Jessica 's Blog

How much house can I afford?

Jessica Torres (Century 21 Premium Realty) — Sun, 11 Nov 2007 11:35:12 -0600

How much house you can afford depends on how much cash you can put down and how much a creditor will lend you. There are two rules of thumb: If you are self-employed you can afford a home that's up to 2 1/2 times your annual adjusted gross income plus any items allowed to be added back or deducted. If you are not self-employed you can afford a home that's up to 2 1/2 times your annual gross income.

Your monthly payments (principal and interest) should be 1/4 of your gross pay, or 1/3 of your take-home pay.

The downpayment and closing costs - how much cash will you need?
Generally speaking, the more money you put down, the lower your mortgage. You can put 3% down (depending on the loan), but you'll have a higher interest rate. Furthermore, anything less than 20% down will require you to pay Private Mortgage Insurance (PMI) which protects the lender, against any default payments.

Also, you should expect to pay 3% to 6% of the loan amount in closing costs. These are fees required to close the loan including points, insurance, inspections and title fees. To save on closing costs you may ask the seller to pay some of those costs; if that is the case, the lender simply adds the amount of the closing costs to the price of the house and you finance them with the mortgage.

One thing to remember: a lender may also ask you to have two months' mortgage payments in savings when applying for a loan.

The mortgage - how much can you borrow? A lender will look at your income and your existing debt when evaluating your loan application. They use two ratios as guidelines:

Housing expense ratio. Your monthly PITI payment (Principal, Interest, Taxes and Insurance) should not exceed 28% of your monthly gross income.

Debt-to-income ratio. Your long-term debt (any debt that will take over 10 months to pay off - mortgages, car loans, student loans, alimony, child support, credit cards) shouldn't exceed 36% of your monthly gross income.

These are just guidelines, lenders aren't always inflexible. If you can make a large downpayment or if you've been paying rent that's close to the same amount as your proposed mortgage, the lender may bend a little.

Courtesy: Century21.com

"Staging" Your Home 101...........

Jessica Torres (Century 21 Premium Realty) — Sat, 03 Nov 2007 11:04:39 -0500

It's easy to fix up or stage your property if you have access to unlimited cash. However, if you are like me, you need to keep your repairs to a minimum to stay profitable. The KEY thing to remember is that; you must keep your properties in good shape to attract tenants or buyers. The most basic improvements, such as carpet and paint can still costs thousands of dollars. Here are some inexpensive ways to improve your properties with very little cash.

New Electrical Switch Plates

Most rental owners and rehabbers paint a unit and leave the old, ugly switch plates. Even worse, some even paint over them! You would tend to think that this would be the first thing to do, when this is such a minor improvement. Oddly enough this is a commonly overlooked improvement.

New switch plates cost about 50 cents each. You can replace the entire house with new switch plates for about $20. For the foyer, living room and other main entertaining areas, spring for "nicer" plates; i.e.: brass or decorative plates. They run about $5 each - not much for the added class.

New or Improved Doors

Another commonly overlooked, yet cheap replacement item is doors. If you have those old brown doors, replace them with new white doors (you can paint them, but unless you have a spray gun it will take you several coats by hand).

The basic hollow-core door is about $20. It comes pre-primed and pre-hung. For about $10 more, you can buy stylish six-panel doors. I would suggest that if you are doing a rehab, the extra $10 per door is well worth-it. For rentals, consider at least changing the downstairs doors, if you dont want to change all of them.

New Door Handles

In addition to changing doors, consider changing the handles. An old door handle (especially with crusted paint on it) looks gross or really old. For about $10, you can replace them with new brass finished handles. Replace the guest bathroom and bedroom door handles with the fancy "S" handles (about $20 each).

Paint/Replace Trim

Most homes or rentals need a good "do over" in the paint department. But if you dont have the time and/or the money, its best to consider just painting the trim. New homes typically come with beige or off-white walls and bright-white trim. Use a semi-gloss bright white on all of the trim in your house.

If the floor trim is worn, cracked or just plain ugly, replace it! Home Depot carries a new foam trim that is pre-painted in several finishes and costs less than 50 cents per linear foot. Create a great first impression by adding crown molding in the entry way and living room.

