Creative Real Estate Financing Methods

This is the age of creative real estate financing. Maybe you remember when financing meant you saved up enough to put 20% down on a house, and then got a mortgage loan for the other 80%? You can still do that, but there are many more options now. Here are ten of them.

1. Second mortgage loans from sellers. Many banks will allow you to have as little as 5% into a home purchase, but will then only loan you 80%. The seller can take payments on a second mortgage from you for the other 15%.

2. Manufacturer loans. Manufactured-home companies are arranging financing with 5% or less down for their buyers. This can be as little as $2,500 down if you already have a lot to put the home on.

3. State government housing programs. Most states have some sort of financing help in the form of a loan-guarantee program or outright loans for low-income buyers.

4. VA mortgage loans. If you have been in the armed services, have a decent job, and can save two or three paychecks, you can probably get a home with a VA loan.

5. Contract for sale. Called a “land contract” and other names depending on the part of the country you are in, this just means that you make payments to the seller instead of a bank. It’s up to you and them to negotiate downpayment amount, interest rate, and the term of the loan.

6. Builders gifting programs. In some parts of the country, builders fund foundations that give you a portion of the downpayment, so you can get into a home with as little as 3% downpayment from your own pocket. FHA and other lenders have so far approved of or allowed this.

7. FHA mortgage loans. The Farm Home Administration doesn’t actually loan the money, but guarantees your loan for the bank, so they can loan up to 97% of the purchase price, depending on the particular FHA program.

8. Friend and family loans. It may not be from charity that a brother or a friend lends you the money to buy a home. That 7% return might look awfully good if their money is sitting in the bank at 2%.

9. Bank no-doc loans. “No-doc” and “low-doc” loans, meaning no or low documentation requirements, are back, and you can find them through online banks. They are for those of you with bad credit but 20% to 30% to put down on a home. You don’t even need a job.

10. Your credit cards. A risky way, but if you have a low-interest credit card, you can use it to come up with the downpayment, especially if you can pay it off soon, perhaps with a coming tax refund. The banks generally won’t allow this, but you can combine this with seller financing.

So are there more ways to approach real estate financing? You bet there are. These are just some ways to buy your own home. When you start investing, you can use other techniques for really creative real estate financing.

Home Sellers: 11 Great Tips for Showing Your Home

In order to sell your home quickly, and for the best price, here is a list of things to address BEFORE your agent brings that first potential buyer to look at it.

1. Make sure the lawn is mowed, the shrubs are trimmed, and the porch is clean and free of clutter. If it’s fall, rake up the leaves. If it’s winter, keep the walkways clear. Make sure the front door is either freshly painted or well-scrubbed. It’s all part of creating a positive first impression as potential buyers approach the home.

2. Inside, clean the house thoroughly, especially the bathroom and kitchen. Make sure the woodwork is either cleaned or freshly painted. Those two areas are very important in most people’s minds, and you need to pay special attention to them to create a good impression.

3. Make sure all the faucets work (without dripping) and all light bulbs come on when their switches are turned on. Little things like that can be distracting to buyers.

4. Make certain that every closet door and cabinet opens easily, and closes securely. Doors that don’t open or close properly give a negative impression to buyers.

5. Don’t let your kids leave out their roller skates or skateboards, and if there are slippery rugs that you’ve learned not to step on over the years, remove them so potential buyers don’t go flying.

6. Organize closets, basements, and attics, so that they look larger. Just like you, buyers are always looking for room to store things. If you have so much stuff that you can’t do that, consider having a garage sale, renting a storage space, or calling the Salvation Army truck.

7. Pay special attention to the bedrooms. Just like the kitchen and bathroom, comfortable, spacious, and well-organized bedrooms make a positive impression in home buyer’s minds, because they know they’ll be spending a significant amount of time in them.

8. Open your curtains during the daytime, to let in as much light as possible. It gives a positive feeling to the home and makes rooms feel more spacious.

9. If the home is being shown at night, turn on every light inside and outside of the house. You’ll be brightening the mood, as well as showing off your color scheme and wallpaper designs to their best advantage.

10. Don’t have a bunch of people around when the home is being shown. In fact, it’s a good idea to make an excuse to leave yourself, so that potential buyers are free to speak freely about what they see as they tour the home.

11. If you have pets, keep them away from the buyers. In fact, it’s worthwhile to take them with you when you excuse yourself and make your exit during the showing.

When getting ready to show your home, always point toward creating a positive impression on prospective buyers. They want what you would want, they’ll notice what you’d notice, so walk through your home and try to see it from a stranger’s perspective. Ask other people to walk through and tell you the negative things they notice. Then address those things. It will all help you to sell your home–quickly, and at the best possible price.

