IRAs that invest in the stock market can lose value when the market falls. However, real estate almost always increases in value. While some workers have to put off retirement when their IRAs lose value, others are investing their IRAs in real estate and retiring on or even ahead of schedule.
Change the custodian of your IRA. Most banks and brokerages aren't set up to buy and manage real estate for IRAs.
Know the rules for buying real estate. These are very important, because if you use your IRA funds to buy the wrong property or commit some other violation of the rules regarding real estate and IRAs, the financial consequences could be devastating.
Remember that you can't deduct depreciation on your real estate. It's possible that the benefit to your IRA is worth the loss of this deduction on your tax return.
Avoid mortgaging your real estate. If you do, you won't be able to shelter the income generated by your real estate. Even if you only use a mortgage to pay for part of the purchase, you won't be able to shelter a corresponding part of the income from the real estate.
Make any repairs or improvements to your property with funds from your IRA only. This means that you'll probably have to have some cash value in your IRA that you can withdraw for these expenses.
Consider investing in a real estate investment trust (REIT), which lets you invest in real estate without the pitfalls of buying and managing the property yourself. Be aware, however, that the overhead costs of buying real estate this way can be considerable; they may even wipe out any income you receive from the investment.
Friday, November 14, 2008
Increase the value of your property
There are many ways to increase the value of your real estate. Attractive touches always look nice and give your real estate curb appeal. Curb appeal is the "hook" needed to arouse a prospective buyer's interest in your home. Increasing the value of your home doesn't have to cost a fortune, although it is ultimately up to the homeowner how much is spent on improvements to increase the value of a house.
Paint the exterior of your home with a fresh coat of paint. New paint work increases the value of real estate and cheers up an otherwise drab looking home. Coordinate the colors for a stunning look that transforms the home, giving it a much needed face-lift. Replace your old front door and its hardware. Be sure to put up a new door knocker and replace the door bell. This will make the home look inviting and welcoming.
Pay a professional company to resurface your driveway to eliminate pits and potholes. Depending upon the length of your driveway, a professional crew will usually be able to resurface it in one day. This not only looks better, it adds value to your real estate.
Landscape the front yard in a tasteful manner. Add fruit trees, shade trees, attractive shrubs and edging plants. Use edging pavers, stepping stones, statuary items and driveway pavers to enhance appeal and add value to your real estate. Many people are becoming eco-conscious and want edible landscaping trees and shrubbery as part of living "green."
Update old-fashioned kitchens and bathrooms. Rip out old kitchen cabinets and counter-tops. Replace them with new cabinetry and granite counter-tops for up-to-date modernization and added value to your real estate. Tile the old linoleum floor, or replace with laminate flooring utilizing under-floor heating for warmth and comfort.
Paint the exterior of your home with a fresh coat of paint. New paint work increases the value of real estate and cheers up an otherwise drab looking home. Coordinate the colors for a stunning look that transforms the home, giving it a much needed face-lift. Replace your old front door and its hardware. Be sure to put up a new door knocker and replace the door bell. This will make the home look inviting and welcoming.
Pay a professional company to resurface your driveway to eliminate pits and potholes. Depending upon the length of your driveway, a professional crew will usually be able to resurface it in one day. This not only looks better, it adds value to your real estate.
Landscape the front yard in a tasteful manner. Add fruit trees, shade trees, attractive shrubs and edging plants. Use edging pavers, stepping stones, statuary items and driveway pavers to enhance appeal and add value to your real estate. Many people are becoming eco-conscious and want edible landscaping trees and shrubbery as part of living "green."
Update old-fashioned kitchens and bathrooms. Rip out old kitchen cabinets and counter-tops. Replace them with new cabinetry and granite counter-tops for up-to-date modernization and added value to your real estate. Tile the old linoleum floor, or replace with laminate flooring utilizing under-floor heating for warmth and comfort.
How to Become a Real Estate Investor
Understand the fundamentals of estate investing. Real estate investing covers a wide range of areas. Before you decide to specialize in one area of real estate investing you need to understand the basics of real estate. Read as many books on real estate investing as you can. Ask an experienced investor for book recommendations. Take a course on real estate at a local community college to understand the basic concepts of investing in real estate. You may also want to join a local real estate investing club to learn and network from more experienced investors.
Get your personal finances in order. One of the benefits of investing in real estate is leverage. By using leverage and other people's money you can invest in a large property and even cash flow. However in order to be able to borrow money at the best rates your personal finances must be in order. Pay down as much debt as possible before applying for loans. Also pay your bills on time in order to have as high of a credit score as you can. Often getting the best interest rates is the difference between a profitable deal or one that is losing you money each month.
Decide on the type of real estate investing you want to specialize in. There are many ways to invest in real estate. You should find one that matches your goals and skills. You many want to buy and rehab homes quickly for a profit if you have the physical skills and desire to do so. Or you may want steady income and tax benefits without actively managing your properties. Investing in apartment buildings may be the real estate investment for you.
Study the market you are interested in investing in before you invest. Spend time looking at the local area and many properties before making an offer. You want to have a good knowledge of the area and properties to be able to know what a fair price is for any property.
Seek partners. If you are short on cash or experience taking on a partner may be an option. A partner can help contribute cash, skills or experience to the deal. Just make sure you have a good partnership agreement in place and that the partner is someone you can work with.
If you are starting out in real estate investing and don't have a lot of money consider bird dogging. Bird dogging means you find the deals and assign the deals to another investor for an assignment fee. Real estate investors are always looking for profitable deals and you can start bird dogging to raise money for your own deals later.
Beware of real estate get rich courses and gurus. You can find a lot of free or inexpensive information on real estate investing by getting books at the library or taking a course at a local community college. Many get rich courses are all hype and may be outdated or not effective in your area. There are no magic get rich technique to succeeding in real estate, just hard work.
Get your personal finances in order. One of the benefits of investing in real estate is leverage. By using leverage and other people's money you can invest in a large property and even cash flow. However in order to be able to borrow money at the best rates your personal finances must be in order. Pay down as much debt as possible before applying for loans. Also pay your bills on time in order to have as high of a credit score as you can. Often getting the best interest rates is the difference between a profitable deal or one that is losing you money each month.
Decide on the type of real estate investing you want to specialize in. There are many ways to invest in real estate. You should find one that matches your goals and skills. You many want to buy and rehab homes quickly for a profit if you have the physical skills and desire to do so. Or you may want steady income and tax benefits without actively managing your properties. Investing in apartment buildings may be the real estate investment for you.
Study the market you are interested in investing in before you invest. Spend time looking at the local area and many properties before making an offer. You want to have a good knowledge of the area and properties to be able to know what a fair price is for any property.
Seek partners. If you are short on cash or experience taking on a partner may be an option. A partner can help contribute cash, skills or experience to the deal. Just make sure you have a good partnership agreement in place and that the partner is someone you can work with.
If you are starting out in real estate investing and don't have a lot of money consider bird dogging. Bird dogging means you find the deals and assign the deals to another investor for an assignment fee. Real estate investors are always looking for profitable deals and you can start bird dogging to raise money for your own deals later.
Beware of real estate get rich courses and gurus. You can find a lot of free or inexpensive information on real estate investing by getting books at the library or taking a course at a local community college. Many get rich courses are all hype and may be outdated or not effective in your area. There are no magic get rich technique to succeeding in real estate, just hard work.
How to Find State Assistance to Prevent Foreclosure
State governments offer several ways to help you get your mortgage payments back on track after you've fallen behind. One of the first things you can do to prevent foreclosure is find state assistance when you are faced with losing your home.
Contact the Department of Housing and Urban Development. One of the main responsibilities of HUD is to help homeowners who are faced with losing their homes. Go to the HUD website (see Additional Resources below) for information about how to contact local HUD offices.
Seek the assistance of the Urban League. This non-profit organization offers counseling and assistance to help homeowners at risk of foreclosure. Go to the Urban League website (see Additional Resources below) to find your local chapter.
Call your state's Attorney General's Office. Many states now offer programs to help borrowers negotiate with their lenders to help the homeowner get current on mortgage payments. Visit the National Association of Attorneys General website (see Additional Resources below) to find out how to contact the attorney general in your state.
Apply for state aid through a Family Independence Agency office. Apply for aid such as food stamps and energy cost assistance programs to allow you to apply more of your money toward mortgage payments.
Have your proof of income and an affordable monthly budget on hand when you are attempting to find state assistance to prevent foreclosure. The representatives will request this information when you apply for assistance.
Your lender has options that may help prevent foreclosure. Always speak to your lender first.
Contact the Department of Housing and Urban Development. One of the main responsibilities of HUD is to help homeowners who are faced with losing their homes. Go to the HUD website (see Additional Resources below) for information about how to contact local HUD offices.
Seek the assistance of the Urban League. This non-profit organization offers counseling and assistance to help homeowners at risk of foreclosure. Go to the Urban League website (see Additional Resources below) to find your local chapter.
Call your state's Attorney General's Office. Many states now offer programs to help borrowers negotiate with their lenders to help the homeowner get current on mortgage payments. Visit the National Association of Attorneys General website (see Additional Resources below) to find out how to contact the attorney general in your state.
Apply for state aid through a Family Independence Agency office. Apply for aid such as food stamps and energy cost assistance programs to allow you to apply more of your money toward mortgage payments.
Have your proof of income and an affordable monthly budget on hand when you are attempting to find state assistance to prevent foreclosure. The representatives will request this information when you apply for assistance.
Your lender has options that may help prevent foreclosure. Always speak to your lender first.
How to Bid at a Foreclosure Sale
A foreclosure sale is a proceeding in which a bank (or other secured creditor) sells real property at auction due to the property owner's failure meet his or her obligations under the mortgage. Bidding at a foreclosure sale can be a good way to find and purchase affordable property but it does bear some risks. Here are some tips to assist you in bidding at a foreclosure sale.
Understand the procedures. Read your state's statutes regarding the foreclosure sales. Familiarize yourself with the process by attending foreclosure sales and observing the bidding procedure.
Read the notices. Notices of default and sale are generally posted at the local courthouse and in local newspapers or journals. These notices contain the name of the borrower, the property description and the date and time of sale. They will also provide the name of the person or firm you can contact for more information regarding the foreclosure sale, including the starting bid amount.
Do your research. Before even considering bidding at the sale, you need to research the title to the property. You will want to determine whether there are any other mortgages on the property, any lawsuits against the homeowner, any mechanics liens on record, or anything else affecting the status of title to the property. You should also physically inspect the property to determine its condition.
Attend the sale at the date and time set forth in the notice of default and sale. Listen carefully to the bidding instructions to see if there are any conditions or terms to the sale. Make sure that you are prepared to go forward with bidding on the property in light of any such conditions.
