Pros and Cons of Using Your Own Money When Buying Foreclosures

Financing plays a vital role in real estate investing — and this includes buying foreclosed homes. While it’s practically a mantra to “use other people’s money,” keep in mind different investments will usually require a different strategy. A financing option that worked wonders in one real estate deal can easily fall flat in another. Following is a quick look at some of the pros and cons of using your own money to buy a foreclosure property.

Pros of Using Your Own Money

One of the best reasons to use your own money to buy a foreclosed home is rate and terms — there aren’t any. Since you are using your own money, you don’t have to pay any points, origination fees, and a host of other garbage fees (often adding up to three to five percent). When buying a foreclosure it’s important to closely watch the transaction costs. After all, what’s the point of buying a foreclosure at a great price only to have your profits eaten away by excessive loan fees?

Another good reason to use your own money to purchase a foreclosed property is your ability to act quickly and without needing the nod of your lender — or real estate partner. If you have your own money, you have complete control and have the ability to make deals that other investors who rely on conventional financing can’t do.

If you have less than stellar credit, using your own money is probably the best option. With today’s tight lending requirements, it may be difficult to get a conventional loan. And unless you’re already rich, getting a hard money loan can really get expensive. Can you say 16, 18, 20 percent?

Cons of Using Your Own Money

Probably the number one reason you shouldn’t use your own money to invest in a foreclosure is that it may limit your ability to act on another investment opportunity. It’s what savvy investors call leverage. In a real estate market that is appreciating, the less money you put into the deal to acquire the property, the more profitable it is. For example, let’s say you have $100k in the bank for investing, and you buy a foreclosure valued at $130k for that $100k. You’ve used up your investment money. What if the following week you could have bought a foreclosure valued at $150k for $90k. You’re out of luck.

Another reason using your own money may be a bad idea is if it would leave you short on funds. For example, you suddenly need a new furnace in the middle of winter but don’t have the $5k to do it. Or your renter leaves the state and now you have a vacant home on your hands. Or the city passes a new ordinance that requires you to pay a huge tax assessment for new street and sewer. You never know?

In conclusion, there is no one-size-fits-all solution. Obviously, an investor who wants to quickly rehab a foreclosure and flip it has different financing needs than an investor who want to buy it and rent it out long term. And, of course, there’s tax consequences – so be sure to consult with your tax advisor. It’s essential to do your research, analyze your options and choose the financing

Tips in Selecting Your Realtor

The thought of selling your home may be easy as you only have to put it up for sale; however, there are a lot of things that you have to consider though if you want to sell your home.  For one, you have to make sure that all bills are paid, especially the taxes.  Two, you also have to make sure that the house is clean and attractive so as to catch the attention of potential buyers.  Three, you also have to give a good price that will not only be attractive to your potential buyers but one that will also give you some profit.  These are just some of the things that you have to take into consideration when selling your house.  For this reason, many homeowners resort to availing of the services of a realtor to help them sell the property.  Now, if hiring a realtor is one of your options, then here are some tips that can help you select a good realtor.

One of the biggest mistakes that many homeowners do when it comes to hiring a realtor is choosing the first realtor that they talk with.  This is a very big mistake.  In fact, it is recommended that you talk with at least three real estate companies or agents before making a choice.  This way, you get to check out their qualifications and background in the real estate industry, and “shopping” for realtors will also give you a chance to interview the different companies so as to make a better and more informed decision.  Remember, you would want to make the sale run smoothly and get a good profit in return, so checking out different realtors before choosing one is a must.  In conjunction with this, you should also know that it is your right, as the seller of the property, to terminate your contract with the realtor and choose another one, should the need arise.  For this reason, one big advice in choosing your realtor is to go for the one that makes you feel comfortable.

Another tip in selecting your realtor is to know if the realtor is licensed and has the proper credentials to conduct real estate transactions, depending upon the State where he or she is working.  If he is working via a real estate company or agency, it would be to your advantage to check out the background of the company and know its credentials and licenses, more so if the realtor is working alone.

Your realtor is going to represent you to your potential buyers, so be sure to choose a respectable, reliable, and legitimate realtor.

Sell Your Home Fast With These Great Tips

I gathered these tips to help those preparing their homes for the market. I hope you find them helpful for you and your circumstances.

1. Disconnect From Your Emotions – Whenever you converse with any real estate agents, it’s quite often you find that when they’re talking to you about real estate, they refer to your purchase with the word ‘HOME’. But when you’re selling, they call it a ‘HOUSE’. This is not an accident. Buying real estate can often be an emotional decision, but selling real estate requires removing your emotions from the equation.

Your ‘house’ is a marketable commodity. It’s a property. It’s real estate. The goal is to enable others to see the value and their potential there, not your own. Not putting emotions aside can lead to a longer period of time for selling.

Getting your home ready means de-personalizing it. Remove pictures and small personal items from your table-tops. Buyers need to be able to envision their own personal items in your home, and with yours there it can be a distraction of this process.

2. Create A Mood - Can you create a specific mood? If you’re near the coast, what about breezy fabrics, or blue-green colors, reminding people of the beach? Are you in the mountains? How about going rustic? Brainstorm some ideas for creating the right mood for people to see.

Remove as much natural light blockage as possible. When you have a showing, bake some cookies or bread to give the house that ‘homey’ smell. Play some classical music softly while showing your home. These things have a powerful effect on people, and help create a mood.

3. Make Them Want A Second Look – Here is some vital selling advice: Don’t think about putting that house up for sale until you’ve totally gone over the whole condition of it. Many times you only get one shot with a potential buyer, and you don’t want to blow it over something neglectful. To get a faster sale and better price, go over your home thoroughly before listing it.

4. Outdoor Tasks – Paint your front door, and garage door. These are things that get first seen by viewers. Ensure all the lights work properly. Have the lawn well landscaped and clean. De-clutter your yard. Add some flowers and trim the shrubs.

5. Indoor Tasks – De-clutter inside as well. Clean the sink, put dishes away, and clean out that refrigerator. Do away with any odors or ash trays. Put clean air fresheners in there. Any odors will have the first negative impact for your viewers. Put your appliances away, organize all your cabinets, and have clean shiny counter-tops.