Did you know that the listing agent or the builder's sales agent represents the seller, not you? Rather you're buying a pre-existing or new construction home, there is no direct expense to you for having a buyer's agent represent you. A good buyer's agent can prove to be priceless because of the countless number of tasks they handle for you and because they can help you avoid irreversible pitfalls. Listed below are just some of the valuable functions a good buyer's agent will perform for you:
1. Analysis of your real estate needs and determine housing criteria
2. Research properties
3. Send you listings that match your needs
4. Provide information pertaining to your move or relocation and short-term stay options
5. Educate you about home buying processes
6. Provide information on market conditions, schools, communities, employment, and more
7. Discuss your financing needs
8. Recommend qualified mortgage brokers
9. Make appointments and show properties
10. Provide timely and professional disclosure and research
11. In car review: pros & cons of each property
12. Point out “Hot Buttons” while showing
13. Help with loan application questions
14. Follow up of loan application with your selected mortgage broker
15. Help cleaning up your credit if needed
16. Analyze purchasing timeline and needs once property is located
17. Free Comparative Market Analysis (CMA) of a property in order to make an educated offer
18. Call listing agent to get sellers disclosure
19. Draft the offer and prepare paperwork
20. Research tax records
21. Get information on utilities
22. Explain all paperwork before signing
23. Generate net sheet
24. Write offer, collect, deposit escrow and provide verification to listing agent
25. Submit contract and follow up
26. Negotiate contract until mutually agreeable
27. Review and explain final contract
28. Send the title company the executed contract
29. Schedule and attend the home inspection
30. Schedule and attend the termite inspection
31. Recommend insurance agents to you
32. Verify loan process has begun
33. Review home inspection findings with you
34. Re-negotiate repairs if needed
35. Order survey/appraisal
36. Assist to meet finance deadline
37. Monitor contingencies – financing, home inspection, etc.
38. Check on homeowners insurance
39. Verify that the title agency has all necessary documentations
40. Follow up with the lender on all aspects of closing process
41. Schedule closing: time and place
42. Review HUD (closing statement)
43. Perform a final walk-through
44. Determine the funds to be brought to closing
45. Coordinate between lenders and title company to determine amount needed
46. Release escrow to title company
47. Explain everything needed at closing
48. Attend your closing to check for errors and omissions
49. Give you the keys to your new home!
50. Follow up after closing – homestead info and insuring that everything is going fine in your new home
Sunday, May 29, 2011
Friday, May 27, 2011
The Six Ways Real Estate Investing Makes You Money
Six Ways to Make Money is Better Than One
Real estate investing is the most powerful wealth-building tool available to the average person.
The reason it’s so powerful is: there are six ways it makes you money.
Stocks, by contrast, only share one of these sources (two if you’re getting dividends).
Once you understand how all six of these income sources work, you will begin to see the tremendous wealth-building power of real estate bought and managed correctly.
Quick Disclaimer: These six income sources only apply to real estate bought and managed properly:
A) with equity
B) with cash flow
C) in “bread and butter” neighborhoods
D) managed with best practices
If your knee-jerk reaction is that real estate investing is too risky, you have not yet been taught how to minimize the risk. The way I was taught to invest in real estate is not the same way that many of the “gurus” teach. Most of those programs are far to risky for my taste.
Multiple Streams of Income
One neat thing about having so many different income streams is that real estate can be forgiving. Many people I know (including myself) screwed up on their first deal, but still made money. That’s because one income stream can make up for a lack of another.
Now, I don’t recommend screwing it up. You might as well do it right as long as you’re getting in the business. That way you won’t ruin your taste for the most powerful wealth-building tool available to the average person.
Let’s run down the list of the six ways:
1. Cash Flow
Cashflow is the reason we seek passive income-producing assets. Without cash flow, you don’t have income… meaning: you can’t quit your job without cash flow.
All of the assets on my comparison chart have cash flow (I’m assuming your stocks have dividends). If it doesn’t cash flow, I don’t consider it.
