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Creative Financing - Ten Ways
by Dallas Appraiser L.L.C. on 07/25/14
Title:
Creative Financing - Ten Ways
Word Count:
528
Summary:
How many ways are there to finance real estate? Who knows, but here are ten creative financing techniques to get you started.
keywords: #DFW, #Tarrant, #Johnson, #Dallas, #home_appraiser, #home_appraisal, #Property_appraiser, #home_value, #real_estate_appraisal, #Appraisal, #Appraiser, #Home_ownership, #equity, #REO, #foreclosure, #property, #Home, #House, #Real_Estate
Article Body:
Do all the creative financing techniques you hear about really work? Yes, actually. They probably have all worked somewhere for someone at least once. The point isn't if they will all work for you. The point is to know what is possible, so you can find your own creative ways to invest in real estate. Here are ten methods to get you thinking.
1. Hard money lenders. You can ask around or find these online. They specialize in short-term loans at high interest. You typically use this type of financing for a "fix and flip." You can often get the money fast, and if you make $30,000 on a project, who cares if you paid $10,000 interest in six months.
2. No-doc and low-doc loans. No (or low) documentation of your income or credit required. Again, you can find banks that do these online now. The catch is that you will only be able to borrow up to 80% of the purchase price or property value. If you have 10% in cash, you might be able to borrow the other 10% from a friend or the seller.
3. Seller-carried second mortgages. Sometimes a bank will loan you 90%, and allow the seller to take back a second mortgage from you for 5%, leaving you needing only 5% for a downpayment.
4. Land contract. Called "contract for sale" or other names as well, this just means the seller lets you make payments, and delivers the title upon payment in full. I sold a rental this way for $1,000 down, because I wanted the 9% interest, and the higher price I got this way.
5. Credit cards. If a seller will take $10,000 down on a fixer-upper that you expect to make $20,000 on, why not use credit cards? This is a true 0-down deal for you, and if you turn the project in six months, you will have paid $900 in interest on an 18% credit card. Don't let $900 get in the way of making $20,000.
6. Retirement accounts. The laws get pretty complex in this area, but you can check with a tax attorney to see how you might borrow from your own retirement account to finance real estate investments.
7. Friends and family. Keep it all business, if you use this source, but loaning you money at 7% isn't a gift if their money is getting 2% in the bank.
8. Note buyers. The seller needs cash. He raises the price, and sells to you for $100,000 with no money down, taking back two mortgages from you for $90,000 and $10,000. He arranged (or you did) for a note buyer to pay him $80,000 cash for the first mortgage at closing, getting him the cash he wanted. You pay two payments now, one to each note holder.
9. Get a loan on other property. Interestingly, if you take out a home equity loan for a vacation, and then forget to use it for that, you can use it for the downpayment on an investment property, without violating the rules of the bank that gives you the primary mortgage. In other words, you got in with no cash of your own.
10. Partnerships. For bigger projects, you could arrange for five investors to each put money into a partnership, with your share being the management responsibility instead of cash.
Investment Property - Leveraging Rental Property Equity
by Dallas Appraiser L.L.C. on 07/24/14
Title:
Investment Property - Leveraging Rental Property Equity
Word Count:
632
Summary:
Owning investment property is a tremendous wealth building strategy. Thousands upon thousands of individuals have amassed great wealth by investing in rental properties.
keywords: #DFW, #Tarrant, #Johnson, #Dallas, #home_appraiser, #home_appraisal, #Property_appraiser, #home_value, #real_estate_appraisal, #Appraisal, #Appraiser, #Home_ownership, #equity, #REO, #foreclosure, #property, #Home, #House, #Real_Estate
Article Body:
Owning investment property is a tremendous wealth building strategy. Thousands upon thousands of individuals have amassed great wealth by investing in rental properties.
Unfortunately, few investment property owners learn how to leverage equity in a way that maximizes tax deductions while creating and locking in equity gains. Instead, they leave themselves open to price fluctuations in the residential property market. These fluctuations can wipe out or severely reduce equity positions in property.
Housing Boom To End?
There is little doubt we are at the beginning of a huge boom market in residential properties. For the last two years, properties have appreciated at unheard of rates in some North Texas Real Estate markets. The question, of course, is what happens when the market cools off? Will we simply see a price plateau or an actual drop in prices? While nobody is sure, the clear consensus is property owners should move to preserve equity while they can.
