Monthly Archives: February 2017

The World of Zero Down Investing

Zero down investing has been one of the big buzz words recently in the real estate investment industry and while there are many things positive about such a situation for a real estate investor, there are also some bits of information that need to be cleared up for anyone interested. Zero down investing can be a great experience for all involved, but having a better understanding of the process will give you a more realistic view of when to use zero down investing as a tool in your real estate transactions.

Zero down investing is not a one-size-fits-all prospect, so understanding a few of the available techniques used to accomplish the goal of zero down investing can help you decide if a particular situation is ripe for that type of financing solution. Not every situation will be eligible for a zero down investing technique, but knowing what is available will help you make that determination. Here are a couple methods.

The Double Loan
Typically, a seller will want around 75 percent of a property’s sale price up front in cash to even think about pursuing a possible real estate transaction with you. Getting a loan from a bank with no down payment for that 75 percent should not be difficult as there are many ways to get guaranteed for such a loan and many banks offer loans without ever delving into your employment status or income level.

So, with that 75 percent out of the way, the problem then becomes scrounging up the last 25 percent to complete the sale. Seller financing is one way to accomplish this and can often work out well for both sides. If the seller finances the last 25 percent of the transaction with no down payment in exchange for favorable terms, you have yourself a zero down investment accomplished through pursuing two separate pieces of the financing puzzle.

In this example, the seller will not only get a nice chunk of cash up front but will also have the benefit of interest-bearing payments over time as a nice investment. Of course, you will have two payments to make and the rent coming in from your investment property would have to be substantial enough to pay both payments, but those properties do exist. Many investors have accomplished investing goals through this method.

Enter the Note Buyer
Involving a note buyer in your zero down investment goal adds a layer of complication to the proceedings and should only be pursued if you truly understand what is being accomplished through involving one. In a note buyer scenario, financing is offered to a property seller in the form of two loans. One loan makes up the bulk of the selling price but is padded with extra value. Another loan makes up the remainder.

For example, on a $100,000 property, one loan could come in for $80,000 and the second for $30,000. Note buyers will purchase mortgages and other loans for a discount, in this case the $80,000 loan. By selling that $80,000 loan to the note buyer for $70,000, that cash is sent to the seller and the note buyer receives the mortgage note in return.

The $30,000 loan would be your responsibility but neither financing option entails a down payment. Obviously, income from the property would have to cover the payments on both loans, but if that math works out, involving a note buyer can accomplish a zero down investment.

Of course, all real estate transactions should be reviewed by experts in the field, whether that is a real estate lawyer, agent or other authority. Zero down investing is a large field and can stand as a term for a wide array of financing arrangements. These are just two ways to accomplish a zero down investing goal. Explore other methods to find the zero down investing method that works best for your real estate.

Foster Successful Investing Habits

The essence of success is achieving a long period of prosperity through your actions. In real estate investment properties, that kind of success can be fostered through committing some habits to your investment routine, using them to continually work towards new opportunities and new investments. By internalizing a few of the following techniques as habits, you can become more successful in your real estate transactions, giving you an edge on the competition (of which there is much in the real estate investment market).

As with most areas of business, getting your name out into the community is a great first step towards developing a network of people that will help you along your path to investment success. Let people know that you are looking for investment opportunities.

Give people you know business cards and ask them to keep their eyes and ears alert for possible properties.

Enlisting those you know and developing a strong network will give you an information pipeline that is unique to you, one that possibly could turn up opportunities others miss. Make it clear that you are available to talk about any opportunity and sometimes they will come to you rather than go out to the public.

Think actively about risk and profit. These may seem like obvious things to think about, but often times investors get caught up in the short-term ramifications of a property and neglect to think about the long term profitability of a property. Conversely, some investors think only about the potential profit of a property and neglect to consider the risk needed to attain that high level of profit.

Internally, you should engage in a balancing ask for risk and profit on every property you assess. Is it in a stable area? Are property values likely to increase? How likely is it that property values will decrease? These are risk-type questions that need to be asked both in the hopes that they are positive and to guard against the answers coming back negative. Never get too concerned with risk or profit singularly, instead consider them both as a sliding scale and consider those that offer a strong balance as the most optimal real estate properties for investment.

The most important piece of advice on how create successful habits is create a plan. With a concrete, pen-to-paper blueprint for the measures you are going to take to ensure success, you are less likely to neglect certain items and more likely to make that plan a part of your daily routine. Talk with a certain number of people in your network each week. Pledge to investigate a certain number of new investment properties each month.

Taking proactive steps is one of the best ways to create great opportunities for yourself in real estate investments and sometimes people simply need a checklist or reminder to keep at those tasks. By developing a plan and going over it as a checklist periodically, you will gradually wean yourself of that need and internalize the habits that will ultimately make you successful.

Once that level of commitment happens, developing opportunities will be less a matter of expending great amounts of energy to stick to a pattern and more an effortless cycle of proactive behavior that creates an advantage for you in what is an extremely competitive real estate investment atmosphere.

However, there is one additional word of warning. Never stop learning new steps to incorporate into your habits. It is one thing to internalize a plan and another to get set in a series of steps that you cannot break free from. Laying a strong foundation of positive habits that can later be added to is worlds apart from learning one set of steps and never deviating from that course of action. Balance your procedure with old and new ideas and you will possess a better chance for real estate investment success.

