What To Look For In Income Property?

Determine If Being a Landlord Is Right For You

Once you determine that being a landlord is right for you by understanding the market, learning the climate of the rental community, learning the neighborhood or neighborhoods that the potential income property is in, and understanding your finances to include vacancy rate.  Then, the investor is ready to find an income property.

Know Your Finances

First, we will discuss understanding the investor’s finances.  The goal of the income property is to produce income.   In other words, the property must cash flow.  To determine if a property cash flows, the investor must know the property taxes, the mortgage amount, maintenance cost, insurance cost, the fair market rent, and the repairs needed to make the property livable.

The property taxes,  mortgage amount, insurance and fair market rent can make or break the income potential of a property.  How you ask? The latter items with the exception of fair market rent must be paid by the owner whether the rent is collect from the tenant or not that is why the vacancy rate must be part of the investor’s calculations in determining the income potential of a piece of property.

Let’s look at the math.

As an investor looking at the  math is just as important and in some cases more important than finding the property.

There are options that the investor must consider if he or she is financing the property.  One option that an investor may choose is a hard money lender.

In order to determine if this the right choice for the investor, I found a math calculator that will help with minimizing the risk of this type of loan.  Remember, the interest rate on this type of loan can be very high.  Let’s examine the hard money loan by click on the link. 

There is an advantage to this type of loan.  The advantage of this type of loan is that the investor can get immediate cash or access to the equity of the property.  This loan, however,  is often used if the investor needs to rehab the property after purchasing it. 

At the time of purchase of the property that needs rehabing the investor will need to determine what the after rehab value is for the property.  The reason this is important is that the hard money loan will yield 65% to 70% loan to value for the investor.  For example, let’s say the investor found a property for $35,000 and the after repair value is $90,000.  The loan amount will be $58,500, so the investor will have $23,500 for the rehab.  The available amount for the rehab needs to be determine before purchase, so that the investor can determine if the project will possibly yield the income or value that the investor is expecting after the rehab is complete.

Once the potential amount of funds for the rehab is determined the investor needs to get estimates on the rehab to determine if the amount available is enough to complete the project.

It is important to note that all of this research needs to be completed before purchase.  In an effort, to prevent the prospective property not being sold before the investor completes his or her research, the investor would need to have his or her contractors available at the time the potential property is considered for purchase. 

The contractors would give the investor a rough idea of the amount needed for the rehab.  Of course, most properties that the investor would consider will not have utilities on, so the investor needs to add an additional twenty percent to the final estimated rehab amount to cover possible unknowns.

Once the investor deems that the property is a good investment then the investor purchases the property.  However, to reduce the investor’s financial risk the investor must also determine how long the rehab will take and when the investor will realize an income if the property is an income property or buyer if it is consider a flip property.

The math consideration does not stop at determining the type of financing, the investor also needs to consider the holding cost.  The holding cost is interest, property taxes, insurance, and utilities. 

Another aspect of examining income property is making sure that that the investor is abreast of all the changes to the market, the neighborhood, and the laws. 

Changes in Laws that Affect Investors

Due to the shift of the real estate market it is more important than ever to keep abreast of changes to the financial world, the neighborhood, employment, etc.  There are several changes recently that have affected real estate investors, so it is important to be abreast of the industry.  Please read the articles below:

• Real Estate Investor, Beware
• Breaking News For Investors 
• Types of Real Estate Markets
• Investors Have Options
• Good New Investors
• Thinking of Becoming An Investor
• Great News Investors, You Can Finance 10 Properties Again

Real estate investing can be rewarding, but it is very important to exam the risk.

Investors Have Options

As a real estate investor, it is recommended that you keep abreast of market trends, latest news, and economical insight.  Therefore, I recommend learn those trends by following this blog and following National Real Estate Investor. 

At the  National Real Estate Investor’s site you can get a subscription and/or get several free newsletter. 