We don’t buy a piece of real estate unless the rental income is greater than the monthly expenses by a decent margin. For example: when your tenant pays you $1,000 a month and your monthly expenses including principal, interest, taxes, insurance, and maintenance/occupancy reserve are $800 a month. The $200 difference is now income in your pocket.
2. Equity Capture
Equity capture is when you buy an asset for less than it’s worth. In real estate, it’s when you buy a house in a $100k neighborhood for $50k, fix it up for $20k and you’re “all in” for $70k.
You just captured $30k in equity which goes directly towards your net worth. Few other investment vehicles can create wealth so quickly
In fact, of the six assets on my comparison chart, real estate investing is the only one that allows you to capture equity. Stocks are sold to the average person “at market” which, by definition, means there is no captured equity.
Without equity, you are exposing yourself to the risk of a falling market. We always buy assets with equity so that we are never hurt by a down market.
Online businesses, network marketing, and vending can be good sources of cash flow; but they don’t offer an opportunity to buy an asset for less than it’s worth.
3. Forced Appreciation
The ability to change the value of an asset by your own efforts is a very attractive reason for choosing an asset for self-determinists like me. Most of the businesses that I have ever started relied heavily on my creativity and work ethic to gain in value.
In real estate, you have the opportunity to physically change the value of an asset. In single-family investing, we take a distressed asset and raise the value back up to where it supposed to be with a proper rehab.
Multi-family investing lets us take this concept to a new level. While the value of a single-family house is constrained by the comparable sales in the neighborhood, the value of an apartment complex is based on the profits. That means you are only limited by your ability to increase the income and decrease the expenses.
The value of a vending or online business is also based on the profit margin that you can personally control.
Unfortunately, stocks do not allow you to control the value (that’s in the hands of the execs), and network marketing businesses typically can not be sold (so they don’t have a market value).
4. Market Appreciation
Real estate doubles in value every twenty years. It might fluctuate in the short term, but it is forced to rise over the long term with inflation of building materials, labor, and scarcity of land.
The main reason most people buy stocks today is for market appreciation while it’s only the 4th most important reason we buy real estate. Do you see the difference?
While stock investors live and die by market appreciation, real estate investors see it as a nice bonus to pile on top of the other five ways we make money.
5. Principal Pay Down
Here’s a neat way we make money in real estate that most people don’t even think of. We naturally accumulate equity in our houses as the notes get paid down.
Even if you weren’t making money any other way, your tenants would be paying down your mortgage a little bit each month. It starts out small, like fifty or a hundred dollars a month, but it grows over time and adds to your equity in the house.
The other asset classes typically don’t have mortgages, so this wouldn’t apply.
6. Tax Advantage
Real estate investors pay the lowest takes of any for-profit group in the United States. The IRS allows us to reduce our earned income tax on cash flow by taking a depreciation deduction against the house. We can avoid capital gains tax when we sell by using a 1031 tax exchange.
How long can you avoid taxes with a 1031? If you pass the property to your children, they will take over at the new cost basis, which wipes out all of the capital gains over the life of that asset
No of the other assets can claim such a huge tax advantage.
Does it Make Sense?Are you starting to understand why I talk up real estate investing so much? It’s the only asset class that I know of that can create rapid wealth. All the others make money in one or two ways, but not six.
Real estate investing is the most powerful wealth-building tool available to the average person.
The reason it’s so powerful is: there are six ways it makes you money.
Stocks, by contrast, only share one of these sources (two if you’re getting dividends).
Once you understand how all six of these income sources work, you will begin to see the tremendous wealth-building power of real estate bought and managed correctly.
Quick Disclaimer: These six income sources only apply to real estate bought and managed properly:
A) with equity
B) with cash flow
C) in “bread and butter” neighborhoods
D) managed with best practices
If your knee-jerk reaction is that real estate investing is too risky, you have not yet been taught how to minimize the risk. The way I was taught to invest in real estate is not the same way that many of the “gurus” teach. Most of those programs are far to risky for my taste.