Bid. You will usually need certified funds, such as cash or a cashier's check, to bid on the property. You should call ahead of time to confirm the starting bid. Be aware that there may be other bidders at the sale that can increase the bidding amount. Know in advance which amount you are willing to bid up to and don't exceed it.
You should consult an attorney experienced in property and real estate matters if you have any questions at all regarding how and whether to bid at a foreclosure sale.
Be aware that you can spend a lot of time and money preparing to bid at a foreclosure sale only to learn at the last minute that the sale is postponed or terminated, or, even if it goes forward, you may not be the successful bidder. Be sure to weigh these risks before starting the process of bidding at a foreclosure sale.
Even if you are the successful bidder, the borrowers may still be living on the property. If this is the case, you will likely need to initiate legal action to have them evicted. Be sure to consider this potential problem in determining whether you want to bid at a foreclosure sale.
Understand the procedures. Read your state's statutes regarding the foreclosure sales. Familiarize yourself with the process by attending foreclosure sales and observing the bidding procedure.
Read the notices. Notices of default and sale are generally posted at the local courthouse and in local newspapers or journals. These notices contain the name of the borrower, the property description and the date and time of sale. They will also provide the name of the person or firm you can contact for more information regarding the foreclosure sale, including the starting bid amount.
Do your research. Before even considering bidding at the sale, you need to research the title to the property. You will want to determine whether there are any other mortgages on the property, any lawsuits against the homeowner, any mechanics liens on record, or anything else affecting the status of title to the property. You should also physically inspect the property to determine its condition.
Attend the sale at the date and time set forth in the notice of default and sale. Listen carefully to the bidding instructions to see if there are any conditions or terms to the sale. Make sure that you are prepared to go forward with bidding on the property in light of any such conditions.
Bid. You will usually need certified funds, such as cash or a cashier's check, to bid on the property. You should call ahead of time to confirm the starting bid. Be aware that there may be other bidders at the sale that can increase the bidding amount. Know in advance which amount you are willing to bid up to and don't exceed it.
You should consult an attorney experienced in property and real estate matters if you have any questions at all regarding how and whether to bid at a foreclosure sale.
Be aware that you can spend a lot of time and money preparing to bid at a foreclosure sale only to learn at the last minute that the sale is postponed or terminated, or, even if it goes forward, you may not be the successful bidder. Be sure to weigh these risks before starting the process of bidding at a foreclosure sale.
Even if you are the successful bidder, the borrowers may still be living on the property. If this is the case, you will likely need to initiate legal action to have them evicted. Be sure to consider this potential problem in determining whether you want to bid at a foreclosure sale.
How to Beat a Foreclosure on a Home
Even with a strong national economy, low unemployment and low interest rates, Americans are always subject to dealing with mortgage lenders arriving to foreclose on their homes. Housing experts say that the ease with which homebuyers, even those with bad credit, have been able to get mortgages over the years is the most common culprit of foreclosure. As a result, many buyers have overextended themselves, taking loans with unfavorable terms even when the housing market dictates extremely high price tags. Homeowners can and do beat foreclosures on their properties–-but only when they act the moment they begin to experience financial difficulties.
A forebearance or a deed in lieu of foreclosure is the best choices.
If you’re going to have trouble meeting your mortgage payment, call your mortgage lender immediately. Swift action may prevent the loss of your home.
Mortgage lenders will always want to work with you and help you find a way to keep your home. That’s because they’re in the money lending business not the real estate business.
If your mortgage lender has not had a payment from you for a month or two, and if they haven’t heard from you, they will assume you do not intend to pay them. In that case they will feel justified in trying to take back your house.
If you are in serious financial difficulty, you should seek professional assistance and/or legal counsel to best protect your investment and your home.
Before you call your lender, be ready to discuss your financial problems. They will need all the information you can give them in order to help you.
Make notes about your income and outgoings so you will be better able to answer questions. It will impress the lender if you seem to be making a sincere attempt to tell the truth about your situation and get your finances under control.
There are a number of ways in which your lender may be able to help. If you get in touch with a lender before you miss a payment, the lender might offer forbearance. This means they would put the soon-to-be-missed payment at the back of the loan, allowing you to skip a month and not getting a mortgage late on your credit. This is why you need to contact your lender if you've lost a job or had some other short-term setback. In fact, your lender may allow you to skip several payments and give you time to get back on your feet.
Ask your lender about restructuring your loan. Since the lender knows that mortgage payments are the last payments a person will let slide they already realize you are probably having a few other financial problems.
If you have some equity in your home, a lender may allow you to restructure your loan to lower the monthly payments. If you’ve missed some payments they may even agree to add the past amount due into the new loan.
Ask your lender about helping you get a one-time payment from the government’s FHA-Insurance Fund to bring your mortgage current. You may qualify if your loan is at least 4 months delinquent, but no more than 12, and you are able to begin making full mortgage payments.
If your problem is so serious that it can’t be resolved in a reasonable amount of time, it may be better for you to sell your home and find one with more manageable payments. In that case, sell the home, pay off both the mortgage balance and your delinquent debt, and avoid foreclosure.
If you can’t sell your home it may be possible to sign it over to a lender. This is considered a voluntary foreclosure and could damage your credit record. You will lose your home, but you will not be held liable if the home sells below the debt amount.
The last resort, when all other options fail, is to declare bankruptcy, since foreclosure proceedings are usually stopped until a bankruptcy is resolved. This may save your home although it will damage your credit record for at least 7 years and you will lose control of your finances.
Foreclosure is not better for you credit...there's no way. A bankruptcy stays on your credit report for 7 years... a foreclosure stays on the credit report forever. I'm in real estate and people think it's better for foreclose and really it's not. Most of the time they still owe money because the house didn't sell for the value of their mortgage. A forebearance or a deed in lieu of foreclosure is the best choices.
The banks have to make the whole amount of the loan including the late payments due at once. This is called the accelleration clause. This allows them to start the foreclosure process. They could not foreclose if the person in the default was never given the opportunity to try to make a payment. The purpose of the accelleration clause is for the bank to move forward, not to punish the person... by then it is already too late for them.
A forebearance or a deed in lieu of foreclosure is the best choices.
If you’re going to have trouble meeting your mortgage payment, call your mortgage lender immediately. Swift action may prevent the loss of your home.
Mortgage lenders will always want to work with you and help you find a way to keep your home. That’s because they’re in the money lending business not the real estate business.
If your mortgage lender has not had a payment from you for a month or two, and if they haven’t heard from you, they will assume you do not intend to pay them. In that case they will feel justified in trying to take back your house.
If you are in serious financial difficulty, you should seek professional assistance and/or legal counsel to best protect your investment and your home.
Before you call your lender, be ready to discuss your financial problems. They will need all the information you can give them in order to help you.
Make notes about your income and outgoings so you will be better able to answer questions. It will impress the lender if you seem to be making a sincere attempt to tell the truth about your situation and get your finances under control.
There are a number of ways in which your lender may be able to help. If you get in touch with a lender before you miss a payment, the lender might offer forbearance. This means they would put the soon-to-be-missed payment at the back of the loan, allowing you to skip a month and not getting a mortgage late on your credit. This is why you need to contact your lender if you've lost a job or had some other short-term setback. In fact, your lender may allow you to skip several payments and give you time to get back on your feet.
Ask your lender about restructuring your loan. Since the lender knows that mortgage payments are the last payments a person will let slide they already realize you are probably having a few other financial problems.
If you have some equity in your home, a lender may allow you to restructure your loan to lower the monthly payments. If you’ve missed some payments they may even agree to add the past amount due into the new loan.
Ask your lender about helping you get a one-time payment from the government’s FHA-Insurance Fund to bring your mortgage current. You may qualify if your loan is at least 4 months delinquent, but no more than 12, and you are able to begin making full mortgage payments.
If your problem is so serious that it can’t be resolved in a reasonable amount of time, it may be better for you to sell your home and find one with more manageable payments. In that case, sell the home, pay off both the mortgage balance and your delinquent debt, and avoid foreclosure.
If you can’t sell your home it may be possible to sign it over to a lender. This is considered a voluntary foreclosure and could damage your credit record. You will lose your home, but you will not be held liable if the home sells below the debt amount.
The last resort, when all other options fail, is to declare bankruptcy, since foreclosure proceedings are usually stopped until a bankruptcy is resolved. This may save your home although it will damage your credit record for at least 7 years and you will lose control of your finances.
Foreclosure is not better for you credit...there's no way. A bankruptcy stays on your credit report for 7 years... a foreclosure stays on the credit report forever. I'm in real estate and people think it's better for foreclose and really it's not. Most of the time they still owe money because the house didn't sell for the value of their mortgage. A forebearance or a deed in lieu of foreclosure is the best choices.
The banks have to make the whole amount of the loan including the late payments due at once. This is called the accelleration clause. This allows them to start the foreclosure process. They could not foreclose if the person in the default was never given the opportunity to try to make a payment. The purpose of the accelleration clause is for the bank to move forward, not to punish the person... by then it is already too late for them.
How to Delay Foreclosure
In today's economy, more people are having trouble making their mortgage payments. If you find yourself in this position, you should know what options are available to you to help you delay foreclosure. Doing so may allow you to keep your home.
Start by contacting the lender who holds your mortgage, whether it's one payment you can't make, or you can't afford your mortgage payment as it currently stands at all. It costs a lender quite a bit of money to foreclose on a home, so if you ask for their help, they're likely to work with you.
Opt for a reinstatement option on your mortgage, in which you promise to bring your mortgage up to date by paying a lump sum by a particular date. This option is best if your financial situation is going to improve quickly, not for those who are going to continue to struggle to make mortgage payments.
Refinance your mortgage, particularly if interest rates are lower than what you are currently paying. You can use the equity in your home to help pay your current late payments, and also to spread out your mortgage over a longer term to lower the payments to a more affordable level for you.
Investigate a deed in lieu of foreclosure with your lender. In this scenario, you sign the house over to the bank, agree to sell it within a certain period of time, and the debt is forgiven. There are many stipulations that vary by state as to who qualifies for this method of delaying foreclosure, so it's best to talk to a real estate attorney.
Sell your home on your own and pay off the mortgage with the proceeds from the sale. This will allow you to start over with a home you can more easily afford.
Start by contacting the lender who holds your mortgage, whether it's one payment you can't make, or you can't afford your mortgage payment as it currently stands at all. It costs a lender quite a bit of money to foreclose on a home, so if you ask for their help, they're likely to work with you.
Opt for a reinstatement option on your mortgage, in which you promise to bring your mortgage up to date by paying a lump sum by a particular date. This option is best if your financial situation is going to improve quickly, not for those who are going to continue to struggle to make mortgage payments.