Some of the newsletters are about:

• Helping commercial real estate professionals
• One newsletter examine the key economic trends and market trends.
• Still yet another newsletter examines the latest news in commercial real estate.
• Another newsletter examines technology used in commercial real estate.
• Another newsletter examines topics, economic, markets, and trends in commercial real estate executives.
• There are newsletters on senior housing, development trends, green technology and lastly commercial brokerage trends.

I think, that it is equally important to examine commercial real estate, as well as, residential real estate.  The reason I am recommending this is that commercial real estate is not affect by the same trends as residential real estate is affect with.  In other words, commercial real estate is doing okay and residential real estate is not doing okay.

FREE Credit Teleseminar

Credit is important to your ability to purchase your dream home, so Taylor-Brown Real Estate thought this was important press release.

Morlino Morris, author of A Prescription For Financial Health said, “The action by American Express really got us thinking. People need the right kind of information and solutions. They need to learn how to protect themselves during this financial crisis. So, we decided to conduct free tele-seminars on ‘Managing Credit and Debt Through This Financial Crisis.’”

People from across the country via their telephone can join Lathea & Morlino Morris, co-founders of The Credit Alternative Group, formerly, “Smart Credit Moves” financial columnists for the “Herald News NJ,” co-creators of The Complete Credit Management Toolkit 3.0 and national speakers as they present in an easy to follow format the options you have to Keep Your Home and Effective Strategies For Managing Your Credit & Debt during these challenging economic times. Also, you will have the option to follow along with a PowerPoint web presentation — all for Free.

Register for this free one hour tele-seminar at www.TheCreditAlternative.com to be held on Thursday, February 26th from 2:00 pm – 3:00 pm and 6:30 pm – 7:30 pm.
Media Contact: Tiffany Coleman –  973-509-1903  ext 4# – Tiffany@TheCreditAlternative.com

 

 

 

 

 

Tips on Choosing a Mortgage Broker

According to statistical data, it is believed that the greed of mortgage brokers created the foreclosure crisis.  The reason mortgage brokers are being blamed for the mortgage crisis stems from the incentives offered to them to be advocates for “toxic loans and yield spread premium.”  In other words, greed is the callous for the epidemic that is plaguing and adversely affecting every American.

A way to combat this epidemic of toxic loans, is to hire an upfront mortgage broker.  An upfront broker has an agreement that entitles the broker to only one to two percent of the loan amount as their broker’s fee.  The broker receives this amount regardless of the terms of your mortgage.

Even HUD recognize that yield spread premium may have been the reason for this epidemic, so HUD is making changes to the settlement statement or HUD-1 over the next year that would make it easier for the consumer to see the hidden cost and yield spread premium.

According to the National Association of Mortgage Brokers, the only fees that you should be paying upfront are for an appraisal and credit report.

It is equally important to understand the mortgage that you are getting.  Ask the broker the pros and cons of the mortgage being offered.  Ask about the rate adjustment if you choice an adjustable rate mortgage.  Ask what your new payment will be if the rate adjust?  Ask how high the rate will adjust and what will that payment be?  Check to make sure that the loan disclosure or good faith estimate matches what the mortgage broker told you.

Amerisave is a company that offers upfront fees and even gives a $1000 guarantee to close as promise.  Get a 30 year fixed mortgage at 4.25%.  Click on Amerisave link to check it out for yourself.

You Will Love Atomic Blogging If You Want to Start a New Blog

Atomic Blogging opened my eyes to the realization that my blog can grow and promote my business at the same time.   I learned how to increase traffic to my site through utilizing article directories and social networking.  Not only did the book explain what article directories and social networking can do for my businesss, but it gave me tools that I could use to optimize my blog to increase its ranking and traffic, as well.  However, the most valuable thing from the book was the examples utilized to increase monetization along with the examples to increase my blogs traffic results.

The book also introduce me to reviewing as a means to increase traffic and making money online.  I did my first review, as a result of this information and received an immediate increase in traffic.  I look forward to doing more reviews in the future.