New Front Door

A cheap front door makes a house look cheap. An old front door makes a house look old. You only get one chance to make a good first impression. If you have nice heavy door, paint it a bold color using a high-gloss paint, consider a nice bright red or nice forest green depending on what matches best with the current color of your house. If your front door is old, consider replacing it with a new, stylish door. For about $125, you can buy a very nice door.

Tile Foyer Entry

Most rental property foyers are graced with linoleum floors. Consider a nice 12" Mexican tile. An 8' x 8' area should cost about $100 in materials. Now, that may seem a little steep, but definitely a worthwhile investment. You don't want that potential buyer/renter feeling repulsed by that old linoleum. Now if this is too much, go for that linoleum, but try to find some that has that look of granite.

New Shower Curtains

It amazes me that many landlords and sellers show properties with either no shower curtain or any ugly old shower curtain in the bathroom. Don't be cheap - drop $40 and buy a nice new rod and fancy curtain.

Paint Kitchen Cabinets

Replacing kitchen cabinets is expensive, but painting them is cheap. If you have old 1970's style wooden cabinets in a lovely dark brown shade, paint them. Use a semi-gloss white and finish them with colorful plastic or even brass knobs. Dont forget the inside of those cabinets too!

A fancy modern faucet looks great in the kitchen, but they can run as much as $150! Not to worry - most home retailers run clearance sales on overstocked and discontinued models from time to time. I have found nice Delta and Price Pfister faucets for about $60 on sale. If that is still a little too steep, just look for any shiny new faucet that catches your eye.

Add Window Shutters

If you have ugly aluminum framed windows, consider adding wooden shutters outside. They come pre-primed at most hardware retailers and are easy to install. Paint them an offset color from the outside of the house; i.e.: if the house is a dark color, paint the shutters white. If the house is a light color, paint them green, blue, etc.).

Add a Nice Mailbox

As in real estate marketing; MAKE SURE TO STAND OUT AND BE BOLD!! For about $35 you can buy a nice colorful mailbox. For about $60 more, you can buy a nice wooden post for it.

Although these tips seem like they are too little and insignificant to make a difference, people notice these things....and they like them!

Good Deals in Real Estate..............

Jessica Torres (Century 21 Premium Realty) — Wed, 24 Oct 2007 21:00:56 -0500

In Investing, for the reason of competition alone, you have to advertise the fact that you are in a position to help while being fair, trustworthy, and accurate in making quick decisions before the competition tries to persuade these people first; therefore you will need to understand marketing. Which means that you must decide on what you are going to specialize in, you need to develop a method to define your target audience, and then attrat them with a week written message using the different types of media to get the word out.

What exactly do you want to specialize in? Here are some categories from which to choose from:

Condos, vacation property
Single-family homes
Apartments - residential duplex, triplex, fourplex
Commercial - hotels/motels, strip malls, office complexes, mobile home parks, storage units, parking lots, garages, restaurants, stores, apartments (for five or more families)
Industrial - factories, refineries, manufacturing plants, and so forth
Farms - commercial, industrial, or agricultural, depending on zoning
Raw land - lots, vacation, recreational, sub-dividable residential, commercial, industrial, agricultural, and special purpose
Special purpose - churches, schools, hospitals, power plants, theaters, sports arenas, golf courses, marinas, and so forth

Here are some examples of how you might go about finding some good deals:

Look at bulletin boards, local papers and small independent publications. This goes for every publication you get. Make sure you get one of the first copies off the press. Better yet, advertise yourself and get people who are thinking about selling to call you before they actually tell the world through an ad.

Watch the local paper for foreclosure auctions, tax sales, and HUD and VA listed properties. Note: Auctions held in bad weather where the property absolutely must be sold are your best chance to limit competition and get property at rock-bottom prices. Because there is no low limit on what can be accepted (no reserve) you may win big.

Post fliers everywhere-colleges, Laundromats, shopping centers, bowling alleys, public bulletin boards, churches, local businesses, wherever large numbers of people congregate. Give them a chance to give you a lead on a hot deal. Print quality business cards.

Join organizations of all types. The sky is the limit. There are so many-just pick the ones that you would be interested in truly being a member in.

When you use headhunters, leave out no one. Property managers, moving companies, relocation services, neighbors, landlords, tenants, the mailman, the paper boy, gardeners, landscapers, service technicians, pest control people, friends, acquaintances, relatives, and other investors. You name it!

