Evaluating the Market to Decide on a Price to Offer

The easiest way to obtain such data is from a licensed real estate agent. They can provide you with details about recent condo sells and the prices they sold for. This includes the location so you can compare prices for various neighborhoods. Such information is public record so you can get it on your own too if you aren't using a realtor. It does take time to compile though.

Get it in Motion

You don't want to drag your feet when it comes to getting one of the condos for sale in though. Most of them don't stay on the market long at all. If you wait, the prices are going to continue going up. You also risk the locations where you would like to live not offering much. Prime locations such as the downtown area sell very fast!

Evaluating the market to find out what the price range is will help you to make an offer. You want to get the best deal you can. Avoid emotionally making an offer because you can't stand the thought of not getting the property. If you can't afford it, you will be stressed very month about the payment. Don't put yourself in a position where they could possibly foreclose on you.

Offer Versus Asking Price

You may assume the demand for condos for sale in means the sellers can set the asking price and they always get it. This is why you need to do your homework before you place an offer. If a location is priced thousands more than what others in the area have recently sold for, you need to question why. Does it offer more value or is the seller after more money?

You can't blame the sellers of condos for sale in for trying to get the most money they can for their property. If someone is willing to pay it, they are going to ask for it! However, most of them are also willing to accept a reasonable offer that comes to them. If you put that offer out there, they may accept it!

What if they Don't?

One of the fears is the seller won't accept your offer. You don't have to worry too much about that when you try to buy one of the condos for sale in. Just put the reasonable offer out there as a starting point and see what happens. If they don't accept it, are they willing to negotiate at all?

If the answer is no, you have to decide if you are willing to pay the price they are asking. If not, you need to look at one of the other properties available and repeat the process. If they give you a counteroffer, it will be somewhere between what you offered and what they asked for. You can accept it or you can give another counter offer.

This process can continue until you agree on a price or until one of you is no longer willing to budge. This process takes a bit of time, but it can save you a great deal of money on one of those condos for sale in high in demand. It certainly doesn't hurt to give it a try!

Before Buying Size Your Residential Real Estate Needs

The largest investments we make in our lives are often the hardest to refund, that's why it is really important to figure out what you need and then move on with your search. If we talk about the big investments, one thing that people spend their whole life's hard-earned money is real estate. No matter whether you are extremely rich or a common man saving every penny to buy a home for his family, you can't afford to make an impulsive decision and turn your moment of joy into remorse by settling down for something you never wanted. It is crucial to know about the options you have before taking a plunge into home buying, for they say half of your search completes when you are sure about what kind of home you are looking for. The list of the options that any average home seeker can look for in the real estate market includes:

Newly Constructed Home

What could be better that designing each and every detail of your dream home yourself? Planning your house yourself give you the leverage of choosing every little thing from layout of the structure to the color of the cabinet, which is one of the most dominant reasons why the culture of newly constructed house is increasing day by day. The major drawback that comes along buying a brand new constructed house is the list of unplanned expenses that occur meanwhile the construction.

Condominiums

Condominiums are the individual flats located in a multi-story building. The condominium building generally has its own recreation centers, parks, shopping hubs and is governed by an association that determines the monthly fee and takes care of the maintenance and improvement of the building. The major drawback of living in a condominium is the lack of privacy and increased depreciation during a housing- market downturn.

Townhouses

Vertically joined in a row with other similar looking houses, townhouses are perfect for the people who are seeking for the privacy of a single family apartment along with the exterior maintenance of a condo. Townhouses are generally located in the vicinity of schools and parks. They are bit cheaper compared to the condominiums and newly built houses but will not be the right choice if you are overly sensitive about noise coming from the adjacent shared wall.

Foreclosure Property

Foreclosure properties are known to be an inexpensive alternative for the people looking for a previously owned home that require minor repairs and modifications. A foreclosure property is also known as Real Estate Owned property and is often owned by the lender as the previous owner defaulted on paying back loan. Foreclosure properties are usually up to 65% below the market and are considered to be best deals on the market.

Second Homes

The second home is a secret hideaway people buy to get away from the standardization of life and spend a week or two into the woods away from the hustle and bustle of town. The second or vacation homes are difficult to maintain as there is no one to look after the repairs and maintenance of the house when you are away.

Now that you have a brief idea about some of the real estate options available for a home buyer, figure out what kind of house you want and plan your search accordingly. Buying real estate is not a small step but with lots of knowledge and right guidance you can make the most out of your investment.

Wholesaling Horror Stories

A couple months ago I had a client bring me a deal to fund. He was pursuing a wholesale deal and the precursory buy/sell figures looked great. I started building his file, which I anticipated to be a no money down deal with a fast close in 2 weeks. Then, he sent me the contract. As a standard practice, we always review the contract to make sure there are no “gottcha's” that might derail a deal, and in reviewing this client's file, everything looked good, with the exception of the name of the buyer. The wholesaler had prepared the contract using their company name instead of using a “throw-away” LLC (see below). I've seen this before, and it typically doesn't cause any issues if you schedule a double closing; however, before I could advise the client, the wholesaler had received an addendum from the seller adding the client to the contract. The result: both the wholesaler and the end buyer, the client, were listed on the contract! In other words, the client, unbeknownst to him, just landed himself a partner.