The book has been instrumental in keeping me focus and committed to my blog.  It also has given me tools that I can use on other sites that I have.

Atomic Blogging is a good read and I recommend the book for anyone looking to increase traffic to their blog.  The author of this book has a great website that gives updates to his book and additional tools at www.gathersuccess.com

Good Deal 16 Short Sales Properties All Under $15K Each

Today’s special is 16 short sale properties all under $15K each with 13 that are occupied with paying tenants.  There is a 17th property, but it is for $25K.  It, too, is occupied with a tentant paying 858 a month.  

Email Serena at snorbrown@yahoo.com for more details or call 219 803 4489.

It Is A Good Time to Refinance

Good News in This Economy

According to CNNMoney.com’s article http://moneyfeatures.blogs.money.cnn.com/2009/02/13/how-to-score-a-low-rate-loan/ it is a great time to refinance.  With the falling interest rate, you can save thousands on your mortgage. 

Caution on Your Refinance

The article goes on to caution the consumer that because everyone is trying to refinance at the lower rate it may take a lot longer to secure the lower rate because it is taking longer to close deals.  However, Amerisave offers $1000 to the consumer if the loan does not close when promise.  In addition, Amerisave offer the lowest rate and fees guarantee or Amerisave will pay you $500.

AmeriSave.com

Get Ready to Move Out of Lake County

The recent action or inaction of Lake County’s officials caused the Governor to take controversial stand against Lake County that may cause the tax payers of Lake County to pay higher property taxes. 

Governor Mitch Daniels is quoted as saying, “the government reforms will move forward, even if it means leaving Lake County behind to face higher property taxes.”

Once again, Lake County is faced with “pulling themselves up by the boot straps” and changing their own destiny.

The officials of Lake County believe that the citizens of the county will not support Kernan-Shepard reforms.  The reforms are discuss in a recent blog at Are the Reforms Governor Daniels Proposed Going to Affect You?

I do not believe that the Lake County officials are “in touch with” the citizens of Lake County.  The citizens of Lake County do not want to pay high taxes, so it may be time to move out of Lake County.  Call Taylor-Brown Real Estate at 219 803 4489 for help with finding your new home in Porter or LaPorte Counties.

Mr. President, I Have a Solution

The crisis that this country is enduring has created many scars.  Many that can be patched by offering a solution to the financial burden that is burning a hole in the average American’s dream of homeownership. 

There are many offering there verison of solution.  Well, I too, feel that it is my turn to offer my solution.

My solution is for homeowners.  I think, a viable solution would be to allow the homeowner to use FHA/VA  insurance to pay the homeowner’s mortgage current.  The FHA/VA insurance provides protection to the lenders for losses if the homeowner defaults on the loan.  The homeowner who pays for this insurance to protect the lender should be able to use this insurance to bring his or her mortgage current if they can prove to the lender that he or she is capable of paying the mortgage once the mortgage is brought current.  Utilizing this insurance will remove the burden off of the tax payer for FHA/VA insured loans and put it on the insurer.

For all other mortgages, the mortgage can be renegoitated at the current value and at a better fixed rate. 

The  mortgage crisis is not going away, so no action will equal disaster.  Let’s think outside the box to keep the American Dream alive.

Do You Have A Question About Real Estate, Mortgage, Insurance?

I created this blog to answer your questions about <a href=”www.taylorbrownrealestatetalks.com”> real estate</a>, <a href=”www.taylorbrownrealestatetalks.com”>mortgage</a>, and <a href=”www.taylorbrownrealestatetalks.com”>insurance</a>. So, I need to hear from you.  What topics are you concerned about?  Is it short sales, foreclosure, how to prevent foreclosure, selling, buying, etc.    Click on the title and put your question in the comment sections to see your topic in the news of Taylor-Brown Real Estate Talks with 24 to 48 hours after you ask.