A special note: Water, gas, and electric company personnel who shut off utility meters can be very good bird dogs when it comes to finding property that is in trouble or vacant. Make sure they have your cards.

Go to free seminars on real estate. Do this not only to learn about real estate but also to capture names and circulate among real estate-minded people. Once you have their names, call your own club meeting and network to prosperity. Find your mentor here.

Dont forget to try just helping someone to sell his or her property even if you don't want it. Be a friend and offer to help for nothing in return. You will be amazed at what happens when you sincerely try to help with no thought in mind of making money.

Those are some of the basics of advertising and finding the opportunities to buy real estate below market. The old saying goes: You make your profit when you buy, not when you sell.

Investing

Jessica Torres (Century 21 Premium Realty) — Sat, 20 Oct 2007 08:24:10 -0500

http://www.investools.com/

Found this website anyone could use for information on how to invest. I took it and it was great! Highly recommend this for anyone who has questions on whether or not to invest.

Who are Relocation Specialists?

Jessica Torres (Century 21 Premium Realty) — Sun, 14 Oct 2007 19:49:58 -0500

Many times a move is precipitated by a change in job position or career. To help facilitate that process corporations often hire a real estate company and their relocation specialists (a realtor who specializes in this field) to help employees make the transition from one city to another. In fact he or she can be your greatest ally during this critical transition period.

To help ensure a positive experience, follow these recommendations.

1. Start with a frank conversation about your price range and moving time frames. For instance, if your new position is starting quickly, you may want to rent for a few months instead of rushing into a home purchase.

2. Explain your family dynamics. Is your spouse changing jobs too? Will he or she need to be near public transportation or within driving distance to another community? Also, do you have school-age children? This is information that can influence where you buy.

3. Be specific about your wants and needs. Provide your specialist with a prioritized list of amenities. Although it is unlikely they will find an exact match, the more information your specialist has, the better chance they have of finding a home that meets your requirements.

4. Be open-minded. Your relocation specialist is an expert in his/her field. Take their advice and recommendations to heart. Remember for this relationship and transaction to work, you need to trust the agents experience and insight. For instance, if you are moving from a generally affordable region to a higher-priced metropolitan locale, you will need to rely on his/her expertise to show you a good value when it presents itself.

Courtesy: Century21.com

Top Ten Tips for Investing.........

Jessica Torres (Century 21 Premium Realty) — Thu, 11 Oct 2007 15:45:46 -0500

Just because real estate prices seem to have hit a temporary ceiling in many countries around the world, that doesn't mean that profits from property investments are hard to come by.

Even during a real estate market slowdown, stagnation or depression; profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.

1) Research the curve - What I mean by this is, are the prices rising, are the prices falling or have they reached a peak in the area in which you wish to invest. You need to know where the curve of the property market cycle is at in your preferred investment area.

2) Get ahead of the curve - As a basic rule of thumb, it would be ideal for a real estate property investor to attempt to buy ahead of the curve. For example, in a rising market, try to buy homes that are in up and coming areas; ones that are close to locations that have peaked or close to locations that are experiencing some sort of redevelopment. These areas will most likely become the next big thing and those who buy before the trend; will stand to make the most monetary gain. And in reverse, as a market is stagnating or falling it would be good if an investor targets those areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle due to these areas being more than likely to turn profitable as the market rises again.

3) Know your market - Who are you buying property for? Think about your market before you make a purchase. Are you looking to rent out the property? If so to whom - a growing family or a retired couple? Or are you looking just to rehab a house and resell for profit? Know what your intended market is looking for in a property and ensure that is what you are going to be offering them is what they want.

4) Think outside of your comfort zone - There are emerging real estate property markets around the world where certain economies are going from strength to strength, where a growing tourism sector is pushing up demand on real estate or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. But don't forget that you don't have to go overseas. You can always look in another state too; but as with both, you would need to invest into a property management company if you look to let out. Still, look further outside your comfort zone, think outside the box and diversify that real estate portfolio for maximum success.

