Author Archives: Hume Rollington

Have you spent years renting homes or apartments and have grown tired of paying all that rent money to someone else? If so, then it might be your time to consider purchasing a home, and keeping that cash for yourself. However, you do need to ensure that you are prepared on more than one level before jumping into the equity market.

There are many financial considerations to make note of before you start hunting for a home. But, if you’re able to organize your finances into a practical plan and secure a home loan then this can really be the most rewarding purchase you’ve ever made or will make. Finance plays a crucial role in the decision to buy your first home. This is to be expected as if you’re buying your first home you’ll not likely have a few hundred thousand dollars sitting around and will need to find a home loan of some type.

You should really make sure that you are prepared for the application for a mortgage as it will involve a thorough investigation of your past credit history. If there are any issues that you know of with your credit then you should take care of them before you apply for the mortgage. Sometimes this is a simple case of oversight, some things have been taken care of and not recorded as such, and sometimes there can be some debts that you will need to see to. Once these are taken care of, be sure to get a letter of release that you can show to the mortgage broker or company if necessary. If there are no issues with your credit then that will only make the process easier.

There’s no more powerful resource in the home buying process than having all your financing in line before you begin purchasing. It is a good appeal for sellers since they want their properties to sell quickly and without incident or trouble in the money phase, a purchaser with ready-to-go financing’s offers may hold greater favor with almost any seller.

If you are mindful of this stuff then when the time comes to make your offer, the whole affair will go much more smoothly and you’ll be able to spend your time to what is essential, like the way to enhance your new home!

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It was a simple real estate formula. The advertisements ran in our small-town newspaper for years before I realized precisely what was going on. They’re always the same: A house for sale with five percent down and payments of one percent of the purchase price. Maybe a three bedroom home is selling for $90,000, for example, with $4,500 down and $900 each month payments.

When a friend started doing the same thing he explained the process to me. It was a way to get a great return on capital, and it was the opposite of purchasing with no money down. There is no down payment at all when you purchase, because you purchase for cash.

The Simple Real Estate Formula

You most likely know that once you buy for cash, you can normally get a much better price. With no financing contingencies in the offer, and the assurance of a quicker closing, sellers are prepared to sell for less. You may offer $95,000, for instance, on a house that could be worth $108,000. If you are not able to have it for less than, say, $99,000, you walk away – you can always find other opportunities.

Once you buy the house, you put few thousand into high-return repairs and improvements. These might include paint, carpet, and maybe asphalt for a dirt driveway. For our example, we’ll say you spend $5,000. Let’s suppose the house is worth $116,000 now. You’re ready for the next important step in this real estate formula.

Next is putting it on the market and targeting buyers who cannot get financing easily. You give the financing. Since you are making it easy for the buyer, you may get greater than the $116,000 worth for the home – and do it without paying a realtor’s commission. Let’s say you sell it for 123,000. The purchaser needs a down payment of just 5%, or $6,150, and makes monthly payments of $1230 per month. You charge higher interest than the going rates at the banks, of course.

This is a win-win situation. Your buyer has the ability to buy a home instead of renting, and you receive a capital gain of perhaps $16,000 after expenses, plus good interest. Your total rate of return will often be over twenty percent

In our town, the first ones to do this consistently were a father and son team of lawyers. They saved money by doing their own foreclosures when needed. Once they foreclosed, they increased the cost and marketed the house once again.

They produced millions. Are you aware that if you can acquire an average return of eighteen percent on your money, you’ll turn $75,000 into more than one million dollars in about 15 years? That’s the capability of a good real estate formula.

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When we speak of the real estate economy, we use national statistics but speak locally. On the other hand, the stock market is based on the national or even the world economy. The real estate markets are based on local or even micro-local economy. What is happening in LA may not directly affect what is happening in Toledo.

What affects all real estate markets together are the interest rates. There is no single barometer to measure the entire housing industry in US.

So, while statistics calculations and economic aspects are relevant, equally important is using one’s common sense. We’ve got to keep our eyes wide open and have a look around and see what’s happening. Talking to real estate agents, investors and lenders in a specific area can be a huge help to access a market. There are particular concerns you need to take into account while dealing in real estate.

One main concern dealing with corporate real estate managers is how to efficiently handle the real estate assets in the current market environment.

Secondly, real estate agents provide info on utilities, zoning, schools etc. But two usual problems a buyer confronts while buying are: 1) Will the property provide the right environment we want for a home? And 2) Will the property have a good resale value when we are ready to sell?

Another important issue that any buyer/investor faces is the legal issue. Real estate laws vary from state to state. One must consult an attorney licensed to practice law in the state in which the property is located.

Sometimes, the house a purchaser is seeking is available however, not properly advertised. It may take you some time and effort to look for and locate the right property.

The most important issue is of finance. We must know our financial reserves plus our borrowing capacity. If we know about our current savings, income and debt, then we can take help from lenders; banks and mortgage companies, which offer some choices according to your financial capability.

In America, some real estate association and commissions have sponsored regulation that require all real estate brokers to provide a minimum degree of services which forces sellers to buy services they do not want or need.

There is the issue of rebates on transaction fees. Some states in America allow rebates of commissions or fees on real estate transactions but some states have legislated regulations which prohibit rebates.

Next is the problem of consumer participation. The consumer federation of America released a study that real estate boards and commissions are dominated by real estate experts and they recommended greater participation by consumers; that is opposed by experts – this works against the interest of ordinary buyers or sellers.

Last but not the least, lots of hoopla continues to be floating around in the news media about the ‘bubble’ theory of real estate and that the real estate market is going to burst – this might have a mental impact on the potential purchaser or seller.

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