Refinance your mortgage, particularly if interest rates are lower than what you are currently paying. You can use the equity in your home to help pay your current late payments, and also to spread out your mortgage over a longer term to lower the payments to a more affordable level for you.
Investigate a deed in lieu of foreclosure with your lender. In this scenario, you sign the house over to the bank, agree to sell it within a certain period of time, and the debt is forgiven. There are many stipulations that vary by state as to who qualifies for this method of delaying foreclosure, so it's best to talk to a real estate attorney.
Sell your home on your own and pay off the mortgage with the proceeds from the sale. This will allow you to start over with a home you can more easily afford.
How to Repair Credit After Foreclosure
Losing your home is one of the worse things that can happen to you. Foreclosure is an ugly word. However, you can recover from it, but you just have to know how. Repairing credit after you have a foreclosure can be tricky. Read on and you will learn how to repair credit after foreclosure.
Understand why you were foreclosed on. This is an extremely important factor in repairing your credit. If there were circumstances you could have avoided, you need to know what they were so you can fix them in the future. If it was a series of unfortunate circumstances, you want to try to avoid them in the future.
Look into the way you spend money. Your spending habits may need to change so you won't have this problem again. Make yourself a budget and stick to it so you can correct the way you spend money. You are looking to save money so you can avoid getting into a negative situation again.
Pay off your debts. Not an easy task especially if you have numerous debts. However, there are debt consolidation services you can consider--but make sure you check them out because many are frauds.
Maintain your new spending habits. It is easy to fall back into the habits that got you into this mess to begin with, so you have to be committed to changing. One way to help you do this is by cutting up your credit cards so you aren't tempted to use them again. Getting into debt to pay off debt is not the way to go.
Make sure you pay everything on time. This will help you repair your credit standing after your foreclosure. Be willing to make sacrifices to pay your bills on time. The more you show that you have changed the faster you will be able to repair your credit.
http://aaacreditguide.com/foreclosures/
http://ezinearticles.com/?What-Steps-Are-Need-To-Repair-Your-Credit-After-Foreclosure?&id=833903
http://www.mightybargainhunter.com/living-life-after-foreclosure/
http://www.creditinfocenter.com/repair/Repair.shtml
Understand why you were foreclosed on. This is an extremely important factor in repairing your credit. If there were circumstances you could have avoided, you need to know what they were so you can fix them in the future. If it was a series of unfortunate circumstances, you want to try to avoid them in the future.
Look into the way you spend money. Your spending habits may need to change so you won't have this problem again. Make yourself a budget and stick to it so you can correct the way you spend money. You are looking to save money so you can avoid getting into a negative situation again.
Pay off your debts. Not an easy task especially if you have numerous debts. However, there are debt consolidation services you can consider--but make sure you check them out because many are frauds.
Maintain your new spending habits. It is easy to fall back into the habits that got you into this mess to begin with, so you have to be committed to changing. One way to help you do this is by cutting up your credit cards so you aren't tempted to use them again. Getting into debt to pay off debt is not the way to go.
Make sure you pay everything on time. This will help you repair your credit standing after your foreclosure. Be willing to make sacrifices to pay your bills on time. The more you show that you have changed the faster you will be able to repair your credit.
http://aaacreditguide.com/foreclosures/
http://ezinearticles.com/?What-Steps-Are-Need-To-Repair-Your-Credit-After-Foreclosure?&id=833903
http://www.mightybargainhunter.com/living-life-after-foreclosure/
http://www.creditinfocenter.com/repair/Repair.shtml
How to Get Foreclosure Tax Relief
The tax law states that when a mortgage debt is eliminated through foreclosure, the amount of the debt that exceeds the value of your house or other property is usually considered to be taxable income. However, there is a relief provision that allows insolvent debtors to offset that cancelled taxable income to the extent their liabilities exceed their assets.
Receive Form 1099-C from your lender, which shows the amount of debt forgiven and the fair market value (FMV) of the property given up through foreclosure.
Verify that the information on Form 1099-C is correct. The sale of the property at auction usually determines the FMV of the property. Some circumstances, such as the property not yet being sold by the lender, may result in a higher FMV.
Determine if your property foreclosure eliminated debt exceeded the FMV.
Calculate the total value of all your assets and the total amount of your liabilities. If the liabilities exceed your assets, the amount of that excess can be used to totally or partially offset the excess of forgiven mortgage debt over the FMV of the property.
Request a payment agreement with the IRS if the relief provisions do not entirely offset the foreclosure taxable income. You can also consider making an offer in compromise to reduce the tax liability.
Lenders are required to issue Form 1099-C to the borrower and to the IRS.
Notify the lender as soon as possible if there is any discrepancy in the amounts reported on Form 1099-C.
Receive Form 1099-C from your lender, which shows the amount of debt forgiven and the fair market value (FMV) of the property given up through foreclosure.
Verify that the information on Form 1099-C is correct. The sale of the property at auction usually determines the FMV of the property. Some circumstances, such as the property not yet being sold by the lender, may result in a higher FMV.
Determine if your property foreclosure eliminated debt exceeded the FMV.
Calculate the total value of all your assets and the total amount of your liabilities. If the liabilities exceed your assets, the amount of that excess can be used to totally or partially offset the excess of forgiven mortgage debt over the FMV of the property.
Request a payment agreement with the IRS if the relief provisions do not entirely offset the foreclosure taxable income. You can also consider making an offer in compromise to reduce the tax liability.
Lenders are required to issue Form 1099-C to the borrower and to the IRS.
Notify the lender as soon as possible if there is any discrepancy in the amounts reported on Form 1099-C.
How to Find Foreclosure Listings
In order to make a dent in the real estate foreclosure market, you must first locate the properties in which you want to invest. There are a number of ways to find these listings, and it is the wise business person who uses as many options as possible.
Locate paid subscription services online that provide updated listings on a daily or weekly basis, such as RealtyTrac, ForeclosureListings.com and FreeForeclosureDatabase.com (see Resources below). You can locate records across the United States, which is particularly convenient if you plan to invest in more than one state.
Review public notices, which are usually found at country courthouses around the country, on a regular basis. Not only will you find foreclosure listings, but you'll also get information on defaulted properties (the step before foreclosure). If your area has a fairly large newspaper, public auctions and information on defaulted properties are listed in the Classifieds or Real Estate sections.
Hand out and post flyers that let readers know that you are interested in distressed properties. They should be posted in high-traffic areas such as busy supermarkets, coffee shops and gyms where your message can be seen by a large number of individuals.
Seek out the foreclosure lists of banks, mortgage companies and other lenders. Many lenders have online sites with this information, while others have in-house departments that you will have to contact by telephone or in person. As these are the contacts that will have the information before anyone else, you should establish relationships with several of these people so that you'll have a leg up on the competition.
Network with qualified real estate agents who are knowledgeable about the foreclosure market. Some of these agents have relationships with various lenders and have information on foreclosure listings before they are made public. You may have to pay commissions, but it is well worth it.
Join professional organizations and let your fellow members know that you are in the business of purchasing foreclosures. Once you make your associates aware, you may find that they will direct business your way. You can reward them for their tips by offering them a finder's fee.
Place advertisements in local newspapers in the real estate section. Let readers know what you are interested in purchasing foreclosures or pre-foreclosures, and give them your contact information.
RealtyTrac for foreclosure listings (http://www.realtytrac.com/)
FreeForeclosureDatabase for foreclosure listings (http://www.freeforeclosuredatabase.com/)
ForeclosureListings.com for foreclosure listings (http://www.foreclosurelistings.com/)
http://www.freehudlist.net
Locate paid subscription services online that provide updated listings on a daily or weekly basis, such as RealtyTrac, ForeclosureListings.com and FreeForeclosureDatabase.com (see Resources below). You can locate records across the United States, which is particularly convenient if you plan to invest in more than one state.
Review public notices, which are usually found at country courthouses around the country, on a regular basis. Not only will you find foreclosure listings, but you'll also get information on defaulted properties (the step before foreclosure). If your area has a fairly large newspaper, public auctions and information on defaulted properties are listed in the Classifieds or Real Estate sections.
Hand out and post flyers that let readers know that you are interested in distressed properties. They should be posted in high-traffic areas such as busy supermarkets, coffee shops and gyms where your message can be seen by a large number of individuals.
Seek out the foreclosure lists of banks, mortgage companies and other lenders. Many lenders have online sites with this information, while others have in-house departments that you will have to contact by telephone or in person. As these are the contacts that will have the information before anyone else, you should establish relationships with several of these people so that you'll have a leg up on the competition.
Network with qualified real estate agents who are knowledgeable about the foreclosure market. Some of these agents have relationships with various lenders and have information on foreclosure listings before they are made public. You may have to pay commissions, but it is well worth it.
Join professional organizations and let your fellow members know that you are in the business of purchasing foreclosures. Once you make your associates aware, you may find that they will direct business your way. You can reward them for their tips by offering them a finder's fee.
Place advertisements in local newspapers in the real estate section. Let readers know what you are interested in purchasing foreclosures or pre-foreclosures, and give them your contact information.
RealtyTrac for foreclosure listings (http://www.realtytrac.com/)
FreeForeclosureDatabase for foreclosure listings (http://www.freeforeclosuredatabase.com/)
ForeclosureListings.com for foreclosure listings (http://www.foreclosurelistings.com/)
http://www.freehudlist.net
Friday, October 31, 2008
How to calculate your return on investment (ROI)
Return On Investment, or ROI, is a very important performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. The ROI measures your income returned to you based on how much money you are using to put into an effort. ROI is important to consider because if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken. This measure is used a lot to analyze income property, real estate, business performance, small business investments, and even to determine upgrades or equipment purchases to help add services or improve services performed by a business. Here is how you calculate ROI.
To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations. Here is the formula for ROI: (Income from Investment - Cost of Investment) / Total Cost of Investment = ROI
When I look at an investment property, I use my formula to determine if it is worth buying the property or not. In the case of an investment property, ROI is calculated by dividing the cash flow after taxes, insurance, and expenses by the total invested. So the formula to help you determine your ROI on an investment property is: (CFAT)+(insurance)+(expenses)/(Total Invested in property) = ROI When working with an investment property, it is best to determine each cost over the course of a year to find out the yearly ROI.