Multiple Streams of Income
One neat thing about having so many different income streams is that real estate can be forgiving. Many people I know (including myself) screwed up on their first deal, but still made money. That’s because one income stream can make up for a lack of another.
Now, I don’t recommend screwing it up. You might as well do it right as long as you’re getting in the business. That way you won’t ruin your taste for the most powerful wealth-building tool available to the average person.
Let’s run down the list of the six ways:
1. Cash Flow
Cashflow is the reason we seek passive income-producing assets. Without cash flow, you don’t have income… meaning: you can’t quit your job without cash flow.
All of the assets on my comparison chart have cash flow (I’m assuming your stocks have dividends). If it doesn’t cash flow, I don’t consider it.
We don’t buy a piece of real estate unless the rental income is greater than the monthly expenses by a decent margin. For example: when your tenant pays you $1,000 a month and your monthly expenses including principal, interest, taxes, insurance, and maintenance/occupancy reserve are $800 a month. The $200 difference is now income in your pocket.
2. Equity Capture
Equity capture is when you buy an asset for less than it’s worth. In real estate, it’s when you buy a house in a $100k neighborhood for $50k, fix it up for $20k and you’re “all in” for $70k.
You just captured $30k in equity which goes directly towards your net worth. Few other investment vehicles can create wealth so quickly
In fact, of the six assets on my comparison chart, real estate investing is the only one that allows you to capture equity. Stocks are sold to the average person “at market” which, by definition, means there is no captured equity.
Without equity, you are exposing yourself to the risk of a falling market. We always buy assets with equity so that we are never hurt by a down market.
Online businesses, network marketing, and vending can be good sources of cash flow; but they don’t offer an opportunity to buy an asset for less than it’s worth.
3. Forced Appreciation
The ability to change the value of an asset by your own efforts is a very attractive reason for choosing an asset for self-determinists like me. Most of the businesses that I have ever started relied heavily on my creativity and work ethic to gain in value.
In real estate, you have the opportunity to physically change the value of an asset. In single-family investing, we take a distressed asset and raise the value back up to where it supposed to be with a proper rehab.
Multi-family investing lets us take this concept to a new level. While the value of a single-family house is constrained by the comparable sales in the neighborhood, the value of an apartment complex is based on the profits. That means you are only limited by your ability to increase the income and decrease the expenses.
The value of a vending or online business is also based on the profit margin that you can personally control.
Unfortunately, stocks do not allow you to control the value (that’s in the hands of the execs), and network marketing businesses typically can not be sold (so they don’t have a market value).
4. Market Appreciation
Real estate doubles in value every twenty years. It might fluctuate in the short term, but it is forced to rise over the long term with inflation of building materials, labor, and scarcity of land.
The main reason most people buy stocks today is for market appreciation while it’s only the 4th most important reason we buy real estate. Do you see the difference?
While stock investors live and die by market appreciation, real estate investors see it as a nice bonus to pile on top of the other five ways we make money.
5. Principal Pay Down
Here’s a neat way we make money in real estate that most people don’t even think of. We naturally accumulate equity in our houses as the notes get paid down.
Even if you weren’t making money any other way, your tenants would be paying down your mortgage a little bit each month. It starts out small, like fifty or a hundred dollars a month, but it grows over time and adds to your equity in the house.
The other asset classes typically don’t have mortgages, so this wouldn’t apply.
6. Tax Advantage
Real estate investors pay the lowest takes of any for-profit group in the United States. The IRS allows us to reduce our earned income tax on cash flow by taking a depreciation deduction against the house. We can avoid capital gains tax when we sell by using a 1031 tax exchange.
How long can you avoid taxes with a 1031? If you pass the property to your children, they will take over at the new cost basis, which wipes out all of the capital gains over the life of that asset
No of the other assets can claim such a huge tax advantage.
Does it Make Sense?Are you starting to understand why I talk up real estate investing so much? It’s the only asset class that I know of that can create rapid wealth. All the others make money in one or two ways, but not six.
Subscribe to:
Posts (Atom)
