How much do you really know about investment property? Accurate research and professional expertise applied to the purchase of an investment property builds a solid foundation for financial success. You may want to work with a REALTOR who can help to identify the great opportunities in investment properties in the area of your choice. Or, you may choose to do the work on your own. A REALTOR can provide the inside line on properties with potential in the geographic area where you are looking for property. If you do choose to work with a REALTOR, you will save time, and you may have more choices and opportunities.
Research the Property's Past and Present
Some essential information must be obtained about the property's past. For example, do you know the history of property, or even how old it is? What sort of upgrades have been made to the home? Is the roof waterproof, and is the plumbing and electrical in working order?
What's the Neighborhood Like?
Once the overall condition of the property has been assessed, tax assessment records must be examined to determine property value trends. A good realtor will be familiar with the neighborhood where the property is located and if he or she is not, the REALTOR should check the neighborhood at different times of the day and night and speak to some neighbors. If there is a homeowners association, check the guidelines, assess fees, and be certain they allow rental of properties.
Assess the Bottom Line
For what purposes are you, the investor, going to use the property? To rent? To house your business? Or, to rehabilitate the property and sell it at a profit? Once this is determined, you can assess the bottom line.
Are you paying cash for your investment property? If not a mortgage will have to be paid. Have your REALTOR determine if rent and applicable fees will cover the mortgage, property management and maintenance. Consider property management if you do invest in property. Research fees and services provided by different property management companies, or ask your REALTOR if they provide this service, because many do. If you do not want to collect rents and contract repairs, find a property manager with the skills to negotiate, be your intermediary, and facilitate business in your absence.
For investors who rehab and sell buildings at a profit, a decent turnaround is 60-90 days from the time of purchase to the time the property is put back on the market. Three to four contractors should be researched and they should provide written bids with time estimates on their projects.
Document Fund Availability with Your Offer
Once you find that dream investment property, don't forget that offers need to be accompanied by your financial institution's statement of fund availability or a lender's approval letter. This will help make certain your offer will be accepted over other offers that may not come with appropriate paperwork.
There are still plenty of great deals on investment properties in this real estate market, and there are some less than desirable properties as well. Do your research. Or, hire a professional who will do it correctly for you. With proper planning and decision making, your real estate investment should be a profitable and worthwhile endeavor.
Visit VonCannonRealEstate.com for more information on investing in commercial or residential properties.
Wednesday, December 22, 2010
Thursday, December 9, 2010
10 Tips on Investing in Distressed or Foreclosed Properties
1. Search on the world wide web for distressed or foreclosed properties as a starting point. Use a professional REALTOR to identify great foreclosure deals for you. You may be successful at searching the web on your own, but keep in mind some of the information is outdated, some may be incorrect, and some of the available properties are not even listed. A REALTOR subscribes to updated MLS listings and can offer you the most current information available.
2. If you search yourself for distressed properties and purchase from the selling agent, you are paying a commission to someone with a vested interest. Obtain objectivity in the sale by working with your own REALTOR. You won't pay any more. Technically, everyone works for the seller, since they pay the commission.
3. With distressed or foreclosed properties, time is of the essence. Purchasers must close on the date specified by the agency, and cannot close after this without penalties of $25-200 per day.
4. It takes 1-3 weeks to qualify a loan. If you are approved for a loan, make sure you are qualified by your lender as soon as possible. If you are paying by cash, make certain funds are available. If finances are in order, the REALTOR will then submit an offer. When the offer is accepted by both seller and buyer, the REALTOR will submit the ratified contract to the lender and closing agent. These steps will begin the process of a successful real estate transaction.
5. When purchasing a distressed property, always obtain 3-4 bids from different contractors to estimate costs of repairs, if you do not plan on doing the work yourself.
6. If you are going to sell the property after rehabilitating it, ask your REALTOR to research similar properties in the neighborhood to ascertain market price.
7. Keep copious records for tax deductions. Any expenses related to the purchase, repair, or maintenance of the property may qualify. Meticulous records are key to a profitable real estate venture.
8. The title you receive after purchasing a distressed or foreclosed property is a special warranty deed rather than a general warranty deed. Some buyers are alarmed by this, but there is no need to worry. The purchase of title insurance protects the buyer. Each lender purchases insurance to protect the loan as well. Titling insurance should be obtained by the property purchaser. It is always offered by the closing agent. Consider using an attorney instead of a titling company as your closing agent. An attorney is only $50-75 more than a titling company. A real estate attorney can remedy any situation that may arise. Therefore, they are more efficient representatives on time sensitive foreclosure properties.
