Looking for the right deal
Continuation of question from last week-making money in real estate today?
To ensure that the price is right, look up sales of comparable properties. My favorite resources for valuing property..
The recorder’s office at the county court house has records of a home’s past and current owners and sales prices.
The tax assessor’s office has information on a property’s assed value, it’s square footage, improvements, etc.
You may also find this information on line www.statelocalgov.net has links to municipal sites for all states.
DateQuick.com provides reports on comparable sales, local crime rates, neighborhood demographics and real estate market trends.
Make sure that you will profit from the investment. Any rental property should generate monthly income of at least 1 percent of the purchase (that also depends on the financing) price
Example: I was interested in a house in an area where the rents were about (this has been a while back) $900 per month. Therefore, I knew that I could pay up to $90,000 for the house ($900 is 1 percent of $90,000).
Even after I subtracted all of my projected expenses, including mortgage payments, maintenance costs, property taxes and insurance, I was left with a positive cash flow of $100 a month.
Consider deeply discounted properties as you become more experienced. They are likely to need work and may entail complex legal issues.
Real estate owned (REO) properties. Banks and institutional lenders are anxious to sell these foreclosed properties. In this market some are harder than others to corporate. Whether it has anything to do with our government and it’s ( tarp, bailout, etc.) new policy some institutions are not budging. It doesn’t hurt to ask local banks to see their list of REO properties.
Government-auctioned properties. Housing and Urban Development www.bud.gov or Department of treasury, www.treas.gov/auctions for information on auctions of federally owned properties. If you want to save a lot of work and headaches contact a good local real estate agent.
Finamcing Options
Try to get financing from the seller. You’ll be able to make a lower down payment than if you finance through a bank (if not, ask your local real estate agent – they usually have a good lender they use that will give a better service). In today’s rental market, I find that as many as 15 percent of sellers are willing and able to finance purchases.
The seller acts just like a bank, allowing you to use the property as collateral. You issue the seller a note with an agreed-upon interest rate (similar to the prevailing bank rate), then make mortgage payments directly to her/him.
If you default on your payments, the seller can foreclose on the property. As with any real estate deal, you should use an attorney or title company to assist with the closing.
Many sellers want extra assurances that you will make your payments. Next week will explain what you can offer. I hope the readers (and other readers) that e-mailed/called me about this topic are receiving what they hoped for.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-540-6659 Office 239-542-7760 Fax