain point in time. By including such language in the loan documents, some lenders are trying to ensure they will recover a certain amount in interest on a loan as well as reach a certain maturity date on the loan. Lucky you.

Prepayment penalties come in a variety of forms. First and foremost, state law controls the amount and types of penalties that can be charged by a lender. Of course, this means each state has different laws and you should make sure you understand what can be done in yours.

As to the payments themselves, they typically come in two forms. The first is a percentage of the overall loan For instance, assume you have a $400,000 mortgage and the prepayment penalty is 3 percent. Your prepayment penalty will be $12,000. This is typically true even if you are selling your home because of financial difficulties.

In some states, prepayment penalties can come in the amount of interest to be charged over a period. Assume you are paying $2,000 a month in interest on your loan. The prepayment penalty may be something equal to 10 months of interest from the date of prepayment. Put another way, you are looking at a $20,000 prepayment penalty. Obviously, such a payment is going to be a dent in any profit you would pull from the home.

Lenders are not required to identify prepayment penalty language in loan documents. You absolutely must read your loan documents to make sure penalties aren’t included.

Prepayment penalties are not mandatory in loan documents. If a lender refuses to waive the penalties, make sure to shop around for a better deal. Don’t get pounded on the back end of the loan.

About the Author

Dan Lewis is a mortgage broker with http://www.gwhomeloans.com - San Diego mortgage brokers providing home loans and refinances. Visit http://gwhomeloans.com/services.html to learn more about options for San Diego mortgages.

by J. Brian Keith

Owning a home is something every hard working American wants. Many first time buyers discover the only home they can afford may not be all that they were hoping for. There’s not many things more discouraging than calling a real estate agent, giving them your financial information and filling them in on what type of home you’d like to buy for the price range you are comfortable with, then seeing the look on their face and explaining to you what you can really afford. While most people give in and settle for much less, many others find a market that will allow them to purchase homes below or well below what the market dictates, getting much more for their money than most conventional methods of finding a home. Many home buyers are discovering foreclosure lists and the foreclosure market.

In the Pre-Internet time, finding foreclosures could mean buying very expensive lists and having them sent to you via the mail or knowing someone with an “inside scoop”. Now that’s all behind us. Websites like Forclosure.com keep up to date, huge databases of thousands and thousands of foreclosure listings that allow home buyers to search by state, county, city and zip codes to better find what they need in their target areas. Search Engine results provide potential buyers with all the details needed to find foreclosure homes that best suit their criteria, for example: what the price of the home is, how many bathrooms or bedrooms the home has, who must be contacted for information about the home, the address and a photos can be provided sometimes as well.

Like any market, the real estate market has great bargains if you are willing to put in the effort to find them. It’s just a matter of knowing where to look. Foreclosures can present home buyers a way to grab a home at ridiculous prices, many times saving as much as 50% on the price of their home or more. On occasion properties can be purchased for as much as half of their market value. Until recently, the hardest part of purchasing foreclosed homes was finding foreclosures that were available for sale at the time.

Conventional methods of purchasing real estate can serve some purposes, many home buyers, especially first time home buyers, can be best served utilizing the resources of a site like Forclosure.com. Purchasing a home for much less than market value can help home buyers get into the type of home they may not be able to afford otherwise.

Above and beyond the potential savings, home buyers can gain financing advantages that are many times offered by banks or government agencies that have repossessed properties and then need to be sold. Many times, a buyer can finance a purchase with very little money out of their pocket and at a lower or reduced interest rate. When banks foreclose on a property, they call it REO or “Real Estate Owned”. REO homes are at times offered at well below market value. It’s not unheard of for a bank to offer no prepayment penalties, financing with no points and or low loan costs on their REO homes when they finance them themselves.

About the Author

For related information, marketing material or a Foreclosure List
http://www.promotion-group.com/foreclosure/index.html

by Bob Pappas

First and foremost, this article is for investors. As an investor, you should not (must not) have any emotional ties to any of your properties. You are in this business to make a fair and honest profit, and you will sell your home(s) when it makes sense to do so. Your goals should be to buy low and sell high, generate a positive cash flow while you own the house and use as little of your own money as possible. OK, so now how should you go about buying a house for your rent to own inventory of homes?

Location: Stay in your comfort zone. If you are not familiar with the laws and regulations in other states, stay in your home state. If you must “touch and feel” (see) your properties, stay within a comfortable driving range. If you are not comfortable with certain types of neighborhoods, whether it be an urban blight area or upscale posh area, don’t go there. There are plenty of opportunities in your comfort zone. All you have to do is find them and BE PATIENT.