9. Foreclosure properties require special addendums and special contracts by the individual bank and HUD office (where applicable).
10. Foreclosure properties are potentially the most profitable, but require the most attention to detail. A REALTOR experienced in foreclosure deals is highly desirable because the paperwork must be in order to submit a proper bid, and timeliness is critical.
Visit VonCAnnnonRealEstate.com for more information on foreclosures for sale in VA.
2. If you search yourself for distressed properties and purchase from the selling agent, you are paying a commission to someone with a vested interest. Obtain objectivity in the sale by working with your own REALTOR. You won't pay any more. Technically, everyone works for the seller, since they pay the commission.
3. With distressed or foreclosed properties, time is of the essence. Purchasers must close on the date specified by the agency, and cannot close after this without penalties of $25-200 per day.
4. It takes 1-3 weeks to qualify a loan. If you are approved for a loan, make sure you are qualified by your lender as soon as possible. If you are paying by cash, make certain funds are available. If finances are in order, the REALTOR will then submit an offer. When the offer is accepted by both seller and buyer, the REALTOR will submit the ratified contract to the lender and closing agent. These steps will begin the process of a successful real estate transaction.
5. When purchasing a distressed property, always obtain 3-4 bids from different contractors to estimate costs of repairs, if you do not plan on doing the work yourself.
6. If you are going to sell the property after rehabilitating it, ask your REALTOR to research similar properties in the neighborhood to ascertain market price.
7. Keep copious records for tax deductions. Any expenses related to the purchase, repair, or maintenance of the property may qualify. Meticulous records are key to a profitable real estate venture.
8. The title you receive after purchasing a distressed or foreclosed property is a special warranty deed rather than a general warranty deed. Some buyers are alarmed by this, but there is no need to worry. The purchase of title insurance protects the buyer. Each lender purchases insurance to protect the loan as well. Titling insurance should be obtained by the property purchaser. It is always offered by the closing agent. Consider using an attorney instead of a titling company as your closing agent. An attorney is only $50-75 more than a titling company. A real estate attorney can remedy any situation that may arise. Therefore, they are more efficient representatives on time sensitive foreclosure properties.
9. Foreclosure properties require special addendums and special contracts by the individual bank and HUD office (where applicable).
10. Foreclosure properties are potentially the most profitable, but require the most attention to detail. A REALTOR experienced in foreclosure deals is highly desirable because the paperwork must be in order to submit a proper bid, and timeliness is critical.
Visit VonCAnnnonRealEstate.com for more information on foreclosures for sale in VA.
Monday, November 29, 2010
Renovations and Upgrades: Bring it to the Bank - Part 1
Elaine VonCannon, ABR, SRES, REALTOR, Notary Public, Team Manager
Renovations and upgrades can increase the value of your home by thousands of dollars when done strategically, intelligently and professionally. Even if you renovate for personal reasons, consider the key areas that will put money back in your pocket. The kitchen and the bathrooms are first choice upgrades that translate into more money later. Bedrooms can also create incredible appeal or end up a serious turn off. Make certain your renovations or upgrades reflect the property values of your neighborhood. Don't overdo it with costly materials if you cannot recoup your costs when you sell your property.
Five Secrets To Upgrading The Kitchen The kitchen is the heartbeat of a home; everyone goes to the kitchen. When you are entertaining guests the flow often moves to the kitchen. The kitchen is also a key component for any homebuyer. If you follow a few basic suggestions your upgrade decisions will serve you well in the long term. If you are still dwelling in the house think about what works best with your lifestyle.
Always consider functionality and durability when you construct kitchen countertops. First, don't use tile countertops. Grout is difficult to clean and ages quickly unless it is sealed properly. If you have a lot of children or cook every night, you may not want to use newer, porous material since it scratches easily. Second, when altering the kitchen cabinets you can paint wood, but use washable paint, not water based paint. If you do not want to paint or replace all the cabinets change the hardware or consider adding new doors. Third, wallpaper in the kitchen is not a good idea. The heat and grease builds up and it is not very durable. Most people either love or hate wallpaper. Eighty percent of my buyers do not prefer wallpaper. Fourth, evaluate the cost of flooring alternatives like high-grade vinyl, wood flooring or ceramic tile. Do not use "stick 'em" tiles because they do not wear well and can detract from the value of your kitchen. Fifth, update the sinks, faucets and light fixtures for a bigger pay off. Most importantly be sure the kitchen is bright, airy and cheerful. These recommendations will increase the attractiveness and value of one of the most important rooms in the house.