For example, if $50,000 were put down to purchase an investment property and I had to spend another $5,000 in property repairs then my total invested so far would be $55,000. We are assuming that I paid cash for this house, so I do not have a mortgage. Now let's say that I could rent the house out for $800 a month. I would earn a total of $9600 a year on the property. Now I have to take into consideration the cost after taxes on my cash flow. So lets say the taxes are $600 a year. I have to also add insurance and other expenses for the year. For the sake of the example, we will say my insurance cost $400 a year, and my other expenses are $300 a year. So my equation would look like: ($9,600)-($600 + $400 + $300)/($55,000) = ROI ($8300)/($55,000) = 0.15 or 15% ROI per Year on my investment property
Now ROI looks a little better when applied to a vending machine company or to capital equipment. For example, if I were to spend $5,000 to purchase a vending machine, and another $1000 for the product for the year, then my total invested so far would be $6,000. Now let's say that I made a profit of $200 a month from the machine. I would earn a total of $2,400 a year from the machine. Now I have to take into consideration the cost of my rent for the machine in a building and any repairs. So lets say my rent for the year is $300, and my repairs are only $100 for the year. Here is what my equation would look like for this scenario" ($2,400)-($300 + $100)/($6,000) = ROI ($2,000)/($6,000) = 0.333 or 33% ROI per Year on a vending machine
Calculating out ROI is the best way to see how fruitful your investments or passive income strategies are going to pan out. If the ROI on investment is lower than another equally interesting investment, then you have a solid baseline for rejecting the lower investment strategy.
To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations. Here is the formula for ROI: (Income from Investment - Cost of Investment) / Total Cost of Investment = ROI
When I look at an investment property, I use my formula to determine if it is worth buying the property or not. In the case of an investment property, ROI is calculated by dividing the cash flow after taxes, insurance, and expenses by the total invested. So the formula to help you determine your ROI on an investment property is: (CFAT)+(insurance)+(expenses)/(Total Invested in property) = ROI When working with an investment property, it is best to determine each cost over the course of a year to find out the yearly ROI.
For example, if $50,000 were put down to purchase an investment property and I had to spend another $5,000 in property repairs then my total invested so far would be $55,000. We are assuming that I paid cash for this house, so I do not have a mortgage. Now let's say that I could rent the house out for $800 a month. I would earn a total of $9600 a year on the property. Now I have to take into consideration the cost after taxes on my cash flow. So lets say the taxes are $600 a year. I have to also add insurance and other expenses for the year. For the sake of the example, we will say my insurance cost $400 a year, and my other expenses are $300 a year. So my equation would look like: ($9,600)-($600 + $400 + $300)/($55,000) = ROI ($8300)/($55,000) = 0.15 or 15% ROI per Year on my investment property
Now ROI looks a little better when applied to a vending machine company or to capital equipment. For example, if I were to spend $5,000 to purchase a vending machine, and another $1000 for the product for the year, then my total invested so far would be $6,000. Now let's say that I made a profit of $200 a month from the machine. I would earn a total of $2,400 a year from the machine. Now I have to take into consideration the cost of my rent for the machine in a building and any repairs. So lets say my rent for the year is $300, and my repairs are only $100 for the year. Here is what my equation would look like for this scenario" ($2,400)-($300 + $100)/($6,000) = ROI ($2,000)/($6,000) = 0.333 or 33% ROI per Year on a vending machine
Calculating out ROI is the best way to see how fruitful your investments or passive income strategies are going to pan out. If the ROI on investment is lower than another equally interesting investment, then you have a solid baseline for rejecting the lower investment strategy.
How to make money with tax liens
Ever since there has been real estate ownership in our country, the government has levied taxes against it. These taxes help to fund a lot of county services, such as public schools, law enforcement, road construction & maintenance, parks, and other hospital funding. When real estate taxes are not paid, the local government can not support the county infrastructure. So to help the local government make back the capitol they need, the offer tax liens on real estate to investors. Here is how to make money with tax liens.
First of all, this is not a get rich quick scheme. This takes some time and research. I have seen a lot of sites out there offering info on tax liens and courses - but honestly, all you have to do is go to your local county government office and ask about tax lien info. Tax liens are not to be confused with tax deeds -these are two different ways to pick up property, and not all states offer tax liens! SO DO YOUR HOMEWORK! We will talk about tax deed sales in another article.
Tax Sales are offered up by local government agencies at auction to the public. During Tax Lien Sales you DO NOT purchase land, but you do purchase a debt to be collected on. You are paying the home owners tax debt, and hoping that they pay you back with interest. It is a gamble, and you are essentially loaning them money to pay their taxes. Investors receive the governments lien for property taxes or first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens. So if these homeowners default, you could pick up a property that you could later auction off, but you really only want the interest on the loan, not the property. That is the point! If you want the property, then you want to go to a TAX DEED sale.
Local governments allow investors to pay off these taxes so that they can raise money to pay for basic city functions like police protection, public schooling and medical services. Depending on state laws and competition, investors can realize returns as high as; 16% per year If everything works out as planned, the city and county will get their money, the home owner will be able to stay in their home, and the investor gets a real estate secured, high yielding investment that performs better than the stock market - hopefully.
Generally, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact the county your local county office for specific information and details about these sales.
It is extremely important to know and understand which type of sale you are attending. YOU WANT TO GO TO A TAX LIEN or TAX CERTIFICATE SALE, not a TAX DEED sale. Each has specific rules and guidelines which must be followed promptly, and which can differ greatly county to county. It is strongly recommended that anyone interested in attending a tax sale be aware of the method and timeliness required for payment and delivery of a property. For further information, familiarize yourself with property tax law, consult a legal attorney, and contact the government agency conducting the sale.
First of all, this is not a get rich quick scheme. This takes some time and research. I have seen a lot of sites out there offering info on tax liens and courses - but honestly, all you have to do is go to your local county government office and ask about tax lien info. Tax liens are not to be confused with tax deeds -these are two different ways to pick up property, and not all states offer tax liens! SO DO YOUR HOMEWORK! We will talk about tax deed sales in another article.
Tax Sales are offered up by local government agencies at auction to the public. During Tax Lien Sales you DO NOT purchase land, but you do purchase a debt to be collected on. You are paying the home owners tax debt, and hoping that they pay you back with interest. It is a gamble, and you are essentially loaning them money to pay their taxes. Investors receive the governments lien for property taxes or first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens. So if these homeowners default, you could pick up a property that you could later auction off, but you really only want the interest on the loan, not the property. That is the point! If you want the property, then you want to go to a TAX DEED sale.
Local governments allow investors to pay off these taxes so that they can raise money to pay for basic city functions like police protection, public schooling and medical services. Depending on state laws and competition, investors can realize returns as high as; 16% per year If everything works out as planned, the city and county will get their money, the home owner will be able to stay in their home, and the investor gets a real estate secured, high yielding investment that performs better than the stock market - hopefully.
Generally, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact the county your local county office for specific information and details about these sales.
It is extremely important to know and understand which type of sale you are attending. YOU WANT TO GO TO A TAX LIEN or TAX CERTIFICATE SALE, not a TAX DEED sale. Each has specific rules and guidelines which must be followed promptly, and which can differ greatly county to county. It is strongly recommended that anyone interested in attending a tax sale be aware of the method and timeliness required for payment and delivery of a property. For further information, familiarize yourself with property tax law, consult a legal attorney, and contact the government agency conducting the sale.
How to evict a tenant
There are times when owning rental property is a lesson in human nature and conflict. There will be times when you may need to evict a tenant and reclaim your property. If you have to evict a tenant there is a proper eviction procedure that needs to be followed very closely. You need to stay calm, be respectful, and take care of the situation professionally. Here is the way to evict a tenant.
The first thing to do when evicting a tenant is to be calm and stay professional. Do not get mean, do not threaten your tenant, and do not give them a reason to get upset at you. This is a very touchy thing to do, and if you have gotten to the point in your relationship where the tenant is not paying you or where they are causing issues at your rental property, then you need to follow a very specific and exact eviction process. I have had tenants threaten me, trash my property, and even sue me over evicting them - staying calm and professional in every situation is the most important thing to remember. This is a process that can take as short as 5 days or last as long as 30 days. Expect it to last at least 30-40 days because you will need to get the city court involved.
I hope that you have a city approved rental property. If you do, then good, move on -If you do not, you are going to have to apply for a temporary rental permit from the city - which costs a bit of money, and have your property inspected for a rental license. This can happen while you are waiting to evict the tenant, but you really need to have the property approved and licensed before you rent anyway! Look at the link in my resources to learn how to get a rental license or visit this link here: http://www.ehow.com/how_4559543_become-landlord-landlord-license.html
Step3If your tenant is not paying or if they are breaking any of the agreed upon articles in your lease, try first to let them know that you are not happy with what is going on and find out why they are not paying or violating the terms of your lease. At this point, you have two options: 1) File a "7-day notice for non-payment" with the city - read step 4 2) File a "30 day termination of lease" with the city - read step 5
If you want to try and work things out with the tenant and get the money they owe you, then you need to file a "7 day notice for non-payment". This notice lets the tenant know that they have 7 days to pay you the money they owe you or else the eviction process will begin. This notice helps you to get the rent collection process going, and these notices cost you money to file with the court. Expect to pay anywhere from $50 - $100 dollars to get this done. Save these receipts and write them off at tax time, as well as the loss of rent you are incurring because of these tenants. Once you send out the "7 day notice of termination of lease", wait for your tenant to call you and come up with the money or resolve the issues that they are in violation of. They have only 7 days to take care of this. Normally, this notice is all you need to correct the issue, and they will pay you or stop violating your lease terms. However, if you come upon the end of the 7th day and you still have not been paid or they still are violating your lease terms, you will need to file for the "30 day termination of lease in Step 5.
Go down to the city courthouse - civil division, landlord/tenant office - and let them know that you would like to evict a tenant from your property for violation of your lease agreement/payment. Tell them that you do not want to try to resolve the issue with them and you simply want them out of your property. You will need to file for a "30 day notice of lease termination". These are generally free to file. You need to serve the tenant with this notice and then go back to the court house to have them physically sign off for the fact that it has been served. Now, this is a pain because you are going to potentially lose an entire month and 1/2 worth of rent. I had a couple of tenants that I had to do this to, and the eviction process ran about a total of 40 days. In the end, I was awarded all money owed, and they were evicted - I never saw the money, but they were thrown out of my property, so there is a light at the end of this mess.
Alright, so now here we are a few days later after you have served your tenant the "7 day non-payment notice", or the "30 day notice of lease termination". At this point, you could be quite a few days into the eviction process, so I hope you planned ahead so that you will not be getting into next month and losing more money. If your tenant has not paid you, has not corrected their lease violation, or has not moved out by this point, then you just have to wait for the 30 days to expire and take them back to court to get them evicted officially.
Once your 30 days is up, go back to the city courthouse and let them know the tenant is still in your property and causing problems. Try not to talk to you tenant, refrain from going there, do not threaten them, do not stop by, do not meet with them - unless they have the money for you (bring a police escort) - and just wait for the court to do their thing. The court clerk will then set up a court date to have your case heard in front of a judge. They will send you and your tenants a notice of this date.