Do Your Moving Insurance Homework

Packing up all of your worldly possessions can be a daunting task. Hours of packing, taping, moving and storing can leave you drained and dreading the trip across the country or across the city to your new home. After all of the expended energy, seeing damage to your goods along the way could have the real ability to push you over the edge. As a way to protect yourself, moving insurance can be a great way to take some of the sting out of potential troubles along the way.

Some estimates have stated that 20 percent of all consumers have some kind of issue during a move resulting in damage to their possessions. While large-scale moving companies are federally required by law to offer at least some insurance, it is done by the pound and anyone with an iPod knows that your possessions are often worth more than their weight indicates.

Often, homeowners insurance may offer some kind of moving protection, so before any move, it would certainly behoove you to look through your policy to see if that is the case. Research her is necessary as policies vary in what they cover. Some may offer fire protection but not transportation damage issues while others will. Investigate your plan to get a solid idea of what is covered before ever moving on to looking into purchasing additional coverage.

Of course, anytime insurance is involved, taking down an exact inventory of what you’re packing and what it’s worth will give you the basis for any future claim and the ability to accurately shop for the level of insurance that fits your belongings. If you have some free coverage as a part of your homeowners insurance, you only need to purchase extra coverage to bridge the level of your free coverage and the level of your belongings. Obviously that number cannot be known until you sit down and calculate what your belongings are worth and what portion of that amount you want insured.

That coverage is often available directly through your full-service moving company and is again based on the weight of your belongings. That can of base coverage can come in handy if you do not have the time to fully go through your belongings, but doing so will give you an idea whether the amount a moving company will pay in the event of a catastrophe will sufficiently cover the value of your belongings.

For more exact coverage, some insurance companies will offer moving insurance and if you have an insurance agent that you use for other services, inquiring into moving insurance with them would be a good idea. As with other types of insurance, pooling all of your policies with one company can sometimes give you discounts based on volume.

If your insurance company does not offer moving insurance, there are a number that do and it is a matter of research and homework to determine who will give you the best coverage at the lowest cost for the amount you need. Online resources can also play a role here and doing some searches on moving insurance can give you some quick price levels for particular amounts of coverage.

Of course, as with any type of insurance, the more quotes you get, the better off you will be. Policy details and deductible amounts will vary from company to company and the more quotes you solicit, the better your results will be. Keep in mind that with all of your possessions in one truck, a disaster could be just that, disastrous.

Even if you have faith in your moving company to get your goods to where they need to be, take a lesson from those that have seen trouble and at least investigate the prospect of insuring your goods. There are plenty of resources out there and all will help you feel better about watching that moving truck roll out of the driveway.

Why Cheap Homes Are Cheap

When items are discounted at the grocery store, there’s always a reason. Maybe the bread is a little bit stale or the item has been discontinued. Before buying any discount produce, you should probably understand why it is being discounted. The same is true for homes and while there are many cheap homes on the market, learning why that real estate is selling for such a low price will go a long way towards telling you just how worth your effort that property may be.

There are some common reasons why property sells for a low amount or may be listed for a low price initially. Some of these reasons may indicate a home you do not want to get involved with but some may indicate a good deal. When you see a cheap piece of real estate on the market, evaluate it to see which of these situations it falls in to.

A Less-Than-Stellar Area
The location of a home affects its value profoundly and while that can mean great things for a home owner in a posh location, it can also mean suppressed real estate prices in an area that is anything but. Many people think that no matter what, real estate will increase in value. That is not necessarily true and the future fortune of a neighborhood will directly translate into whether your real estate investment or home price swings up or not.

The Fixer-Upper
We have all seen homes that simply need work. For whatever reason, the current owner has simply grown tired of updating a home and that state of disrepair translates into a steep discount in the home’s sale price. If you do not have the stomach to go through the arduous process of repairing a home, these cheap pieces of real estate are certainly not for you. If you are not scared off by the prospect of some labor, these can be great targets.

The Speed Sell
Sometimes a seller needs to sell a property fast, whether to get out of town for relocation or to quickly liquidate some assets. These types of homes present the best opportunities for prospective buyers as these pieces of real estate suggest the least amount of problems. Of course, these homes get snatched up quickly, the very goal the seller has in mind, so finding them can be a bit of a difficult prospect. The best tactic is to monitor an area of town or maintain searches on a set of criteria on a regular basis to turn up all of the new homes that get put on the market every day. The real estate market is a competitive arena, so make sure you are doing all you can to get an edge over the rest of the prospective home buyers out there.

The Mystery
The rest of the cheap homes generally fall in the mystery category and these pieces of real estate are the ones that you need to be most cautious about when investigating for a possible purchase. Homes are always cheap for a reason and there is certainly a reason buried somewhere in the floorboards. Is it near an airport? Does a railroad run through the backyard? Not all mystery homes hold mysteries that are this obvious but the seller is obligated to disclose anything that affects the value of the home, so just make sure you and your realtor ask the right questions.

Doing your homework on why a piece of real estate is selling for the price it is will go a long way towards determining the worth of a potential investment or home purchase. Cheap homes can look attractive at first glance and then lose luster with further inspection. Ask the right questions and do the right research so that you too can make that determination accurately to avoid potential headaches later.