Bathroom Do's and Don'ts The bathroom is another room buyers love to examine carefully; you will want it to have a lot of appeal. If you can see a ring around your tub for each child then it's time to replace or reface it. The shower and bathroom tiles must be clean, replace tiles that are in bad shape. Ceramic tiles are the best choice for flooring and new sinks. Be certain the grout and caulk are orderly and neat. New counters, sinks, light fixtures and cabinetry will enable you to get more return on your investment. Do not use wallpaper, since it does not hold up well in a moist environment.
Everyone Needs Personal Space In a home the bedrooms become each person's sanctuary. The layout and bedroom size can affect the appeal of your space. If you have small bedrooms consider taking a wall or two out and opening the space up. For example, five small bedrooms can be transformed into three larger bedrooms. If the home lacks in closet space closet organizers can help maximize space. Freshen up the light fixtures; even match them to individual décor. A chair rail or crown molding also adds value. Of course, upgrading the carpet or wood floor also makes the rooms more enticing. When you replace the carpet buy high quality padding, despite the added expense. Cheap padding will not be a long lasting upgrade.
Time is Up... Tune In next Time!
Now that you have some tools, you are ready to make your first steps towards a better home. Thinking strategically is the key to increased value and perfect home improvements. Two more important tips: keep all of your permits on file when you decide to resell and consider hiring a professional when renovating your home. Good luck with your current projects! Visit http://www.voncannonrealestate.com/articles/Renovations_and_Upgrades_Bring_it_to_the_Bank_Part_2.php for Part 2 of "Renovations and Upgrades: Bring It To The Bank" to learn more about the other rooms in your home, exterior maintenance and the importance of garages, fences and more.
Renovations and upgrades can increase the value of your home by thousands of dollars when done strategically, intelligently and professionally. Even if you renovate for personal reasons, consider the key areas that will put money back in your pocket. The kitchen and the bathrooms are first choice upgrades that translate into more money later. Bedrooms can also create incredible appeal or end up a serious turn off. Make certain your renovations or upgrades reflect the property values of your neighborhood. Don't overdo it with costly materials if you cannot recoup your costs when you sell your property.
Five Secrets To Upgrading The Kitchen The kitchen is the heartbeat of a home; everyone goes to the kitchen. When you are entertaining guests the flow often moves to the kitchen. The kitchen is also a key component for any homebuyer. If you follow a few basic suggestions your upgrade decisions will serve you well in the long term. If you are still dwelling in the house think about what works best with your lifestyle.
Always consider functionality and durability when you construct kitchen countertops. First, don't use tile countertops. Grout is difficult to clean and ages quickly unless it is sealed properly. If you have a lot of children or cook every night, you may not want to use newer, porous material since it scratches easily. Second, when altering the kitchen cabinets you can paint wood, but use washable paint, not water based paint. If you do not want to paint or replace all the cabinets change the hardware or consider adding new doors. Third, wallpaper in the kitchen is not a good idea. The heat and grease builds up and it is not very durable. Most people either love or hate wallpaper. Eighty percent of my buyers do not prefer wallpaper. Fourth, evaluate the cost of flooring alternatives like high-grade vinyl, wood flooring or ceramic tile. Do not use "stick 'em" tiles because they do not wear well and can detract from the value of your kitchen. Fifth, update the sinks, faucets and light fixtures for a bigger pay off. Most importantly be sure the kitchen is bright, airy and cheerful. These recommendations will increase the attractiveness and value of one of the most important rooms in the house.
Bathroom Do's and Don'ts The bathroom is another room buyers love to examine carefully; you will want it to have a lot of appeal. If you can see a ring around your tub for each child then it's time to replace or reface it. The shower and bathroom tiles must be clean, replace tiles that are in bad shape. Ceramic tiles are the best choice for flooring and new sinks. Be certain the grout and caulk are orderly and neat. New counters, sinks, light fixtures and cabinetry will enable you to get more return on your investment. Do not use wallpaper, since it does not hold up well in a moist environment.
Everyone Needs Personal Space In a home the bedrooms become each person's sanctuary. The layout and bedroom size can affect the appeal of your space. If you have small bedrooms consider taking a wall or two out and opening the space up. For example, five small bedrooms can be transformed into three larger bedrooms. If the home lacks in closet space closet organizers can help maximize space. Freshen up the light fixtures; even match them to individual décor. A chair rail or crown molding also adds value. Of course, upgrading the carpet or wood floor also makes the rooms more enticing. When you replace the carpet buy high quality padding, despite the added expense. Cheap padding will not be a long lasting upgrade.
Time is Up... Tune In next Time!