If you are served a notice that the tenant wants to fight you in court, then go to the court hearing. Also go to the city court and see if they can schedule the hearing for a date that is close to the end of the 30 day notice so that you are not going too long without collecting rent. They generally will try to help out with the scheduling.
When you go court - if it gets this far - you really do not have much to say except that the tenant was in violation of the lease, they failed to pay you, and you followed the procedures for eviction. The city lawyer may want to try and resolve the issue without going in front of a judge - BUT I RECOMMEND THAT YOU GO IN FRONT OF THE JUDGE. The last time I tried to work it out with the tenants and the city attorney, the tenants still failed to pay me, and I had to deal with them for another 10 days until the city booted them out on the street. SO - go in front of the judge, and let them know that you want them out of your property. You can try to get the money owed to you, but unfortunately, the tenants always get away without paying you - so as one judge told me - be happy that you are getting rid of these people and move on!
After the court ruling, the tenants will have probably about two-three days to get out of your property. If they still refuse to move, go to the court-house immediately, and the will send an officer over to physically evict them.
Record all of your loses against your business expenses and write these off at tax-time. Clean up your property (because they will trash it), change the locks, and get the unit rented out as fast as possible - now DO NOT RENT TO PEOPLE LIKE THAT AGAIN, AND CHECK THEIR BACKGROUND TO AVOID THE ISSUE AGAIN
The first thing to do when evicting a tenant is to be calm and stay professional. Do not get mean, do not threaten your tenant, and do not give them a reason to get upset at you. This is a very touchy thing to do, and if you have gotten to the point in your relationship where the tenant is not paying you or where they are causing issues at your rental property, then you need to follow a very specific and exact eviction process. I have had tenants threaten me, trash my property, and even sue me over evicting them - staying calm and professional in every situation is the most important thing to remember. This is a process that can take as short as 5 days or last as long as 30 days. Expect it to last at least 30-40 days because you will need to get the city court involved.
I hope that you have a city approved rental property. If you do, then good, move on -If you do not, you are going to have to apply for a temporary rental permit from the city - which costs a bit of money, and have your property inspected for a rental license. This can happen while you are waiting to evict the tenant, but you really need to have the property approved and licensed before you rent anyway! Look at the link in my resources to learn how to get a rental license or visit this link here: http://www.ehow.com/how_4559543_become-landlord-landlord-license.html
Step3If your tenant is not paying or if they are breaking any of the agreed upon articles in your lease, try first to let them know that you are not happy with what is going on and find out why they are not paying or violating the terms of your lease. At this point, you have two options: 1) File a "7-day notice for non-payment" with the city - read step 4 2) File a "30 day termination of lease" with the city - read step 5
If you want to try and work things out with the tenant and get the money they owe you, then you need to file a "7 day notice for non-payment". This notice lets the tenant know that they have 7 days to pay you the money they owe you or else the eviction process will begin. This notice helps you to get the rent collection process going, and these notices cost you money to file with the court. Expect to pay anywhere from $50 - $100 dollars to get this done. Save these receipts and write them off at tax time, as well as the loss of rent you are incurring because of these tenants. Once you send out the "7 day notice of termination of lease", wait for your tenant to call you and come up with the money or resolve the issues that they are in violation of. They have only 7 days to take care of this. Normally, this notice is all you need to correct the issue, and they will pay you or stop violating your lease terms. However, if you come upon the end of the 7th day and you still have not been paid or they still are violating your lease terms, you will need to file for the "30 day termination of lease in Step 5.
Go down to the city courthouse - civil division, landlord/tenant office - and let them know that you would like to evict a tenant from your property for violation of your lease agreement/payment. Tell them that you do not want to try to resolve the issue with them and you simply want them out of your property. You will need to file for a "30 day notice of lease termination". These are generally free to file. You need to serve the tenant with this notice and then go back to the court house to have them physically sign off for the fact that it has been served. Now, this is a pain because you are going to potentially lose an entire month and 1/2 worth of rent. I had a couple of tenants that I had to do this to, and the eviction process ran about a total of 40 days. In the end, I was awarded all money owed, and they were evicted - I never saw the money, but they were thrown out of my property, so there is a light at the end of this mess.
Alright, so now here we are a few days later after you have served your tenant the "7 day non-payment notice", or the "30 day notice of lease termination". At this point, you could be quite a few days into the eviction process, so I hope you planned ahead so that you will not be getting into next month and losing more money. If your tenant has not paid you, has not corrected their lease violation, or has not moved out by this point, then you just have to wait for the 30 days to expire and take them back to court to get them evicted officially.
Once your 30 days is up, go back to the city courthouse and let them know the tenant is still in your property and causing problems. Try not to talk to you tenant, refrain from going there, do not threaten them, do not stop by, do not meet with them - unless they have the money for you (bring a police escort) - and just wait for the court to do their thing. The court clerk will then set up a court date to have your case heard in front of a judge. They will send you and your tenants a notice of this date.
If you are served a notice that the tenant wants to fight you in court, then go to the court hearing. Also go to the city court and see if they can schedule the hearing for a date that is close to the end of the 30 day notice so that you are not going too long without collecting rent. They generally will try to help out with the scheduling.
When you go court - if it gets this far - you really do not have much to say except that the tenant was in violation of the lease, they failed to pay you, and you followed the procedures for eviction. The city lawyer may want to try and resolve the issue without going in front of a judge - BUT I RECOMMEND THAT YOU GO IN FRONT OF THE JUDGE. The last time I tried to work it out with the tenants and the city attorney, the tenants still failed to pay me, and I had to deal with them for another 10 days until the city booted them out on the street. SO - go in front of the judge, and let them know that you want them out of your property. You can try to get the money owed to you, but unfortunately, the tenants always get away without paying you - so as one judge told me - be happy that you are getting rid of these people and move on!
After the court ruling, the tenants will have probably about two-three days to get out of your property. If they still refuse to move, go to the court-house immediately, and the will send an officer over to physically evict them.
Record all of your loses against your business expenses and write these off at tax-time. Clean up your property (because they will trash it), change the locks, and get the unit rented out as fast as possible - now DO NOT RENT TO PEOPLE LIKE THAT AGAIN, AND CHECK THEIR BACKGROUND TO AVOID THE ISSUE AGAIN
How to set up a lease with option to buy
A lease with option to buy is a lease that allows a tenant the right to purchase the property for a specific price within a certain time frame. In most lease-option situations, a portion of the rent is applied to a future down payment. Lease options are most popular among buyers who don’t have enough funds for a down payment and closing costs. Here is how you set one up:
To set up a Lease with Option to Purchase with a tenant, you need to still have all of the usual documents that you would have in a rental agreement situation (see my article here), BUT IN ADDITION, you also need to have an Option agreement that protects you as the Optionor. Many option forms available favor the Optionee.
Attached to the Option, you should also draft up a Purchase Agreement, which will spell out the terms of the sale that will allow the tenant to purchase the property. Both the landlord and tenant should initial this document to show that it was agreed to.
Since you as the landlord still own the property until the tenant pays you and takes full possession, use an Option form that is not recordable at the deeds office so that it does not get recorded against the properties public records. This will keep your title clear until you sell the property.
When you structure the Lease with Option with your tenant, be sure to charge the market rent amount. This is an area where many landlords make mistakes. Just because the tenant is planning on buying the house does not mean that they get any special treatment - they are still a tenant, the deal could fall through, and you are still responsible for the property. The Lease with Option is separate from the rental agreement.
Be sure to get a down payment from the tenants at the very beginning of the agreement. The more that your potential buyers put down up front, the less likely they will be to back out as their risk for loss is greater if they do not follow through. Credit the option fee towards the sale price if they close, and if they do not close, be sure to let them know that this fee will be non-refundable.
Additionally to protect your rights, make your option cancelable by you if the tenants default in any of the terms of the standard rental agreement.
Be sure to check into your state's laws regarding how much money you can collect from your tenants when you structure a lease with option. For example here in Michigan, a landlord can only collect 1/2 the rent amount as a security deposit and you have to give it back when the tenants move. It is common not to charge a security deposit when you structure a lease with option so that you do not have to give any money back to the tenant. It is best to apply the security deposit amount to the non-refundable option fee.
When you make a lease with option, the advantage is that you can ask for more than the current market price for your home. It is important to note though that the property will have to appraise for the purchase price you agree upon with your tenants when they go to secure a mortgage, or else your agreement will have to adjust. Take the current market price of the home and increase it by about 15% or higher to determine the selling price and account for appreciation. Remember to deduct their option fee from the final selling price.
Be sure to include a clause in your Lease with Option to purchase that makes the tenant responsible for repairs and maintenance to the property during the term of the lease with option. You want to be very clear to state in your rental agreement that the tenant is the one responsible for the cost of any repairs and renovations. As the landlord, you are still ultimately responsible to perform repairs when you rent property, and you will be the one fined and penalized by the city of repairs are not done, but often tenants will perform or arrange needed repairs under a lease option.
Finally, before you decide to make a final agreement with the tenants who are interested in potentially purchasing your property, have a loan officer do a background check on them and let you know if they will qualify for a mortgage to purchase your property. Have the loan officer advise you on how long it will take to have the tenant "mortgage ready", so that you can set your lease option term accordingly and plan to see if you even want to sell to them.
A Lease with Option can be used to produce better profits, less intense and less involved management scenarios, less headaches, and an all around solution to sell your rental property at top dollar. It also gives your tenants the ability to become home owners and allows the to take pride in the property. It truly is a win-win situation.
To set up a Lease with Option to Purchase with a tenant, you need to still have all of the usual documents that you would have in a rental agreement situation (see my article here), BUT IN ADDITION, you also need to have an Option agreement that protects you as the Optionor. Many option forms available favor the Optionee.
Attached to the Option, you should also draft up a Purchase Agreement, which will spell out the terms of the sale that will allow the tenant to purchase the property. Both the landlord and tenant should initial this document to show that it was agreed to.
Since you as the landlord still own the property until the tenant pays you and takes full possession, use an Option form that is not recordable at the deeds office so that it does not get recorded against the properties public records. This will keep your title clear until you sell the property.
When you structure the Lease with Option with your tenant, be sure to charge the market rent amount. This is an area where many landlords make mistakes. Just because the tenant is planning on buying the house does not mean that they get any special treatment - they are still a tenant, the deal could fall through, and you are still responsible for the property. The Lease with Option is separate from the rental agreement.