Protecting Equity Gains
Protecting equity gains in your investment property requires careful planning. This leveraging strategy is fairly simple, but can sound complex. Please keep in mind this is just an introduction to the investment property tax strategy. You will need to contact us to learn more.
The investment property tax strategy protects your equity gains by separating and leveraging them. The leveraging process is best explained with an example.
Scenario 1 - Without Tax Strategy
Assume you purchased a rental property in 1999 for $250,000 with nothing down. As of July 2005, the combination of loan payments and appreciation has resulted in a gain of $250,000. You have amassed wealth, but all of it is at risk. If prices drop twenty percent over the next year, you will lose $100,000 of your equity in the rental property.
Scenario 2 - With Tax Strategy
We are going to use the same exact scenario. It is July 2005, you have $250,000 in rental property equity, but all of it is risk. You decide to implement the investment property tax strategy and the following occurs.
Our goal is to protect the $250,000 in gain on the rental property while also maximizing tax reductions. The first step is to refinance the property with, typically, an interest only loan. A percentage of the equity gain is taken out of the property and placed into an equity index insurance product. The equity percentage is arrived at by determining the payment amount you can afford on the loan. Typically, it is tailored to match your current loan payment amount.
Going back to our scenario, what happens if property prices pull back 20% over the next year? You do not suffer the loss of $100,000 because the gain is sitting in your equity index insurance product. Essentially, it is a wash and you have protected the capital gains while capturing a stock market-based rate of return.
Ah, but it gets better.
Equity Index Insurance
The investment grade insurance product isn not just any policy. Instead, the policy we use is tied to a stock market index. What if the stock market suffers a loss? Not to worry, this policy carries a guarantee that you will never lose a dollar, even if the market crashes. If the stock market did crash, the policy would simply credit you with nominal growth for the year in question. In all other years, the policy would grow with the stock market. On top of all of this, the money in the insurance product grows tax-free.
So, what has been accomplished? First, you have protected your rental property equity gains from home price fluctuations. Second, you have leveraged your equity into two growth channels, the stock market and appreciating house prices. Third, you have converted taxable growth [property appreciation] into tax-free growth [insurance].
With housing markets ready to cool down, this strategy effectively locks in your profits. Preserving equity gains should be a primary goal of any investment property owner.
How Appraisals and Assessments Differ
by Dallas Appraiser L.L.C. on 07/24/14
Title:
How Appraisals and Assessments Differ
Word Count:
625
Summary:
Many people think appraisals and assessments are the same thing or at least that they should be for the same amount. The truth is they can vary greatly. Let us look at each of them.
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Article Body:
Many people think appraisals and assessments are the same thing or at least that they should be for the same amount. The truth is they can vary greatly. Let us look at each of them.
Appraisals
An appraisal is an estimate of market value. An appraiser can use many methods for coming up with this estimate. For income producing property, the appraiser may capitalize the value of the income stream. (It would take ‘x’ dollars of capital invested at a ‘y’ rate of return to produce an income equal to the rental income generated by this property.) For other properties, an appraiser may use ‘replacement value.’ (It would cost ‘x’ dollars to build this structure if it were being built today.)
Appraisers usually use ‘comparable sales’ when evaluating the market value of a home. They look at nearby properties with similar characteristics, which have sold in the recent past to see at what price they sold. They typically give the most weight to the property they deem to be most like the property they are appraising.
Buyers and sellers generally encounter appraisals when the buyer’s lender has an appraiser make an evaluation of the market value of the property being sold. The lender wants to be sure of the value of the collateral for the loan. An interesting feature that comes into play in this situation is that one indication of value is at what price two unrelated parties will agree to buy and sell the same property. In other words, what is the contract price the seller and buyer of this property agreed on (if they are not relatives).
Assessments
An assessment is the value your local government puts on your property for the purpose of taxing it. How this value is derived varies from jurisdiction to jurisdiction. Some communities say the value is the same as market value. Some say the value is a percentage of market value. Some appear to actually do what they say they do, and some do not.
I was once a partner in an investment property that we were offering for sale at the time the county re-assessed it. Imagine my annoyance when the assessment came in at one hundred and forty percent of the offer price. We were not dummies. The partners were real estate professionals. I appealed the re-assessment, but my appeal was turned down. I offered to sell the property at the assessed price to the appraiser the county had hired to handle the appeals when he was telling me why he could not reduce our assessment. He did not take me up on my offer. Our property sold at the listed price months later. We had paid six months’ taxes on the property at a higher than market value.