Now that you have some tools, you are ready to make your first steps towards a better home. Thinking strategically is the key to increased value and perfect home improvements. Two more important tips: keep all of your permits on file when you decide to resell and consider hiring a professional when renovating your home. Good luck with your current projects! Visit http://www.voncannonrealestate.com/articles/Renovations_and_Upgrades_Bring_it_to_the_Bank_Part_2.php for Part 2 of "Renovations and Upgrades: Bring It To The Bank" to learn more about the other rooms in your home, exterior maintenance and the importance of garages, fences and more.
Wednesday, November 24, 2010
Look Past the Bottom Line for a Property's Potential
This year, investment in the stock market is making many downright jittery. Though overall the stock market does seem to be hovering around the 10,000 mark, many investors are plagued with uncertainty about short and long term investments in the stock market. Will stocks go up or down this week? Is now to time to keep money in the market? Or take money out of the stock market?
As a real estate professional, I always advise people to continue to invest in property. With so many bank owned properties flooding many different markets, real estate investors are actively purchasing homes and investment properties and obtaining some great deals right now.
John Starke, an Investment Advisor and Financial Principle with American Beacon Partners, says that many investors have grown tired of the risk involved in purchasing equities, mutual funds, and other types of investments. Prior to the sharp downturn in the market in 2008, investors’ goals were to accrue money through appreciation. “Rather than nervously watch their portfolios go up and down, investors want a more stable income,” noted Starke. He sees a rise in interest in Real Estate Investment Trusts (REITs), Tax Free and Corporate Bonds, and even some Corporate CDs. “Many investors are pulling their money from equities and mutual funds and opting for investments that pay a decent, regular return on their money,” said Starke.
In my everyday real estate transactions, I see investors pulling large sums of money from the stock market and putting it into the purchase of homes and properties in Virginia. I have taken the time to ask real estate investors their opinion about stock market investments. Many have decided that the stock market is not for them right now. One investor, J. D., purchased a property in King William County, Virginia that was in foreclosure for $90,000. She will spend approximately $4,000 to prepare the property for the rental market and be able to collect a monthly income of $1,000 from her investment. J.D. told me “I feel the time is right to start investing in real estate again. I stopped four years ago when property prices got out of hand. I intend to do even more real estate investment now.”
Another client, who plans to retire in a few years, is selling one commercial property investment in order to purchase a strip mall in the Western Virginia town where he plans to retire. He will pay the purchase price and invest approximately $40,000 into the strip mall to prepare it for the commercial rental market. He told me, “I am tired of having a business that I have to work at everyday. I want to have an investment that will work for me as I am planning to retire in about two years.” His upcoming shift in lifestyle is motivation for his new commercial property investment. Note that he’s not selling one business and putting the money into the market. This may have been the trend for a retiree five years ago – but not in the new economy.
Finally, H.G. in Hampton, Virginia made a wise move with money he once had in the stock market. He purchased a condominium for $50,000, invested $2,500 in the property renovations, and is now receiving $850 per month in rental income for the unit. HG said, “I am making more of a return from my property investment than I would in the stock market, and I also receive a tax deduction to boot.”
There are of course risks in real estate investments. A tenant could default on the rental agreement, or a property could remain vacant for months on end. That is why it is imperative that real estate investors hire experienced and knowledgeable property managers to maximize their investment. All of the property investors mentioned in this article are using my property management services for their real estate investments. Other risks include unforeseen maintenance and repair issues. This is why it is important for property investors to put a portion of their profits aside to reinvest in the home, condominium or townhouse they purchase.
Where property investment is concerned, even these risks, when anticipated and well-planned for, are small compared to the uncertainty of stock investments.
Shawn Tully, Senior Editor at Large for Fortune magazine, published “2010's Coming Stock Market Crash: 1987 all Over Again” in May 2010. He states that stocks are still overpriced. He predicts a low return on investment (or a loss) as an inevitable outcome of this scenario. Tully bolsters his opinion with these astute observations: “Here's how I see the odds. The chances are about one in three that we suffer a huge, wrenching correction in the next year or two similar to the one in 1987. That possibility is so high because stocks are so startlingly expensive. Another high probability event is that markets go on a long sideways grind, with smaller drops along the way. What's extremely unlikely is that the market rises substantially from current levels and stays there for any extended period.”
Experts within the financial industry may be reluctant to put forth the strong opinion that Tully articulates. Still, there is no denying that investors have undergone a major shift in perspective since the financial crisis of late 2008 culminated in a recession, took hold of the United States and spread to other countries.