Buy low: The best way to do this is to find a motivated seller. Here are some obvious (and some not so obvious) ways to find that seller:
1. Search the MLS listings in your preferred location(s) for properties that have been listed for more than 90 days.
2. Check public records for foreclosures and/or tax delinquencies.
3. Read the obituaries in your preferred location(s). There might be a house in the estate that must be sold.
4. Check public records for divorce filings. Many times a house must be sold to satisfy a Judgment.
5. Advertise in local newspapers and on the web (for example, place a free wanted ad on JSC Rent To Own Homes).
6. Look for a high growth area where builders are extremely active. You will discover there will be people who are unable to sell their home because the builder incentives are capturing all the qualified buyers. These neighborhoods are usually very desirable, and there are motivated sellers unable to sell. That sounds like an opportunity, doesn’t it? Here is your advantage. The person that you will try to find to rent the house after you buy it probably is not a qualified buyer to the builder. Builders want bank qualified buyers. Typically, people who are seeking a rent to own opportunity do not qualify for a mortgage with a bank. All you have to do is have a good renter/buyer lined up to move in to that desirable neighborhood.
7. Let your good renter/buyers find their own rent to own home. If you have a good prospective renter/buyer that is asking for your help (and you will if you do your job properly), give them the opportunity to find their own rent to own home. You have to set the ground rules, and they will think you walk on water. It is strongly suggested you develop a relationship with a good realtor who will follow your ground rules, take your renter/buyers on showings (most homes are listed anyway) and save you the time of doing this yourself.

Bottom line - If you find a motivated seller, you should be able to buy the property below appraised value.

Sell high: In this scenario, sell high refers to the option price you will set with your renter/buyer. Keep this in mind - If your renter/buyer was able to qualify for a mortgage today, he/she would probably not be your renter/buyer. He/she would simply buy a house without your help. Furthermore, the renter/buyer is probably a frustrated renter who wants to be a buyer. In other words, you have a motivated prospect, and that prospect should understand that you are a business person who is entitled to a FAIR profit in exchange for the risk you will take to help them. Bottom line - your prospect is probably not very price sensitive, and he/she will probably accept any fair number. In my opinion, a fair option price should be the current appraised value (not necessarily what you paid for the property) plus an amount equal to the average annual rate of increase compounded annually for each year of the option term. Allow me to explain by way of example:

First, try to keep all of your option terms to one year. It’s to the seller/landlord’s advantage. So, assume you own a house with an appraised value of $150,000 and prices have been increasing an average of 8%. For a one year contract, you should set your purchase price at $162,000 ($150,000 + 8% of $150,000 or $12,000); a two year contract, $175,000 ($162,000 x 1.08 = $174,960).

Positive cash flow: Cash flow is defined as the amount of money you receive per month minus the amount of money you spend per month. Obviously you want that to be a positive number.

1. First let’s look at how to minimize the amount of money you spend per month:
Your mortgage loan: You could put a large amount down to minimize your monthly payments, but that would not be wise. The best thing you can do is find a good lender who is willing to work with you. They are out there. A good lender will realize that you will bring in many deals, and most up front fees should be greatly reduced if not eliminated. Ideally you should be able to borrow up to 90% LTV amortized over 30 years without having to purchase mortgage insurance. You should avoid high interest fixed rate loans. You plan to sell the house in a short period of time so a 30 year variable rate loan with a fixed interest rate period of 3 or 5 years will be much better. In our example, we borrow $135,000 at 5% amortized over 30 years. That is approximately $725 per month (principle and interest) Furthermore we use an additional $300 per month for taxes and property insurance.

The lease: Your tenant is not just a lessor. Contractually he/she has the right to become the owner of the home. As such the tenant should develop a “pride of ownership” attitude and be responsible for most of the minor maintenance issues that arise with any home.

Ownership: Get a good real estate attorney and an accountant. They should be able to explain the advantages/disadvantages of personal versus LLC ownership including liability issues. This will help you determine the extent (and cost) of insurance you will want to have.

2. Now, let’s look at how to increase the amount of money you receive every month:
Here’s a little known fact - Over 90% of all people who enter into a rent to own agreement fail to exercise their option after one year! Do you remember I said to try to keep all of your contracts to one year? Besides maintaining better control of your investments, this little known fact can be hugely advantageous to you, the business person. Now, PLEASE keep this in mind; if you have a GOOD tenant who is unable to exercise his/her option, WORK WITH THEM. You should renegotiate a second year to your advantage, but not one that would force a good tenant to leave.

OK, here’s what you should consider (by way of example).
Using the above example, a reasonable contract might stipulate an option consideration of $8,000 (to be fully applied toward the down payment upon exercising the option) and a monthly rent of $1,100 per month of which $100 will be applied toward the down payment providing that monthly rent payment was made on time. After one year, assuming all rent payments were made on time, the tenant/buyer will have accumulated $9,200 in credits ($8,000 plus $100 per month). One can view the actual monthly rent as $1,000 assuming the option is exercised. If the tenant/buyer fails to exercise the option for any reason, That $9,200 is forfeited by terms of the contract.

