real estate: Three Questions to Ask Before Investing in Real Estate - 07/22/19 07:39 AM
 
How can I increase my rate of return?  The cornerstone of any smart investment strategy is to calculate your rate of return.  With real estate this is done by running the numbers using an internal rate of return (IRR) formula that takes into account: Present Value (PV) - what am I paying out of pocket to get into this investment? Term (N) - what's my timeline and how long am I going to hold this investment? Periodic Cash Flow (PMT) - what's my monthly cash flow? Future Value (FV) - what are my net proceeds (after expenses) when I sell … (2 comments)

real estate: Three Steps to Get Started as a Real Estate Investor - 02/18/19 08:32 AM
 
1 – Determine your approach and your investment objectives Are you looking to “buy and flip” or “buy and hold”?  If you’re looking to buy and flip, you’d probably want to start looking for homes that have the highest potential resale value after-improvements.  If you’re looking to buy and hold, you’d probably want to start looking for homes that have the highest potential cash-flow opportunities.

2 – Determine your budget It’s a smart idea to “never be 100% invested” when you invest in real estate.  For example, if you have $100,000 available to invest, you may want to set aside … (0 comments)

real estate: Two Ways to Win a Bidding a War - 02/04/19 08:28 AM
In today's housing environment, you will most likely compete with multiple offers when you go to buy a house.  Here are two strategies you may want to consider if you’re serious about winning a bidding war:
1 – Offer More Than the List Price
Money talks.  Imagine if someone offered you an extra $5,000 or $10,000 for something you’re trying to sell.  It would certainly catch your attention.  The question becomes, how likely is it that the buyer can actually follow-through and get you that extra money?  If you’re the buyer in this scenario, it’s crucial to get a solid mortgage approval BEFORE you … (0 comments)

real estate: Two Approaches to Consider When You Invest in Real Estate - 01/02/19 07:36 AM
 
1 – Buy and Flip This strategy involves buying a house with the intention of selling it for a short-term profit.  Typically, investors who take this approach look for homes that need improvements and renovations.  Here are three questions to ask yourself before you take the leap with this strategy:
How much will the investment cost you? This includes all the costs of renovations as well as the “carry costs” of paying the property taxes, home insurance, and maintenance on the property while you own it. What is a reasonable sales price? A real estate agent or appraiser should be … (2 comments)

real estate: 3 Trends that Could Impact Real Estate Investors - 11/05/18 06:10 AM
 
1 - Less new construction of homes at lower price points Home builders across the country are reporting that the high-costs of lumber, and the increasing costs of getting building permits approved, have lowered their profit margins and reduced their incentive to build starter houses at lower price points. This means that first-time homebuyers have less inventory to choose from when it comes to buying their first home. Less supply means higher prices, and this could be a good thing for real estate investors who jump into the market now.

  2 - Investors are less likely to rebuild after … (2 comments)

real estate: How to Get the Primary Residence Capital Gains Tax Exclusion - 10/23/18 07:30 AM
 
In order to understand capital gain, we first need to understand tax basis. Your tax basis is the cost of buying, building or improving a property. Assume you pay $200,000 for a property. You incur $5,000 in closing costs. Then you spend $45,000 on home improvements. In that case, your tax basis would be $250,000. That’s what it cost you to buy and improve the property.
Assume you later sell the property for $500,000. You incur $50,000 in sales commissions, transfer taxes, and other sales expenses. You then subtract your $250,000 basis. Your capital gain would be $200,000.
Once you … (2 comments)

real estate: Investment Property Math: ARM vs Fixed Rate - 10/08/18 07:03 AM
Here are three things to consider when you're choosing between a fixed-rate mortgage and an adjustable-rate mortgage (ARM) on an investment property:

 
 
1 - Cash-Flow & Rate of Return Considerations
An ARM typically carries a lower interest rate vs. a fixed rate mortgage.  This means that you'll generally pay less interest and have a lower monthly payment vs. a 30-year fixed rate mortgage.  While not super significant in most cases, the savings could add up over time and enhance your overall rate of return throughout your holding period.

 
2 - Time Considerations
How long do you plan to keep the property and … (1 comments)

real estate: Why Do I Have to Pay for a Rate Lock Extension? - 10/01/18 05:46 AM
Why Do I Have to Pay for a Rate Lock Extension?  
Here's the scoop: mortgage rates are determined by mortgage bond prices.  Mortgage bonds trade in what's known as a "To Be Announced" (TBA) market.  When you commit to a rate lock, the lender is agreeing to deliver your mortgage to the bond investor within 30 days, 45 days, etc.  That's where rate lock timeframes come from.  So in essence, bond investors are trading empty buckets of mortgages that are scheduled to be filled within certain timeframes.  

When your mortgage loan takes longer than expected to close, the mortgage lender … (1 comments)