People will always need a place to live. With more and more families sadly experiencing foreclosure and dislocation, renting will be their most likely option. More rental properties will be necessary to fulfill housing demands. Investors need to take a serious look at property investment in their areas, and take steps to purchase viable homes even if they are in need of some repair or upgrades.
Visit http://VonCannonRealEstate.com to view potential investment property listings in Virginia in Williamsburg, Hampton, Newport News, Yorktown, Richmond and Northern Neck areas such as Matthews, Northumberland and King and Queen Counties.
As a real estate professional, I always advise people to continue to invest in property. With so many bank owned properties flooding many different markets, real estate investors are actively purchasing homes and investment properties and obtaining some great deals right now.
John Starke, an Investment Advisor and Financial Principle with American Beacon Partners, says that many investors have grown tired of the risk involved in purchasing equities, mutual funds, and other types of investments. Prior to the sharp downturn in the market in 2008, investors’ goals were to accrue money through appreciation. “Rather than nervously watch their portfolios go up and down, investors want a more stable income,” noted Starke. He sees a rise in interest in Real Estate Investment Trusts (REITs), Tax Free and Corporate Bonds, and even some Corporate CDs. “Many investors are pulling their money from equities and mutual funds and opting for investments that pay a decent, regular return on their money,” said Starke.
In my everyday real estate transactions, I see investors pulling large sums of money from the stock market and putting it into the purchase of homes and properties in Virginia. I have taken the time to ask real estate investors their opinion about stock market investments. Many have decided that the stock market is not for them right now. One investor, J. D., purchased a property in King William County, Virginia that was in foreclosure for $90,000. She will spend approximately $4,000 to prepare the property for the rental market and be able to collect a monthly income of $1,000 from her investment. J.D. told me “I feel the time is right to start investing in real estate again. I stopped four years ago when property prices got out of hand. I intend to do even more real estate investment now.”
Another client, who plans to retire in a few years, is selling one commercial property investment in order to purchase a strip mall in the Western Virginia town where he plans to retire. He will pay the purchase price and invest approximately $40,000 into the strip mall to prepare it for the commercial rental market. He told me, “I am tired of having a business that I have to work at everyday. I want to have an investment that will work for me as I am planning to retire in about two years.” His upcoming shift in lifestyle is motivation for his new commercial property investment. Note that he’s not selling one business and putting the money into the market. This may have been the trend for a retiree five years ago – but not in the new economy.
Finally, H.G. in Hampton, Virginia made a wise move with money he once had in the stock market. He purchased a condominium for $50,000, invested $2,500 in the property renovations, and is now receiving $850 per month in rental income for the unit. HG said, “I am making more of a return from my property investment than I would in the stock market, and I also receive a tax deduction to boot.”
There are of course risks in real estate investments. A tenant could default on the rental agreement, or a property could remain vacant for months on end. That is why it is imperative that real estate investors hire experienced and knowledgeable property managers to maximize their investment. All of the property investors mentioned in this article are using my property management services for their real estate investments. Other risks include unforeseen maintenance and repair issues. This is why it is important for property investors to put a portion of their profits aside to reinvest in the home, condominium or townhouse they purchase.
Where property investment is concerned, even these risks, when anticipated and well-planned for, are small compared to the uncertainty of stock investments.
Shawn Tully, Senior Editor at Large for Fortune magazine, published “2010's Coming Stock Market Crash: 1987 all Over Again” in May 2010. He states that stocks are still overpriced. He predicts a low return on investment (or a loss) as an inevitable outcome of this scenario. Tully bolsters his opinion with these astute observations: “Here's how I see the odds. The chances are about one in three that we suffer a huge, wrenching correction in the next year or two similar to the one in 1987. That possibility is so high because stocks are so startlingly expensive. Another high probability event is that markets go on a long sideways grind, with smaller drops along the way. What's extremely unlikely is that the market rises substantially from current levels and stays there for any extended period.”
Experts within the financial industry may be reluctant to put forth the strong opinion that Tully articulates. Still, there is no denying that investors have undergone a major shift in perspective since the financial crisis of late 2008 culminated in a recession, took hold of the United States and spread to other countries.
People will always need a place to live. With more and more families sadly experiencing foreclosure and dislocation, renting will be their most likely option. More rental properties will be necessary to fulfill housing demands. Investors need to take a serious look at property investment in their areas, and take steps to purchase viable homes even if they are in need of some repair or upgrades.
Visit http://VonCannonRealEstate.com to view potential investment property listings in Virginia in Williamsburg, Hampton, Newport News, Yorktown, Richmond and Northern Neck areas such as Matthews, Northumberland and King and Queen Counties.
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