Five Considerations Before Buying A House

The commonly stated motto for real estate is "location, location, location." However, when buying your first home, (absent already being wealthy) affordability is more important. I am not suggesting that you sacrifice yours and your family's safety or expectations by moving into a dangerous neighborhood, however, if you cannot afford an added luxury (for example, living on a golf course) you should not try to squeeze it into your budget.

(1) Purpose - Know why you are buying a home. If you are buying a home to live in, your standards should be different than if you are buying an investment property. If purchasing to live, you should like the "feel" of the home. You should feel comfortable there and like the floor plan. If purchasing for an investment, the only thing you should be concerned with is whether it needs a lot of work or will be hard to rent out (depending on your investment strategy).

(2) Location - As I stated above, you do not want to move into a dangerous neighborhood because the homes are extremely affordable, however, you should also not move to a rich neighborhood just because the neighborhood is "rich." Assess your situation and see what location is best for your. For example, if you have children, you might want to buy a home in a location that is zoned for a great school. Pick your location based on your situation and not on economic perception.

(3) Price - One of the main reasons that people lose their home is because they finance more home then they can afford. Stick within your price range! Biting off more than you can chew (as far as price is concerned) may work if the money crunch lasts only a couple of months. However, when you take a loan that normally spans 30 years (360 months), be aware that constantly struggling to pay your mortgage will take a huge toll on you.

(4) Mortgage Rate - Absent having the cash to buy a home outright, you will need to finance a home purchase. Due to this fact, many banks offer this option to customers. However, just because you have an account at a bank does not mean that you must use that bank for your mortgage. Look around; find the best rate and the best deal. Do not be committed to your bank just because you have your checking account there. Be committed to the bank that gives you the best interest rate and terms!

(5) Market - Although this may be out of your control, market condition should play a part in your decision. In a really "hot" market, you will be paying more than the worth of home when purchasing. During a "cold" market, you can find great deals and many times pay below fair market value. However, if you are buying a home to live in, your decision to buy should be based on your circumstance. If you can wait for the perfect market condition, than do so, but do not sacrifice your living condition just because the market is not "right."

Real Estate Career Revival Tips

Yes, I have a real estate license. Truthfully, I do not use it that often. I do a small deal here and there, but nothing that I would call a career. Why then, you may ask, am I writing a post about how to revive a real estate career? I am writing this post because reviving a real estate career is similar to reviving any career, you have to think like an entrepreneur! Why am I discussing a real estate career? I am discussing a real estate career because the housing market is currently a hot topic in the news, therefore, I thought the readers would be able to relate more to this post.

First and foremost, you have to love the career that you enter into, or at the very least, you must enjoy it. If you enter a career for the sole purpose of making a lot of money, but you hate your job, you will hate your life. In my opinion, making money is fun and there are infinite amounts of ways to do it. Why then should you settle for a job you hate but makes good money? Why not pursue a job you love and figure out a way to make a lot of money from that job? The point, if you do not like working in real estate, reviving your career is the least of your worries. If you do not like the job, find a new one!

Second, you are going to have to like to talk on the phone. Change your perception about things like “cold calling.” Do not think of it as a burden or an intrusion on the person being called. Instead, convince yourself that you are calling this person for the purpose of helping them make money or buy the property they always wanted. As a real estate agent, you are in the business of selling dreams. It may sound cheesy, but when you help somebody buy their first home or their dream home, you just made a huge impact in that person’s life, and I guarantee that you will get referrals from him/her. Get on the phone and sell people their dreams.

Third, be persistent. You may notice that sales begin to slump in markets like our current market. When this happens, you have to think of new approaches to get clients. Now is the time to start pushing the idea of investment properties. Sellers are desperate and need to get out of their homes, however, nobody is buying. This means that home prices are rapidly falling. In this situation, if you are a seller’s agent, concentrate on changing your primary clientele and represent more buyers. Change your business model for the time being and you will change your income bracket. Flexibility in different markets is key to survival.

Last, set goals. If you find yourself in a rut, set a short-term goal. Example: “I will help two people buy an investment property this month.” Two properties is not going to break the bank, however, the pecuniary gain is not the point. The point of setting a short-term goal is to create a sense of accomplishment and motivation for yourself. This way you will want to endure in this business, you will know the feeling of receiving a commission check, and you will want to have that feeling again!

Is the Mortgage Crunch Really a Bad Thing?

In my previous post Multiple Streams of Income: Real Estate as a Business, I discussed the real estate business as a potentially lucrative business for new entrepreneurs. Well, I am here to tell you that the time to strike is now.

News broke yesterday that the tenth largest mortgage lender, American Home Mortgage, filed for Chapter 11 bankruptcy. This fueled speculation that the mortgage market was in heavy turmoil. This is due to the fact that American Home Mortgage was not a sub-prime lender and because some of the company’s investors included some of the largest financial firms in the world.

However, even if this is true, real estate investors can still benefit from this kind of market. The current situation is that people cannot obtain mortgages. These people are not necessarily financially inept, but these people do have a problem (whether is be substandard credit or lack of a down payment) that prevents them from obtaining a mortgage and thus, owning a house. These people have two choices: they can either leave their current location, move to place where the cost of living is less, and attempt to buy a house at this new location; or these people can rent a home, condo, apartment, etc., until they can afford to buy. Due to considerations such as employment, family, friends, etc., most people choose the latter option.

How does this help real estate investors? If, as a real estate investor, you practice the Buy, Improve, Hold, and Refinance model, this current market is great news for you. As more and more people are unable to obtain mortgages, more and more people will be looking to rent. If you are the owner of an investment property, you should have no problem filling any vacancies, and because of the large influx of renters, you should also have no problem getting a premium rental rate.

What if you do not have an investment property? The good news is that you are not out of luck; the bad news is you will have to have great credit and probably a small down payment, but more of this in a minute. Another effect of this market is that people are having trouble selling their homes. Less people qualifying for mortgages equals less buyers. If we all remember back to Economics 101, we will know that the economy revolves around the principle of supply and demand. Right now, there is a far greater supply of homes than there is a demand. This means that you, as a real estate investor, can grab a property for less that its fair market value (if you have the right credentials a.k.a. good credit and a down payment).

Although the market looks bleak for some, the market looks great for real estate investors. Strike while the iron is hot and find a good investment property today!