5) Purchase price - As my mother always said; "Don't eat with your eyes". You think you can handle that second dessert, when in turn you should've had just one. Don't think that you can buy a $500K house, only put 20% down and rent it out for the whole $3110 payment; when you have a $1500 mortgage yourself. This wont be realistic!! Make sure that if you invest in a property, you can afford paying both mortgage payments for a period of time; just in case.

6) Entry costs - Research fees, charges and all expenses that you will incur when you buy your property. They can differ from state to state. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment will become profitable.

7) Capital growth potential - What factors point to the potential profitability of your real estate property investment? Which economic or social indicators exist to suggest that property prices will increase? Think about what you want to gain from your investment and then, do that research to find out whether your expectations are realistic or not.

8) Exit costs - If you will incur substantial capital gains taxation liability or if you sell your property investment for profit, will that render the investment profitless? Will there be a capital gains tax, or is the area capital gains tax free? DO THE RESEARCH!!!!

9) Profit margins - What level of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins.

10) Think long term - Unless you're buying property with just the intention of rehabbing it for resale and profit; you should view real estate investing as a long term investment. Real estate is a slow to liquidate asset; cash tied up in the property is not simple to free up. Think long term; if you buy a house, plan to keep it a while so that you can earn that equity and in the end.......Make a Profit.

Before you Buy......

Jessica Torres (Century 21 Premium Realty) — Tue, 09 Oct 2007 20:43:16 -0500

Like everything else, there is a learning curve to buying a home. The second time around you will naturally know things you didn't when you bought your first home. Here are three common mistakes made by first-time home buyers during the home search process and their solutions.

Mistake: Buyers who look at homes before they have a complete understanding of their finances.

Solution: Before looking for a property, you should know your finances inside and out. This includes analyzing savings, income and expected expenses. Next, order a copy of your credit report. Your credit score will greatly influence the type and amount of loan you are eligible for. Finally, make sure you are pre-qualified for a mortgage. This step you should always do before you talk with an agent.

Mistake: Looking for a home with your heart instead of your head. Of course there is an element of emotion during the home search process, but it is also a business transaction.

Solution: First, look exclusively in your price range. Next, have a specific list of your wants and needs. Create of roster of must-haves, bonuses and things you absolutely do not want. This will help you remain objective.

Mistake: Looking at properties without doing enough research. Curb appeal and interior charm have their place, but buyers also need to know about the community where they are buying.

Solution: Use the Internet to find out all you can about the town. Research local property taxes, the schools, area transportation and available recreation. Also talk to people in the neighborhood and local officials. Ask about traffic patterns, flooding, planned infrastructure projects, etc. Get the inside scoop from those who know the area best. Your Realtor® or buyer's agent is also an excellent resource.

Buying your first home should be full of great memories. You shouldn't have to look back and say; "Wow, how foolish was I?" As always, take your time in researching; take your time in planning. You never want to rush into a real estate transaction. Be In the KNOW!!

Courtesy: Century21.com

EVER HAD ONE OF THESE DAYS???????

Jessica Torres (Century 21 Premium Realty) — Tue, 09 Oct 2007 19:58:22 -0500

Tips on how to guarantee your house will sell....

Jessica Torres (Century 21 Premium Realty) — Sun, 07 Oct 2007 18:32:14 -0500

The ever changing real estate market has taken yet another turn and conditions in most parts of the country are now favoring the buyer. Often referred to as a "buyer's market," this means that the inventory of homes for sale exceeds the demand for homes. As a result, buyers can be more selective and more conservative with their offers.

But that does not mean at all to lose all hope if you need or want to sell your home now. Use these three steps to help your home go from "For Sale" to "Sold" with better timing.

1. Price It - The number one thing you can do to help your home sell in a buyer's market, or really any type of market for that matter, is to be realistic by pricing it right. An informed buyer and/or an experienced real estate agent will know value when they see it. I have seen on many different occasions, where a seller is not doing enough research and putting their house up for sale at a unrealistic price. If you want to price your home up high, then it better be of a high quality. If a buyer and/or a real estate agent see your house still on the market after some time has passed, it is highly likely that they will be turned off. This usually sets a tone that the seller is unwilling to work with any buyer, no matter how true/not true that is. Always remember that there are other homes being put on the market everyday.