As you probably know, the title for the property has to match the Deed of Trust, and both documents match the name(s) of the buyer(s) on the contract. Being as such, we had to scramble to qualify the wholesaler since he's now the client's partner, which completely changed the funding strategy. Most importantly, I had to have a heart to heart with the client. Did he want a partner? Was the wholesaler even willing to be partner? Ultimately, the wholesaler agreed to sign on the note and Deed of Trust, but would immediately quit claim the Deed to my client after closing and gracefully bow out of being partnered into the deal. Easy enough, right?

Wait, what about the insurance? The insurance would probably be a simple fix, similar to the Deed, but what about the note? Upon signing, the wholesaler, unbeknownst to himself, was going to be responsible for repayment of the loan without being part of the deal! More red flags. Did I mention we only had 2 weeks to get this closed??? Time was moving fast and nothing was falling into place. After many more emails and plenty of phone calls all around, the deal ended up disintegrating for many reasons, such as the seller not being willing to rewrite the contract, allowing for a proper wholesale and the two new “partners” disagreeing on structuring the deal between them. Worst part, both parties had put down big earnest money checks. Last I heard they were all trying to get their money back.

The moral of the story, before you try to wholesale a deal, make sure you fully understand how to properly structure the transfer. Here are a couple of ways to structure a wholesale:

Assignment. The easiest and best way to structure a wholesale is to do an assignment; simple, clean and easy. Usually a one page assignment of contract will suffice, so long as the contract is assignable, which most private seller offers are.

“Throw-Away” LLC. If you are buying a bank REO and the bank won't allow assignments, the next best strategy would be to use that “throw-away” LLC I mentioned earlier, or alternatively a trust. Under the “throw-away” LLC method, a wholesaler creates a brand new LLC for the sole purpose of buying and transferring ownership in the property. The wholesaler simply sells his interest in the LLC to the buyer, and from the bank's standpoint, the buyer remains the same (i.e. the “throw-away” LLC).

Double Closing. An alternative, and less desirable way to wholesale, would be through a double closing. This alternative results in two closings at the same time: the first results in sale of the property from the seller to the wholesaler, and the second results in the sale of the property from the wholesaler to the end-buyer. Like I mentioned before, this method is the least desirable and should be avoided if possible, due to the added costs of an extra closing, as well as the management of all of the moving parts associated with the second closing.

If you have any questions on any of these methods, or if you have a success or horror story of your own you'd like to share, we'd love to hear from you!

Don’t Trust Your Realtor: Common Valuation Mistakes

OK OK… I don't really mean to not trust your Realtor or other advisors, unless they give you really bad advice, like the three mistakes outlined in this article. Many Realtors understand how to value real estate and can be a great asset (especially the ones that focus on real estate investors), but the unfortunate truth is that many investors and agents make these common mistakes:

· Add value to a property for a bedroom

· Incorrectly adjusting for square footage

· Compare non similar style homes with no adjustment

Add value to a property for a bedroom

This is by far the most common error that I see. In some cases a bedroom will add value but normally you cannot count on it. If a house has more bedrooms it is likely bigger and the large home is more valuable, but the bedroom itself is not adding the value, the square footage is. If two houses are the same size and one has an additional bedroom it is lacking something else OR has much smaller rooms, which will deter some buyers. It is basically a wash for valuation purposes. The one exception to this is if the house does not conform to the neighborhood. For example, if the entire neighborhood is two or three bedrooms and you have a one bedroom, it actually should add value to add a bedroom, even if you are keeping the house the same size. I would be very careful in these rare cases because it is hard to know how much value a bedroom will actually add. So when you are looking at your comps, look at the size and not the number of bedrooms.

This does not hold true for bathrooms. Bathrooms will almost always add value.

Incorrectly adjust for square footage

A less common, but more devastating error that I see is to use a price per square foot model to value a home. Many agents make this mistake. The error is to use an average price per square foot and multiply that number by the size of the house you are trying to value. It is not wise to use this method, especially if your house is on the small or large size for an area. Think about it. Is a 2,000 square foot house really worth twice as much as a 1,000 square foot house that might be next door? The area brings a certain range of values that all houses fall in and the lot values should be close to identical no matter what size house is on it. Using a price per sq foot model does not account for the lot.

It is true that you need to adjust for size, because larger homes carry more value, but it is easy to mess the adjustment up. The best way to do this is to dig into your comps and get an idea for the required adjustment. This can be very tricky because the value per square foot decreases as the homes get larger. It is a safe bet to never buy the largest or smallest house in an area, but if you do, use a very conservative adjustment for size. One rule of thumb that I like to use is 1/3rd of the average price per square foot as the size adjustment. This is pretty close to average, so it is nice; but again is a rule of thumb and is not science.