On another occasion I helped some elderly people sell a farm they had lived in all their adult lives. The farm sold for a price a great deal higher than the value at which it had been assessed.
I believe the two examples are fairly typical. Many jurisdictions will ‘puff up’ assessments for businesses and investors and ‘low ball’ assessments for people who have lived in their homes for a long time. Sometimes there are formulas for doing this. ‘Land use’ is one such concept, i.e., the property is taxed at its value as a farm and the fact that it is ripe for dense residential and commercial development is ignored or deferred. Sometimes there are no formulas. It is just done.
For these reasons, it is usually not a good idea to put too much credence in the assessed value of a property when you are trying to figure out market value. They may be the same. They may be vastly different.
How and Why You Should Purchase a Real Estate Website Template
by Dallas Appraiser L.L.C. on 07/24/14
Title:
How and Why You Should Purchase a Real Estate Website Template
Word Count:
515
Summary:
Website temples are popular among many website owners and developers. A website template makes it easy for a business to start and develop a company website. Templates are a great way for individuals with little or no experience in web design to have a quality website. A real estate website template is a popular choice among many real estate agents or agencies.
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Article Body:
Website temples are popular among many website owners and developers. A website template makes it easy for a business to start and develop a company website. Templates are a great way for individuals with little or no experience in web design to have a quality website. A real estate website template is a popular choice among many real estate agents or agencies.
If you are operating a real estate business and are interested in developing a company website, there are a number of benefits to purchasing a real estate website template. A real estate website template will act as a guide for individuals who are inexperienced in producing a quality website. They will often come with amazing graphics and will give business owners ideas as to which information they should include on their website. There are a large number of available website templates available; however, a real estate website template is specifically tailored to the real estate industry.
A real estate website template can cost as little as twenty dollars or exceed over one hundred. The price of a real estate website template will mostly depend of the quality of work. If you are interested in obtaining a template with a number of graphics or multiple pages you should be prepared to spend extra money. Although the majority of real estate templates are general and available for anyone to use, you can have a specific template designed to fit all of your needs. There are a large number of website or template designers who will be more than willing to produce a customized template for you. A customized template is likely to cost extra money.
There are a number of different ways to find a quality real estate website template that will fit all of your needs. To find a template you should perform an internet search. Simply by searching for a real estate website template you should be provided with multiple businesses that sell the templates. Each real estate website template should be explained or shown in great detail. It is advised that you never agree to purchase a real estate website template without first seeing what the final product will look like. In addition to showing important template details, you should also be provided with a purchase price and any other important purchase information.
Once you have seen a number of real estate website templates you will need to decide which template will best suit all of your business needs. There are a large number of general real estate templates; however, there are others that may be specifically tailored to a specific real estate area. It is possible to find a real estate website template that is specifically designed for corporate, commercial, or residential use.
No matter which type of real estate business you are running there are multiple real estate website templates that are sure to fulfill all of your desires. Start your search for a quality real estate website template today.
Keeping Up Potential Property with Property Management
by Dallas Appraiser L.L.C. on 07/23/14
Keeping Up Potential Property with Property Management
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Each property that is owned by someone has a different set of job descriptions that are added to it. If you are familiar with real estate, you are also probably familiar with the roles that are linked to the properties that you are on. One of the important job descriptions for particular properties is in property management.
If you are renting or owning a particular type of home, such as a town home, you will most likely have property management linked to it. The major part of the property managers' job description is to maintain the property that you are on. This not only includes regular maintenance, but also includes refurbishing the property when it is needed. If there are problems with the property, it is up to the property manager to ensure that whatever the problem is can be fixed. If the building is old, the property manager will need to determine what to change in order to allow the area to function to its best ability without causing problems later.
The property managers also act as a link between those who are renting, leasing or working towards owning a property and telling the owner what the problem is. If there are maintenance problems or payment problems, it is up to property management to make sure that the problem is taken care of. Some property managers may also have the responsibility of providing accounting upkeep in relation to the payments that are being made.