2. Make it Show - I cannot tell you how much of a pet peeve this is for me. Why do people show their homes in such disarray? When I go to see a home for sale that's in shambles, I always think: "HOW DO THEY EXPECT TO SELL THIS HOUSE?" When you want to sell your home, it should always look picture perfect inside AND outside! This concept is also known as 'STAGING'. Every time you know your home will be viewed by a potential client, make sure it looks magazine cover perfect! This will, without a doubt, let the buyer feel at home, or better yet picturing that home as being their own.

Now, if you no longer live in that home, make sure that it is cleaned on a weekly basis. Nothing too dramatic mind you, but hire someone to come in and do a little vacuuming, and a little dusting. You want them to basically make sure that things there are still presentable. I can not tell you of how many times I have gone to see a home and been utterly disgusted by the dirt and bugs that have taken over. This will DEFINITELY turn off at least 75% of the buyers that may come to see your home. In their minds, they are just thinking about how much work that needs to be done before they can think about moving in.

3. Choose Wisely - Hire a real estate professional who has the experience and network to get you a buyer and have your home sold. In a buyer's market it is critical to have a professional who is working non-stop to make sure that your home stands out in the market. They need to be able to bring you not only potential buyers; but the knowledge of how to set the right price, tell you how to stage the home, and guide you through negotiations. A Realtors® knowledge about the local marketplace is invaluable.

Why Invest?

Jessica Torres (Century 21 Premium Realty) — Sat, 06 Oct 2007 14:07:47 -0500

Many people when they hear of real estate investing they think of the term ‘flipping homes'. But there is so much more that can be done with regards to investing in a housing market such as this.

It is a well known fact that people can make a fortune investing in the stock market, it's also a well known fact that investors can lose large sums of money in stock; it's a huge risk game to play. With real estate investing; one hardly ever hears about investors going bankrupt, it is a possibility with poor planning and strategizing.

Those individuals who invested wisely in real estate market years ago are living very comfortable lifestyles today. Investing in real estate can garner interesting returns; below are some benefits as well as some cautions.

Don't get me wrong; real estate investing is not easy and may not be for everyone. It requires much from you, a vision, strong determination, time, energy and of course the most important; a good business mind. It's much like starting your own business. The average small business owner will tell you that it was hard in the beginning; they had to sacrifice some or even a lot....but they are reaping their benefits as you read this.

Obviously, not everyone jumps on the real estate bandwagon. In fact, most people aren't willing to take the risk that real estate investing entails. Investing in real estate requires a lot of time and energy; you need to deal with a vast array of tenants - the good ones as well as the bad. Also, just like a business, you have to deal with operating and fixed expenses, such as heating bills and renovation costs

If you invest, you don't have to worry about leaving for a vacation! Long gone are the worries; of wondering if the person at your office will survive without you or even worse that they will try to steal your job in your absence. If you want to go out of town for a few days; go! Don't think twice about it! While you're out of town, the rent keeps ticking away 24 hours a day, seven days a week, whether you're on the job or not. And those loans keep amortizing. The magic is happening just the same.

Aside from being your own boss, having the freedom to travel while earning profits, increasing your net worth, and having a place of your own to call home, investing in real estate holds even more benefits.

What benefits are there?
• Cash flow is the difference between your income and your expenses on a piece of property. By keeping a strong positive cash flow, you will be able to have more options and space to maneuver, i.e. making improvements on your home.

• Appreciation is the increase in value of a property. There are two kinds of appreciation. The first is from economic conditions beyond your control, such as inflation (which is not always the best). And the second kind is; market appreciation, which you can control. When you improve a property through renovations, you increase its value. You can purchase a piece of property in need of repairs and bring it back up to neighborhood standards or slightly higher.

You do have to be careful that you don't over improve your house. There is such as thing as too much improvements on a home. When improving on a home, you must note the values of the other homes in the neighborhood. Noting, how much you can improve on your investment.

Don't expect to buy a home for $100K and sell for $500K; if all the other homes are selling in the $100K - $200K price range.

• Tax advantages Owning real estate with the goal of making a profit allows you to deduct interest payments and other expenses come tax time. This should not be mistaken for a quick/easy way to get that extra money.

Owning a real-estate business is a great way to achieve your financial freedom, or just save for your child's future. What could be more worthwhile than taking up real estate as either a business or just a plain old hobby? The benefits are without a doubt out there for the taking.