Be sure to get a down payment from the tenants at the very beginning of the agreement. The more that your potential buyers put down up front, the less likely they will be to back out as their risk for loss is greater if they do not follow through. Credit the option fee towards the sale price if they close, and if they do not close, be sure to let them know that this fee will be non-refundable.
Additionally to protect your rights, make your option cancelable by you if the tenants default in any of the terms of the standard rental agreement.
Be sure to check into your state's laws regarding how much money you can collect from your tenants when you structure a lease with option. For example here in Michigan, a landlord can only collect 1/2 the rent amount as a security deposit and you have to give it back when the tenants move. It is common not to charge a security deposit when you structure a lease with option so that you do not have to give any money back to the tenant. It is best to apply the security deposit amount to the non-refundable option fee.
When you make a lease with option, the advantage is that you can ask for more than the current market price for your home. It is important to note though that the property will have to appraise for the purchase price you agree upon with your tenants when they go to secure a mortgage, or else your agreement will have to adjust. Take the current market price of the home and increase it by about 15% or higher to determine the selling price and account for appreciation. Remember to deduct their option fee from the final selling price.
Be sure to include a clause in your Lease with Option to purchase that makes the tenant responsible for repairs and maintenance to the property during the term of the lease with option. You want to be very clear to state in your rental agreement that the tenant is the one responsible for the cost of any repairs and renovations. As the landlord, you are still ultimately responsible to perform repairs when you rent property, and you will be the one fined and penalized by the city of repairs are not done, but often tenants will perform or arrange needed repairs under a lease option.
Finally, before you decide to make a final agreement with the tenants who are interested in potentially purchasing your property, have a loan officer do a background check on them and let you know if they will qualify for a mortgage to purchase your property. Have the loan officer advise you on how long it will take to have the tenant "mortgage ready", so that you can set your lease option term accordingly and plan to see if you even want to sell to them.
A Lease with Option can be used to produce better profits, less intense and less involved management scenarios, less headaches, and an all around solution to sell your rental property at top dollar. It also gives your tenants the ability to become home owners and allows the to take pride in the property. It truly is a win-win situation.
How to pre-screen a potential tenant's credit
When showing your property to tenants, it is important that you run a very through background check on their credit history to ensure that they pay on time, and that they do not have any large outstanding debts. Chances are that if they do, you will be stuck with tenants that do not really care about paying you on time, that do not care about taking care of the property, and who will probably be more likely to scam or sue you to try and get money from you. Everytime you decide to select a tenant, take the time to run a background check on them and you can avoid 95% of all issue right up front.
Before you rent your property or even put it up for lease, make a list of questions to ask a potential tenant and bring it with you during your tenant interviews and unit showings. You can check online for numerous "tenant questionnaires" "tenant background check forms", but be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake. Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
When selecting a tenant, you should be pre-screening them as soon as you first talk to them or meet them. Usually you will meet a potential tenant for the first time over the phone. Discuss the property you have for rent, your lease, and other details, and gauge their level of interest. If they want to come and check the place out, inform applicants of rent and security deposit requirements and other relevant information that might disqualify the prospective tenant to see how serious they really are. If they are still interested in checking out the property, then you can go over your questionnaire you prepared in Step 1 with them in person.
When you first meet the tenant in person, there are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for: 1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
Now that you have gone through steps 1-4, and probably turned away quite a few applicants, you might have one or two people left that you would be willing to rent your property to. One of the most important tools for a good tenant screening is a rental application. Make sure the application includes questions that you feel are crucial to renting to this person. It is very important that the application be filled out thoroughly and accurately. Be sure to request a copy of the person’s driver’s license and social security card to verify their identity. You need these pieces of information to run a credit report. Despite what their appearance tells us, a credit report will give you a much more accurate perspective of the applicant.
Now, go to the site that I have included in the resource link, and run a credit report on this applicant. I have used the resource provided many times, and they offer excellent services and other reports that you might find useful. The name of the company is Citi Credit Bureau.
Once you are satisfied with this potential tenant as someone that you want to rent to, set the time, date and place for your lease signing. Instruct the applicant to bring the proper amounts of money, how you would like to be paid (cash, or check) and identification.
Using a legal residential lease, read over the entire lease with the tenants at a lease signing, and have them initial each page. Since this is the final agreement it is extremely important to be sure that all parties involved agree to it. By having them initial each page, this shows that you did your due diligence and went through every item with them. If you need to make comments on items, that is also fine, just initial them. I had a court case against a tenant once, where they disputed the agreement in court - the attorneys went over the document copies we had and saw that they initialled every item, and threw the case out. As you read the terms of the lease with the tenants, look for any points of contention they may have, and discuss late charges and fees. Be sure that any specifications that you have set forth are included in this lease, or are added as an addendum to the agreement signed by all parties
Remember, it is not too late to change your mind. If you do not agree with the tenant’s response or something just does not feel right, do not rent to this tenant.
Before you rent your property or even put it up for lease, make a list of questions to ask a potential tenant and bring it with you during your tenant interviews and unit showings. You can check online for numerous "tenant questionnaires" "tenant background check forms", but be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake. Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
When selecting a tenant, you should be pre-screening them as soon as you first talk to them or meet them. Usually you will meet a potential tenant for the first time over the phone. Discuss the property you have for rent, your lease, and other details, and gauge their level of interest. If they want to come and check the place out, inform applicants of rent and security deposit requirements and other relevant information that might disqualify the prospective tenant to see how serious they really are. If they are still interested in checking out the property, then you can go over your questionnaire you prepared in Step 1 with them in person.
When you first meet the tenant in person, there are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for: 1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
Now that you have gone through steps 1-4, and probably turned away quite a few applicants, you might have one or two people left that you would be willing to rent your property to. One of the most important tools for a good tenant screening is a rental application. Make sure the application includes questions that you feel are crucial to renting to this person. It is very important that the application be filled out thoroughly and accurately. Be sure to request a copy of the person’s driver’s license and social security card to verify their identity. You need these pieces of information to run a credit report. Despite what their appearance tells us, a credit report will give you a much more accurate perspective of the applicant.
Now, go to the site that I have included in the resource link, and run a credit report on this applicant. I have used the resource provided many times, and they offer excellent services and other reports that you might find useful. The name of the company is Citi Credit Bureau.
Once you are satisfied with this potential tenant as someone that you want to rent to, set the time, date and place for your lease signing. Instruct the applicant to bring the proper amounts of money, how you would like to be paid (cash, or check) and identification.
Using a legal residential lease, read over the entire lease with the tenants at a lease signing, and have them initial each page. Since this is the final agreement it is extremely important to be sure that all parties involved agree to it. By having them initial each page, this shows that you did your due diligence and went through every item with them. If you need to make comments on items, that is also fine, just initial them. I had a court case against a tenant once, where they disputed the agreement in court - the attorneys went over the document copies we had and saw that they initialled every item, and threw the case out. As you read the terms of the lease with the tenants, look for any points of contention they may have, and discuss late charges and fees. Be sure that any specifications that you have set forth are included in this lease, or are added as an addendum to the agreement signed by all parties
Remember, it is not too late to change your mind. If you do not agree with the tenant’s response or something just does not feel right, do not rent to this tenant.
How to purchase a short sale home
Buyers pursue short sales to get a good deal on a house or investment property. However a short sale home is a home that is undergoing the pre-foreclosure process and has a lot of red tape associated with its purchase. No matter how good the deal may seem on a short sale, you really have to do a lot of research before making an offer. A short sale home can yield you great house at a great price and also help the seller out of trouble, but be sure to pay close attentions to the steps of this article if you are thinking about purchasing a short sale.
The most important piece of advice I can give you right off the bat is to hire a real estate agent that has short sale experience. I used to be a real estate investor, and I thought I knew a lot about purchasing property - but a realtor who has done short sales time and time again, knows the in's and out's - trust me - eat a little of your pride and profit margin and hire a realtor who knows how to do short sales. They know how the details involved with the sale, they know how to guide you through the process, they will be interested in protecting you, and they will be able to cut through the red tape quickly.
Now that you have hired a real estate agent that knows how to short sales, you can work with them on these next steps. They already know to do this, but it is good that you also know. You will have to go to the city office and ask for the public record information on the short sale house that you are interested in. Your agent can find out who is on the property title, the status of the foreclosure, notices that have been filed against the seller, and they can even find out how much is owed to the lenders. If there are more than one lender' s on the property - for example in the case of a 40/20 loan - then the purchase of the home will be even more difficult because both lenders have to agree to the short sale and buyout plan. It is also important to check the insurance required on the property and to try to figure out the utility costs including city utility costs and maintenance. Work with your agent to get these details.
Understand that the seller may still have external debts related to the property that need to get taken care of before the banks will agree to sell the property. Sellers may also owe taxes, city fines and fines, and utility fees that need to be taken care of before the debt can be forgiven, or this may get rolled into your purchase of the property based on negotiations. This can all delay the sale of the property. Additionally, the seller also a time frame in which to re-claim the property, and believe it or not, some people are able to come up with the money and save their property.
It is important to make sure that all of the proper documentation has been submitted by the seller and by you and your agent in the negotiations to purchase a short sale property. The seller needs to submit a hardship letter to the banks and start the discussions with them about a short sale. Once that process has been started, and you are interested in the property, you will need to make an offer to the seller. If you offer is accepted, you then need to send it to the property lender for final approval. You may also have to send along an earnest deposit for the property as well to the lender or to the sellers agent. You will also have to secure your own loan for the accepted price of the property and be able to show all of that documentation to the sellers bank as proof of your ability to purchase the property. Send a pre approval letter to the lender and to the sellers agent. Your agent should also send along a comp listing of homes sales in the are that are comparable to the price you are offering to pay for the home.
Always provide a solid date for the sellers lender to get back to you with the approval of the deal. You do not want to waste your time waiting on the approval of the sale only to find out at the last minute that it will not go through. Be sure to have your agent give the lender a time frame in which to respond. If they do not respond by that time, be sure to make it clear that you will be free to cancel your offer and get back your earnest deposit. Some lenders take two to three weeks to approve the final sale. Make sure that your real estate agent has the proper name and number of the lender contact that will be making the final decision.
Expect to pay a commission out of your own pocket. In a short sale, the bank is the one paying the sellers commission, and they will try to negotiate a final commission price to avoid paying out any more than they have to. Before you sign an agreement with your agent, ask them if they will waive the difference due. Most of the time they will not, and you will have to pay this out of your own pocket.
You will also be asked to purchase the property "as is" by the bank. It is in your best interest to get the property inspected and make your final offer contingent upon the approval of the inspections. This will cost a little more money up-front, but it will save you a lot of grief down the road. Just because there are people living in the home now, does not mean that it will pass current city inspections. Many cities require that the property get inspected before a new occupant moves in, and you will be hit with fines, penalties, and other hardships if you fail to take care of this up-front. I had this issue with a property once and the list of items I had to fix on the property were so long and so expensive that I should have never purchased the property. Get a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, and fireplace inspections. Also follow up with the city to see when the last inspections were conducted and ask the city what the expect should happen with the property.