The Benefits of Real Estate Investing

Real estate investing is increasing at a staggering rate these days. More and more individuals are learning that real estate investments can offer wonderful earning potential. Real estate investing is a process which has many attractive qualities that make it a viable money-producing opportunity. There are a number of benefits that go along with purchasing real estate investments and the following paragraphs will highlight some of these benefits. As you will see these attributes make it quite apparent why individuals are becoming interested in investment opportunities of this type.

Build Equity in the Property
For those individuals who are looking to invest in real estate on a long-term scale, there are certain benefits to doing so. When individuals purchase real estate and hold onto it for awhile, they are ultimately able to build a good deal of equity in the home they are purchasing as an investment property. Equity is a beneficial aspect for the homeowners as the more equity a property has, the more that it adds to the net worth thereof. This is an important and frequently cited reason why individuals do choose to invest in real estate and maintain the property as an investment for a long period of time thereafter.

Possible Tax Advantages
Another benefit of purchasing real estate for investment purposes is the possible tax advantages that one may receive as a result of owning the investment property. Depending on a variety of factors, individuals who own investment property may just see some gracious tax advantages as a result. Therefore, individuals may be more than ready to invest in real estate once they have looked into possible tax advantages that result from engaging in a transaction of this type.

High Rate of Return on the Sale of the Property
When the investment property is sold somewhere down the road, the homeowners will most likely see a high rate of return on the sale of the property. Depending on the market at the time of the purchase and sale, this rate of return may be more than generous when one looks at the profit margin. Some factors to consider if looking to purchase property and sell it within a short period of time after the initial purchase include current market for property sales, renovations and upkeep necessary to get the property ready for the sale and ability to hold on to the property longer if a sale does not come as quickly as one had expected. If one has considered all of these possibilities and still feels that they will be able to sell the property quickly, then this is a wonderful benefit of real estate investment.

Lease the Property to Tenants
While some real estate investors choose to purchase the property and then sell it shortly thereafter, there are other individuals who have a different reason for purchasing investment properties and wish to obtain a profit by other means. These individuals are ones who prefer to purchase the property and then lease it out to tenants. By doing so, the homeowners are able to pay for any mortgage which may be present on the property plus receive any additional income from leasing the property to tenants.

Investing in real estate is a wonderful way to gain equity in a piece of property, take advantage of possible tax benefits and maybe even make a considerable profit from the sale of the property once the individual feels like doing so. These are some of the many reasons why individuals are purchasing real estate as investment property and current low interest rates make now a perfect time to buy. The benefits of real estate investing are difficult to pass up, so go ahead and find your first real estate investment property!

So you want to be a property developer?

If you’re like most people, you’ll have had the dream at one of two key times. Either you have just sold your own property and made a small fortune, despite the fact you did very little work on the property when you owned it. Or you’ve been watching one of the very popular TV property shows, where a couple of amateurs have blown their budget, made a series of basic mistakes, yet still made a small fortune.

Yes, life as a property developer seems romantic, and probably better than the daily slog you currently face at work.

Yet there can be few occupations as risky as being a property developer. Where else would you be asked to invest tens of thousands of pounds into a project, dedicate months of hard work and only then find out if you had made a profit. Even running your own business isn’t that risky, as you can measure your profitability along the way.

The reality is that it’s quite hard to make it as a full-time property developer. The money you made on the sale of your last house may have come from the growth of the housing market while you owned it. That’s not something you can rely on as your main source of income.

And as a property developer you are reliant on being able to turn enough of a profit from a property to cover your living expenses for a few months, plus help to fund your next purchase.

So before you jack in your job and start scouring local estate agents’ windows for suitable houses to do up, here are a few things to think about.

First off – are you really suited to this? Many of us are risk averse; that’s why we like going to work and getting a regular salary. It makes it easier to live your life knowing you have that monthly income.

Being a property developer means the end of regular income (unless you decide to rent your properties out, anyway). And the financial risks are higher. If you can’t sell a property you’ve just finished, that’s not only going to stop you feeding your family, but will make it hard for you to move onto the next project. This is not an insurmountable problem, but an issue you should consider before making the leap.

Still sure you want to go ahead? Then the next thing is to look at the marketplace you are going to develop for. Look around your local area and try to work out where the greatest demand for property lies. Are there a lot of commuters wanting a well connected area or a virtually new property? Wealthy executives demanding four bedroomed detached houses? Families wanting lots of space for very little money? Retired people who want low maintenance bungalows within walking distance of shops?

Find the demand and develop for it. Try not to get hung up on the developer’s dream. If you want to create the perfect home, then do it in your own. Keep your developing as a business.

Once you’ve done your targeting, it’s time to do some hard work. You should be prepared to do as many unskilled labouring jobs in your projects as you can. In fact, to be a successful property developer you should be prepared to learn how to do the things you currently can’t. It’s a key attribute that will help you maximise your profits. Just remember to get qualified people in for the skilled work.

And the final part is to do whatever it takes to get a quick sale at the right price. It’s the goal you’ve been working towards all along.