To increase your cash flow, offer the tenant/buyer greater credits in exchange for a higher monthly rent. For example, in exchange for $1,300 per month, offer the tenant a $400 rent credit for every on-time payment received. Now, it can be viewed as a monthly net rent cost of $900, and the total equity built would be $12,800. If you present this properly, you can let the tenant negotiate for higher rent payments! You will have a much better cash flow, and there will still be a nice profit if the option is exercised provided you properly purchase the house. If the option is not exercised (90%+ odds it won’t be exercised), you keep all the rent monies paid. But, again, PLEASE keep this in mind; if you have a GOOD tenant who is unable to exercise his/her option, WORK WITH THEM. You should renegotiate a second year to your advantage, but not one that would force a good tenant to leave.

Use as little of your own money as possible: With diligence and patience, you will be able to buy a home for less than appraised value. Rather than buying the house at the reduced amount, pay the appraised value and take the difference as an allowance for, say, remodeling. Take this money in the form of a bank check. Using the above example, assume you are able to negotiate a purchase price of $140,000 (this is possible, in fact, doable if you do your homework). Tell the seller you will pay $150,000, and they must give you a bank check for $10,000.

Now you will finance 90% of the purchase price of $150,000 which equals $135,000. You need a down payment of $15,000. Your actual out of pocket cost is $5,000 because of the $10,000 allowance.

Summary: We will assume the tenant/buyer takes advantage of getting additional rent credits, makes all rent payments on time and the option is exercised after the first year. Using the above example (which is based on a composite of actual deals) and not accounting for miscellaneous costs (for simplicity purposes), here is the deal:

1. Cash spent - $17,300 ($5,000 out of pocket down payment plus $1,025/month P.I.T.I.)
2. Cash received - $23,600 ($8,000 option consideration plus $1,300/month rent)
3. mortgage obligation: $135,000
4. Received from sale - $149,200 ($162,000 minus $8,000 option consideration minus $4,800 rent credits)

Profit from cash flow = $6,300 ($23,600 minus $17,300)
Profit from sale = $14,200 ($149,200 minus $135,000)
Total profit = $20,500

$20,500 profit divided by $5,000 out of pocket = 410% RETURN IN ONE YEAR!!!

If the tenant does not exercise the option, it can only get better.

About the Author

Bob Pappas is an associate of JSC Rent To Own Homes, a unit of JSC Investments LLC. Bob acts as an investing third party in certain situations where either a renter would like to purchase a new house or the house he/she is currently renting, or a seller wishes to sell his/her property through a lease purchase agreement. http://www.jscinvestments.com/

by Nate Garin

By selling your home on your own you are known in the real estate world as a “FSBO” or “For Sale By Owner”. Some buyers specifically look for FSBO listings because they assume they can deduct a standard real estate professionals fees from the price of the home so they tend to make lower offers. Others believe that FSBO homes are easier to deal with than trained real estate professionals. Obviously, neither case is always true but it happens enough to be aware of it.

Your advertising is what drives potential buyers to first, become aware of your home, second, to gain interest, and finally, to make an offer for your home. It is only reasonable to assume that the more interested buyers you have the higher selling price you can expect.

In this era of highly accessible information there are many options available to you as a seller of real estate. As in any project you undertake, it would be wise to sit down and think out a strategy before spending any money, in order to avoid wasting money on ineffective promotional tools. Some questions you might ask yourself are the following:

1. How much time do I have to sell my property?

2. How much cash do I have to spend on advertising?

3. How many buyer leads do I expect, per dollar spent on advertising?

4. How much time do I have to devote to advertising daily and weekly?

After assessing your personal situation you will be better prepared to develop your promotional strategy. There are several advertising options out there, some more expensive than others and some deliver more leads than others. It’s reasonable to assume that the most valuable advertising resources are those that deliver the most leads to you for the least amount of money. Some of the most popular and effective methods follow.

* Posting an ad in the local newspaper

* Conducting an open house

* Distributing flyers around the neighborhood

* Posting a yard sign in front of your house

* Posting an ad on an internet real estate website (or on multiple sites)

Naturally, there are no guarantees that you will get attention by merely participating in the above promotional methods, because a lot depends on your ad copy, the presentation of information, and your asking price. Buyers simply won’t contact you if your price is too high. However, the right combination is essential to selling real estate by owner successfully.

Once you have decided where and how to advertise, you’ll need to write your ad copy and organize facts about your property. Following are a few tips on writing your ad.

Writing your ad Keep in mind that many people seek out FSBO properties when you write your ad. Be sure to take advantage of this by making it clear you are selling by owner.

Here is a list of things to do when writing your ad:

* Do indicate you are selling by owner

* Do indicate you have a complete property listing on the internet, and where it can be found

* Do describe the structure, style, and number of bedrooms and bathrooms

* Do describe the neighborhood

* Do list the sales price

* Do highlight any special features your home may have, such as a pool, hot tub, fenced yard, etc.

* Do include your phone numbers and email and indicate the best time to reach you (if by phone)

By not including the property address in your advertisement, you encourage potential buyers to call for more information, which gives you an opportunity to set up an appointment to show them your home.

About the Author

The author is involved in one of the leading for sale by owner websites as well as an online community for loan officers. http://www.loaninfohome.com/