If you follow all of these steps closely and work with an experienced short sale agent, you should be able to avoid a lot of the pitfalls and issues associated with a short sale home. When conducted properly, a short sale home can actually help you to save money in the long run and once you go through a short sale, you will have excellent experience for taking on your next property purchase.
The most important piece of advice I can give you right off the bat is to hire a real estate agent that has short sale experience. I used to be a real estate investor, and I thought I knew a lot about purchasing property - but a realtor who has done short sales time and time again, knows the in's and out's - trust me - eat a little of your pride and profit margin and hire a realtor who knows how to do short sales. They know how the details involved with the sale, they know how to guide you through the process, they will be interested in protecting you, and they will be able to cut through the red tape quickly.
Now that you have hired a real estate agent that knows how to short sales, you can work with them on these next steps. They already know to do this, but it is good that you also know. You will have to go to the city office and ask for the public record information on the short sale house that you are interested in. Your agent can find out who is on the property title, the status of the foreclosure, notices that have been filed against the seller, and they can even find out how much is owed to the lenders. If there are more than one lender' s on the property - for example in the case of a 40/20 loan - then the purchase of the home will be even more difficult because both lenders have to agree to the short sale and buyout plan. It is also important to check the insurance required on the property and to try to figure out the utility costs including city utility costs and maintenance. Work with your agent to get these details.
Understand that the seller may still have external debts related to the property that need to get taken care of before the banks will agree to sell the property. Sellers may also owe taxes, city fines and fines, and utility fees that need to be taken care of before the debt can be forgiven, or this may get rolled into your purchase of the property based on negotiations. This can all delay the sale of the property. Additionally, the seller also a time frame in which to re-claim the property, and believe it or not, some people are able to come up with the money and save their property.
It is important to make sure that all of the proper documentation has been submitted by the seller and by you and your agent in the negotiations to purchase a short sale property. The seller needs to submit a hardship letter to the banks and start the discussions with them about a short sale. Once that process has been started, and you are interested in the property, you will need to make an offer to the seller. If you offer is accepted, you then need to send it to the property lender for final approval. You may also have to send along an earnest deposit for the property as well to the lender or to the sellers agent. You will also have to secure your own loan for the accepted price of the property and be able to show all of that documentation to the sellers bank as proof of your ability to purchase the property. Send a pre approval letter to the lender and to the sellers agent. Your agent should also send along a comp listing of homes sales in the are that are comparable to the price you are offering to pay for the home.
Always provide a solid date for the sellers lender to get back to you with the approval of the deal. You do not want to waste your time waiting on the approval of the sale only to find out at the last minute that it will not go through. Be sure to have your agent give the lender a time frame in which to respond. If they do not respond by that time, be sure to make it clear that you will be free to cancel your offer and get back your earnest deposit. Some lenders take two to three weeks to approve the final sale. Make sure that your real estate agent has the proper name and number of the lender contact that will be making the final decision.
Expect to pay a commission out of your own pocket. In a short sale, the bank is the one paying the sellers commission, and they will try to negotiate a final commission price to avoid paying out any more than they have to. Before you sign an agreement with your agent, ask them if they will waive the difference due. Most of the time they will not, and you will have to pay this out of your own pocket.
You will also be asked to purchase the property "as is" by the bank. It is in your best interest to get the property inspected and make your final offer contingent upon the approval of the inspections. This will cost a little more money up-front, but it will save you a lot of grief down the road. Just because there are people living in the home now, does not mean that it will pass current city inspections. Many cities require that the property get inspected before a new occupant moves in, and you will be hit with fines, penalties, and other hardships if you fail to take care of this up-front. I had this issue with a property once and the list of items I had to fix on the property were so long and so expensive that I should have never purchased the property. Get a home inspection and pay for other types of inspections such as pest, roof, sewers, septic tanks, and fireplace inspections. Also follow up with the city to see when the last inspections were conducted and ask the city what the expect should happen with the property.
If you follow all of these steps closely and work with an experienced short sale agent, you should be able to avoid a lot of the pitfalls and issues associated with a short sale home. When conducted properly, a short sale home can actually help you to save money in the long run and once you go through a short sale, you will have excellent experience for taking on your next property purchase.
How to find a real estate agent
Finding a good real estate agent is the most important part of purchasing property. They help to keep the transactions smooth, they help to look out for all of the details, they protect your interests, and they provide very helpful insight. The best agent is a professional who listens to your needs and wants in a property, conducts themselves in an ethical and timely manner, someone who knows the market, and who also genuinely is interested in helping you find the perfect place. Here is how you find them.
Look for Real Estate agents that are part of the Realtors® National Association of Realtors and have the Realtors® logo on their card. Not all real estate agents are Realtors®. Realtors® that are part of this Association pledge to follow a strict code of ethics, and are held to a higher standard of conduct than the ordinary business practices of other real estate agents required by law. As you begin looking for real estate agents that are part of the Realtors® Association, you will notice that not all agents are part of this group.
Ask your family, friends, and co-workers if they could refer any good real estate agents to you. A lot of real estate agents get most of their business directly from referrals. Since you know these people that you are asking for a referral, ask them to describe their experiences working with the real estate agent. Try to find an agent who goes above and beyond their responsibilities and really satisfied the needs of your friends, family, or co-workers.
You can also look online and research real estate agents in your area. Do a Google search for the top real estate companies in your area. Make a list of these companies, and then follow up with them by calling their offices or checking out their own company websites. A lot of real estate websites have agent profiles that you can read and learn more about their track record and areas of expertise. Look for their experience, length of time as a real estate agent, areas of expertise, and any customer testimonials they might have listed. If possibly, follow up with the customers they helped out to how they felt about working with their real estate agent.
One of the easiest ways to find a real estate agent is to drive around your neighborhood or neighborhoods in your area and make a note of the home for sale. Read the signs to see which agents are being used. You should also make a note about when the property went on the market, and how long the property stays on the market. Agents that list multiple properties in an area probably know the area very well, have multiple leads, and are very well referred. Additionally, agents that sell homes quickly in your area might also be the best agent for you to contact. It all depends on their results and you can track those results by knowing the homes they have listed.
Open houses are also a great way to meet real estate agents and collect their business cards. Take a look in your area for any open houses and make it a point to attend and meet with the listing agent. You will be able to feel them out and see how they represent their clients and the property they are selling. If you're thinking about selling your home, pay attention to how the agent is showing the home. Are they personable, informative, and knowledgeable? Do they have any take-away promotional material about the home? Do they describe the features of the home in a positive way? Additionally, you can also find other business cards for real estate agents that might have left their information behind at the open house. Collect these cards or write down their information.
If you have tried all of the steps above, and you still have not found a real estate agent that you would like to work with, you could always take a look in your local Sunday newspaper for ads run by real estate agents in your targeted neighborhood. Write down a list of the agents names, and then look up their websites or agencies. You might be surprised how many of them have listings in your area. You can also take this new list of real estate agents and compare it to the signs and open houses you see in your area to see if these agents already have listings close to you. These agents could be specialists in your neighborhood, and you could get a hold of them to meet with them and learn about their experience.
If you have done all of the steps above, found a few agents, met with them, and still feel like they are not the perfect real estate agent for you - ask them for referrals. Agents are happy to refer buyers and sellers to associates if the service you need is not a specialty of theirs. Agents know many other agents that specialize in the area you are looking for. Additionally, you can even follow up with mortgage brokers to find an agent that they trust and know has a proven track record.
Look for Real Estate agents that are part of the Realtors® National Association of Realtors and have the Realtors® logo on their card. Not all real estate agents are Realtors®. Realtors® that are part of this Association pledge to follow a strict code of ethics, and are held to a higher standard of conduct than the ordinary business practices of other real estate agents required by law. As you begin looking for real estate agents that are part of the Realtors® Association, you will notice that not all agents are part of this group.
Ask your family, friends, and co-workers if they could refer any good real estate agents to you. A lot of real estate agents get most of their business directly from referrals. Since you know these people that you are asking for a referral, ask them to describe their experiences working with the real estate agent. Try to find an agent who goes above and beyond their responsibilities and really satisfied the needs of your friends, family, or co-workers.
You can also look online and research real estate agents in your area. Do a Google search for the top real estate companies in your area. Make a list of these companies, and then follow up with them by calling their offices or checking out their own company websites. A lot of real estate websites have agent profiles that you can read and learn more about their track record and areas of expertise. Look for their experience, length of time as a real estate agent, areas of expertise, and any customer testimonials they might have listed. If possibly, follow up with the customers they helped out to how they felt about working with their real estate agent.
One of the easiest ways to find a real estate agent is to drive around your neighborhood or neighborhoods in your area and make a note of the home for sale. Read the signs to see which agents are being used. You should also make a note about when the property went on the market, and how long the property stays on the market. Agents that list multiple properties in an area probably know the area very well, have multiple leads, and are very well referred. Additionally, agents that sell homes quickly in your area might also be the best agent for you to contact. It all depends on their results and you can track those results by knowing the homes they have listed.
Open houses are also a great way to meet real estate agents and collect their business cards. Take a look in your area for any open houses and make it a point to attend and meet with the listing agent. You will be able to feel them out and see how they represent their clients and the property they are selling. If you're thinking about selling your home, pay attention to how the agent is showing the home. Are they personable, informative, and knowledgeable? Do they have any take-away promotional material about the home? Do they describe the features of the home in a positive way? Additionally, you can also find other business cards for real estate agents that might have left their information behind at the open house. Collect these cards or write down their information.
If you have tried all of the steps above, and you still have not found a real estate agent that you would like to work with, you could always take a look in your local Sunday newspaper for ads run by real estate agents in your targeted neighborhood. Write down a list of the agents names, and then look up their websites or agencies. You might be surprised how many of them have listings in your area. You can also take this new list of real estate agents and compare it to the signs and open houses you see in your area to see if these agents already have listings close to you. These agents could be specialists in your neighborhood, and you could get a hold of them to meet with them and learn about their experience.
If you have done all of the steps above, found a few agents, met with them, and still feel like they are not the perfect real estate agent for you - ask them for referrals. Agents are happy to refer buyers and sellers to associates if the service you need is not a specialty of theirs. Agents know many other agents that specialize in the area you are looking for. Additionally, you can even follow up with mortgage brokers to find an agent that they trust and know has a proven track record.