The property manager provides a level of security that is offered to both owners of a property as well as to those who are renting or leasing the area. By having a property manager in place, it ensures that there will be certain levels of upkeep in the building that is being rented as well as allow for continuity in one who is renting or leasing an area.
Choosing Your Real Estate Appraiser
by Dallas Appraiser L.L.C. on 07/23/14
Choosing Your Real Estate Appraiser
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If you have been thinking about purchasing a real estate property for personal use or as an investment, you will need to hire the services of a real estate investor. If you play to finance your home through a bank or other lender, you will more than likely need to get the property appraised first. Banks and most lenders want to know the value of the home for your protection, as well as make sure that the home they are financing is worth the total amount that you take on the loan.
In most cases, the appraisal indicates that the home does indeed meet or exceed the asking price. In some cases however, the appraisal will come back saying that the home is worth less than the selling price. If this is the case, the buyer normally has to either drop the deal or try to negotiate with the seller to get a price that meets the appraisal.
For those very reasons, a real estate appraiser is very important. When you are dealing with a home, one appraisal can make a deal or break it. Even though you may not be financing your purchase through a lender or the bank, you should still make an effort to get the home appraised and find out the true value. You should also make a point to find the best appraiser that you can afford. If you hire an appraiser who is not that experienced, you will pay for it later when you discover that the property is not worth what you paid for it.
A real estate appraiser will go through the home performing an evaluation, and then provide you with a written evaluation after he has gathered all necessary information. Appraisers will also taken into consideration the replacement costs as well. Also, they will have to very land descriptions as well. There is a lot of work involved with appraisals, which is why it is so very important that each step of the process is performed correctly by a qualified real estate appraiser.
If you have a real estate agent, he or she will more than likely be able to make a recommendation. Keep in mind that this does not mean the recommendation is the best; it is just someone who your agent works with. To ensure that you get the right appraisal on your home you will need to find yourself an appraiser who is capable of completing the job.
When you look for your real estate appraiser, you should look for someone who comes highly recommended. You can ask family and friends for their opinions, or search local papers, even the Internet. If you take your time and search for the best real estate appraiser that you can find - you will normally get an appraisal that is right on target.
Cheap Homes - Five Ways To Save Thousands
by Dallas Appraiser L.L.C. on 07/23/14
Title:
Cheap Homes - Five Ways To Save Thousands
Word Count:
524
Summary:
How do you find cheap homes? There are a hundred ways to save money on your next home, but they usually start with the five basic principals explained here.
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Article Body:
How do you find cheap homes? There are too many ways to list here, but there are five basic principles to learn. Understand these, and you can save thousands of dollars on your next home.
Cheap Homes Are In Cheap Towns
Yes, there are still beautiful towns in this country where you can see a good movie, put the kids in a good school, go shopping, enjoy nearby natural beauty, and buy homes for under fifty thousand dollars. My wife and I bought a beautiful little home with hardwood floors, a full carpeted basement, and a garage, in a pretty mountain town, for $17,500, in 2002. You can still get homes for under $35,000 there.
What you can't get very easily there, is a good job. These towns with the cheapest homes usually have a bad job situation. They are great places to retire to, or to move to if you have a business or profession that isn't location-dependent. Writers and internet entrepreneurs are beginning to discover them. Of course, if you've already determined where you'll be living, or need a town with high-paying jobs, you can skip this idea.
Some Homes Are Just Cheaper
Another way to save when buying a home is to find a less expensive alternative that still fits your needs. This can mean buying in the inexpensive parts of town, or buying the inexpensive types of homes. Don't set your mind on one type of home or one neighborhood before you know what all the alternatives are.
This doesn't mean buying a cheap dump to save money, or buying in a dangerous part of town. It is more about a philosophy of defining your true needs so you can find the least expensive way to meet them. You may be surprised at what is available for less.
You Can Offer Less
No matter what you buy, you can save a lot if you know a few basic negotiating techniques. Is it worth a few minutes reading and an hour or two of practice to save thousands of dollars? Anyone can learn a few simple negotiating techniques that are used by the masters of negotiation. Somewhere, every day, people get cheap homes come through good negotiating.
Financing Can Make Homes Cheaper
You can pay the full asking price on a home and still spend thousands less than another person might. It isn't just price, but financing too that makes a home affordable. Pay a lower interest rate, and you can save many thousands of dollars. You can pay low or no loan fees, avoid mortgage insurance, save on appraisals, and more.