Keep in mind that the adjustments that I mentioned are above the ground adjustments. Basements do NOT carry the same value. In fact, it is normally worth less than half of the above ground square footage. For example, in a nice area an above ground adjustment might be $90.00 above ground but basements in that area might only be worth an adjustment of $30.00 per finished sq foot. I never have understood this because if finished it is usable/livable space and people love basements. I gave up trying to understand why the basement has little value and have just accepted it. You don't need to understand why it is true as long as you know it is true and use that to help come up with an accurate value.

Compare non similar style homes with no adjustment

This one makes me laugh when I hear it. The biggie that I see here is comparing the ranch or rambler style home to a home with stairs, like a bi-level or 2-story. The house with no stairs is always more valuable. You need to think of yourself as the buyer and what a buyer would want. Another common example of this mistake is comparing older homes to newer homes. In fact, we just took a call today from a client that was comparing her home to a never been lived in house one neighborhood over. They were almost identical in size and were within a quarter of a mile to each other, but one is about 30 years old and one was just built. Do you really think that someone would buy a used home for the same price they can get a new home for? The newer home is worth more, so it is best to not even use that comp; but if you need to use it, be sure to adjust for the age.

My hope is that by understanding these common mistakes you will be able to come up with more accurate after repaired values, and be a better investor for it.

Four Strategies to Buy Rentals With No Down Payment

This tends to be a pretty controversial subject, and for good reason. When I was getting started in the business, I was young and broke and had no credit to speak of. I was not qualified to borrow money, yet I figured out how to buy properties, and I bought a lot of them. It was not long before I became a full time real estate investor, and on paper, I was a millionaire long before my 30th birthday. I accomplished this with a lot of hard work, education and tolerance to take the risk.

With all this said, just because you don't need money to buy houses, does not mean you should have no money. I am a big, big believer in this. You see, although I was a millionaire at a young age, I basically lost it all when the market shifted. I was too aggressive with my growth, and did not establish an appropriate amount of reserves. After starting over, I structured things differently and am in a good position to not only survive a down turn, but to thrive in it. In this article, I will briefly walk through 4 ways to buy rentals with nothing out of pocket, but want you to understand that this does not mean you should own rentals with no reserves.

Owner Finance: This could mean many things, but for the purposes of this article I am going to assume that the seller of the home is extremely motivated and is willing to basically sell the house just to get away from the mortgage payments. This is commonly referred to as a subject-to transaction because you, as the buyer, will take title subject-to any other liens that are in place. What this means is you get ownership of the house, but the seller is still on the hook for the loan. You as the buyer will agree to either pay off the loan or make payments on the loan on their behalf. If you don't, the lender can foreclose and wipe you off of title.

The seller is taking a tremendous amount of risk with this type of transaction, so it is difficult to negotiate and they need to be extremely motivated. It works well for you because you don't need down payments or to qualify for a loan. It works for them because they have someone else making the payments on their loan, which relieves them of the payment pressure, and potentially can improve their credit. As you become more experienced, this is a strategy you will want to look into. This allows you to purchase an unlimited number of cash flowing properties without ever needing to qualify or sign for a loan.

Lease Options: This is the strategy that really worked for me when I was just getting started. I like it a lot because it is easy to explain to the seller and it is not difficult to get them comfortable with it. They still need to be motivated to want to do this, but nothing like the subject-to transactions.

The way this works is you negotiate with a seller of a home to lease the property for a set period of time. I would typically negotiate 10 years on these, but it can be anything you are comfortable with. The rent amount will be set. From there you agree on a price to buy the property for sometime during the lease term. The price is typically locked in close to today's value. You then sublease the property, hopefully for more than your rent payment, and wait for the value to increase. If the value does not increase, which has happened to me, you can either re-negotiate the deal or let the property go. You have no obligation to buy, so you are not taking the risk of market fluctuation. If and when the value does increase you have several options: You can sell your option, exercise your option and resell the house for your profit, or just exercise the option and keep the property in your portfolio.

Bridge Loans: The idea here is to find a property that needs a lot of work that will make a good rental. You need to negotiate a price were you can buy it, fix it, and roll in all closing costs, and still be at or below 70% of the after repaired value (ARV). This does not work well unless the property needs to be repaired. This is very different than the first two strategies discussed, and is commonly used with bank owned foreclosures. Although, anytime you can negotiate a great deal will work.

After you purchase the home, you want to get it repaired and get a tenant in place as quickly as possible. You then refinance the loan into your permanent rental property loan. There are some additional details for this to work that are beyond the scope of this article.

Partners: At the time the market was collapsing around me, there were tremendous buying opportunities everywhere. Using the Bridge loan strategy, I was able to pick up a handful of deals that I still have today. I did not qualify for loans, so I brought in a partner to sign on the debt for me, and I shared the deal with him 50/50. Neither one of us put money down, and the properties all cash flow, net of vacancies and maintenance, a minimum of $300 a month. There has also been a tremendous amount of appreciation over the years. The houses have more than doubled in value!

No matter what your strategy in real estate, partners can help you reach your potential. They can provide anything that you are lacking to get deals closed. I have a great deal of respect for partnerships because I think they are necessary, but I also think they can be the worst decision ever made.