How to interview a potential tenant
When trying to rent out a property to a potential tenant, it is very important that you get to know them and that you set their expectations for renting from you and what you expect out of the relationship. It is not always easy to gauge how a person lives or behaves behind closed doors, but these steps will help you to weed out a lot of unqualified potential tenants.
Before you rent your property or even put it up for lease, you need to be sure that you know who you want to rent to, and what you expect from your tenants. Do a search online to try and find some tenant questionnaires, or tenant background check forms to get an idea for the general items you should be asking.
Once you have taken a look at some of the available questionnaires for tenants, make a list of questions that you want to ask your potential tenant and bring it with you during your tenant interviews and unit showings. Be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake.
Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
Aside from your phone interview with your potential tenant, a lot can be determined upon your first meeting with the tenant in person. There are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for:
1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
If they make it this far, they may be a pretty good candidate to rent to. Ask them to fill out your rental application and your credit/background check form. If they refuse, thank them for their time and get rid of them. If they fill out all of your requested information, go ahead and run a credit check on them.
Before you rent your property or even put it up for lease, you need to be sure that you know who you want to rent to, and what you expect from your tenants. Do a search online to try and find some tenant questionnaires, or tenant background check forms to get an idea for the general items you should be asking.
Once you have taken a look at some of the available questionnaires for tenants, make a list of questions that you want to ask your potential tenant and bring it with you during your tenant interviews and unit showings. Be sure to cover questions like: 1) Full Name - including first, middle, and last names 2) Phone numbers you can reach them at - cell phone, home phone, and business phone number. 3) The potential tenants reason for moving 4) Ask them when they are looking to move into a new 5) The number of people they live with now, and the number they intend on living with. 6) Ask them if they have children and their ages. 7) Ask them if they have any pets 8) Ask them if they smoke 9) Let them know that they will be required to fill out your credit background check and that it is standard practice. If they refuse or are hesitant, you do not want to rent to them. 10)Ask them to provide you with Landlord References, names and phone numbers. Be sure to follow up on these immediately, as they could be fake.
Also, feel free to ask about any other information that you know would make the tenant undesirable to you. Serious applicants want to make a good impression on you and will be happy to answer any questions. You want to avoid applicants that refuse to answer your questions.
Aside from your phone interview with your potential tenant, a lot can be determined upon your first meeting with the tenant in person. There are a number of factors to look for to help you pre-screen them and determine if you want to rent to them. Here are some of the most common things to look for:
1. The general appearance of a person and how they maintain themselves can hint at what kind of home they keep. In general, do they look neat and clean? How do they carry themselves? Do they look like they would care for your property? 2. Does this prospective tenant have manners and behave respectfully? Do they have indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details. I often look back at my first meetings with tenants, and 9 times out of 10 - they all turned out to be the type of people that I thought they would be just based on their first impressions alone. 3. Note how the potential tenants feel about the property, and also note if they criticize your property. Are they pointing out legitimate concerns or they looking for a way to “negotiate” a lower price? Are they demanding too much, are they unrealistic, and do they seem difficult to work with? 4. Does the Prospective tenant look serious about the property and their questions posed to you. Are they prepared to fill out an application and pay the fee that is associated with it? Are they willing to provide you with the security deposit you are requesting?
If they make it this far, they may be a pretty good candidate to rent to. Ask them to fill out your rental application and your credit/background check form. If they refuse, thank them for their time and get rid of them. If they fill out all of your requested information, go ahead and run a credit check on them.
How to become a landlord - or get a landlord license
If you are interested in renting a room in your house, or renting an entire property that you have acquired, consider this your basic guide for becoming a landlord. There is a lot that you need to know when renting a property that I can not possibly cover fully in this article, but the purpose of this article is to provide you with a basic checklist to help get you started renting. Just read along, follow my steps, and be sure to also follow up with your city housing and inspection offices for additional details and requirements.
So you have decided to become a landlord and start renting your property. There are many reasons that people want to start renting their property. These reasons generally include moving to a new home, purchasing an investment property, getting help to pay for the mortgage on the home they live in now, or trying to break into commercial property management. Regardless of your reasons, here are the basic steps to follow.
GET A RENTAL LICENSE: Before even looking into rental agreements, pricing, and stuff like that, you need to get your home qualified to become a rental unit, and you need a rental license from the city you live in. There are a lot of strict city ordinances, rules, and regulations about rental property, so you need to get acquainted with these rules and regulations for the area you live in. Go down to your local city building and ask to talk to the Housing / Development / Ordinance office. Cities have different names for these offices, but if you try one of these, they should be able to point you in the right direction.
Once at the office, let them know that you are interested in renting your property. Let them know that you would like to learn about the rental inspection process and licensing and costs associated with doing this.
It is also helpful to ask them if they can give you a landlord/tenant rules and regulations pamphlet. They may not have this on hand, and you may have to go to the city courthouse to get this. This is very important to read as it highlights all of the most common laws for the city you live in regarding landlords and tenants. I highly recommend that you get this and read through it entirely!
The process for becoming an approved rental property owner is actually pretty easy, but time consuming. You will have to be patient and work with the city every step of the way to ensure a smooth process. The first step you need to take is to schedule and pay for a home inspection conducted by the city ordinance officer. They will give you a date and time that they are available to come out to your property. It is important that you meet the ordinance officer at your home on the date that you have scheduled. Try to be there early, and do not waste the city ordinance officers time. They are very busy. Also avoid having to reschedule these appointments.
On the day of your home inspection, try to be there at least 15 minutes earlier than the city inspector. They will come out to your home, take a look at your property for any code violations, concerns, or problems that you need to correct and they will create a list for you to review. First time inspections can take anywhere from a hour to a hour and thirty minutes. Plan for the inspection to last at least an hour, and do not rush the inspector once they get to your property. I would also recommend that you walk with the inspector, but let them do their job, and only answer questions when asked. Avoid additional small talk.
The inspector will go back to their office and write up a formal list of violations that you need to correct in order to bring your property up to code and get it approved as a rental unit. They will also provide you a due date to get the violations changed.
Once you get this letter, read over each item, and get the items they request taken care of. Call the city housing office back and ask them any questions about the violations you have or advice for fixing the issues should you need it. You will also need to reschedule an appointment for the ordinance officer to come out and check the violations he listed. You generally do not have to pay for the follow up inspections, but you should ask to be sure. The city will also give you enough time to get the violations finished, but if you need more time, just ask to push the re-inspection date back a little.
Plumbing, electrical, and gas/furnace issues should be handled by professional, licensed, and certified contractors. Call these folks, if needed, and let them know that you need them to have them check out/repair certain items for a rental inspection. Ask them for receipts and even signed comments to give to the inspector upon completion of their work.
Once you have completed fixing all of the violations on the list that the city ordinance officer provided you, wait for the next appointment date that you set up
The officer will then back come out to your home and check to see if everything passes. If it does, then you can go to the city office or court house and purchase a landlord license with the city. If you fail the inspection, you can work with the city to reschedule an inspection again. You will have to pay for this new inspection.
Once you purchase your landlord license, you can safely rent your property knowing that it has been approved by the city. Now all you need to do is get a great set of rental application and lease documents, and start looking for tenants! I would also recommend that you also go to the city court house and ask them what the process is for evicting tenants - because every landlord has to deal with that eventually.
So you have decided to become a landlord and start renting your property. There are many reasons that people want to start renting their property. These reasons generally include moving to a new home, purchasing an investment property, getting help to pay for the mortgage on the home they live in now, or trying to break into commercial property management. Regardless of your reasons, here are the basic steps to follow.
GET A RENTAL LICENSE: Before even looking into rental agreements, pricing, and stuff like that, you need to get your home qualified to become a rental unit, and you need a rental license from the city you live in. There are a lot of strict city ordinances, rules, and regulations about rental property, so you need to get acquainted with these rules and regulations for the area you live in. Go down to your local city building and ask to talk to the Housing / Development / Ordinance office. Cities have different names for these offices, but if you try one of these, they should be able to point you in the right direction.
Once at the office, let them know that you are interested in renting your property. Let them know that you would like to learn about the rental inspection process and licensing and costs associated with doing this.
It is also helpful to ask them if they can give you a landlord/tenant rules and regulations pamphlet. They may not have this on hand, and you may have to go to the city courthouse to get this. This is very important to read as it highlights all of the most common laws for the city you live in regarding landlords and tenants. I highly recommend that you get this and read through it entirely!
The process for becoming an approved rental property owner is actually pretty easy, but time consuming. You will have to be patient and work with the city every step of the way to ensure a smooth process. The first step you need to take is to schedule and pay for a home inspection conducted by the city ordinance officer. They will give you a date and time that they are available to come out to your property. It is important that you meet the ordinance officer at your home on the date that you have scheduled. Try to be there early, and do not waste the city ordinance officers time. They are very busy. Also avoid having to reschedule these appointments.
On the day of your home inspection, try to be there at least 15 minutes earlier than the city inspector. They will come out to your home, take a look at your property for any code violations, concerns, or problems that you need to correct and they will create a list for you to review. First time inspections can take anywhere from a hour to a hour and thirty minutes. Plan for the inspection to last at least an hour, and do not rush the inspector once they get to your property. I would also recommend that you walk with the inspector, but let them do their job, and only answer questions when asked. Avoid additional small talk.
The inspector will go back to their office and write up a formal list of violations that you need to correct in order to bring your property up to code and get it approved as a rental unit. They will also provide you a due date to get the violations changed.
Once you get this letter, read over each item, and get the items they request taken care of. Call the city housing office back and ask them any questions about the violations you have or advice for fixing the issues should you need it. You will also need to reschedule an appointment for the ordinance officer to come out and check the violations he listed. You generally do not have to pay for the follow up inspections, but you should ask to be sure. The city will also give you enough time to get the violations finished, but if you need more time, just ask to push the re-inspection date back a little.
Plumbing, electrical, and gas/furnace issues should be handled by professional, licensed, and certified contractors. Call these folks, if needed, and let them know that you need them to have them check out/repair certain items for a rental inspection. Ask them for receipts and even signed comments to give to the inspector upon completion of their work.
Once you have completed fixing all of the violations on the list that the city ordinance officer provided you, wait for the next appointment date that you set up
The officer will then back come out to your home and check to see if everything passes. If it does, then you can go to the city office or court house and purchase a landlord license with the city. If you fail the inspection, you can work with the city to reschedule an inspection again. You will have to pay for this new inspection.
Once you purchase your landlord license, you can safely rent your property knowing that it has been approved by the city. Now all you need to do is get a great set of rental application and lease documents, and start looking for tenants! I would also recommend that you also go to the city court house and ask them what the process is for evicting tenants - because every landlord has to deal with that eventually.
Subscribe to:
Posts (Atom)
Posts