Save Money On Everything Else
Start learning the insider secrets to saving money at each step in the home buying process. You can learn tricks like how to use a walk-through inspection list to present with your low offer. You can learn ways to get cheaper inspections, pay lower taxes, pay less for homeowners insurance, and save on closing costs. I even financed a home without an appraisal once. There is more to buying cheap homes than just getting a low price.
Choosing your First Home
by Dallas Appraiser L.L.C. on 07/22/14
Choosing your First Home
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My wife and I bought and sold our first home within the last 4 years of our marriage. If you think you are ready to move out of your apartment, there is no time better than now. Beginning to search for your first home is an important step to having the ability to build better finances and to live in a place that is comfortable. If you are considering a new home, there are specific things that you will want to know before jumping in with both feet.
Before you even begin to look at homes, make sure that you conduct your own investigation. This will mean that you should find the going rates, how much other owners are paying every month, and what you can or can't afford. You will also want to see what types of houses are going and what they are going for. If you know the basics of what is available, it will be easier for you to get exactly what you want. You should also consider things such as your credit rating and your pay check. You don't want to walk into something that is over your head or start to look for something, only to find out that you won't be able to move in.
From here, it is all a matter of getting involved with the right people. One of the most important decisions that you can make is to find the right real estate agent. This will make a large difference in the type of deal that you get as well as what type of home and mortgage you end up with. Real estate agents have the ability to do investigations for you and find something that is best for you. You will also want to make sure that there are connections with home inspectors and the right lenders. Without the right people set in place, there will be problems with getting the best deal with your new home.
After you begin to look with your real estate agent, make sure that you begin to understand the terms that are being given to you. Loan terms, terms about the market, and other real estate jargon. will often times be spoken about. If you don't know what something is, look it up right away or ask. Getting into a first home is a large step from an apartment, making it important that you understand what you are getting into.
The process of finding a new home can be challenging and fun. Making sure that you open the front door instead of having to crawl through the back can help you to get exactly what you want. By learning the ropes from the very beginning, you can be certain to get what you want, only to move up from there.
Checklist for Preparing Your Home to Be Listed
by Dallas Appraiser L.L.C. on 07/22/14
Title:
Checklist for Preparing Your Home to Be Listed
Word Count:
364
Summary:
Once you decide to sell your property, you need to realize it evolves from your residence into a product. Before listing it, here are some tips on sprucing up your product.
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Article Body:
Once you decide to sell your property, you need to realize it evolves from your residence into a product. Before listing it, here are some tips on sprucing up your product.
Property Checklist for Preparing Your Home to Be Listed
Most sellers make the mistake of assuming the way they live in a home is a good atmosphere in which to conduct a sale. It is not. Homebuyers are not looking for a property in which you, the seller, seem comfortable. They are looking for a property in which THEY will feel comfortable and can envision themselves settling down in. This may sound like a minor distinction, but it is actually very large. If you can wrap your mind around this fact, you will have a much better selling experience.
First and foremost, you must understand that people have different tastes. The particular chandelier or aspect of your home, which is unique, may seem appealing to you, but not to buyers. Emotionally, you must be prepared for buyers to make rude comments regarding aspects you might cherish. Remember, it is a product to be sold and nothing else. If they do not have taste, that is their problem. On the other hand, they could be the buyers of the property you are trying to sell, which is your problem. Remember that when you are about to make a snide remark.
Before listing your property, it makes sense to address a few issues to avoid any problems.
1. Clean up closets - sellers look.
2. Clean up garages - sellers consider it a sign of how you took care of the home.
3. Clean the refrigerator - make it spotless. We are talking surgical room spotless.
4. Same goes for the oven.
5. If you have an attic, clean and organize it. Buyers will look everywhere.
6. Make sure all light bulbs work.
7. Fertilize the yard a few weeks before listing the home.
8. Repair leaky faucets.
9. Consider replacing worn or old fixtures.
10. Clean the windows.
Again, the goal is not to show a home you enjoy living in. The goal is to show a home they buyer could be comfortable living in. You are shooting, as much as possible, for that new home look.
Can You Spot The $566,000 Difference In Identical Homes?
by Dallas Appraiser L.L.C. on 07/22/14
Title:
Can You Spot The $566,000 Difference In Identical Homes?
Word Count:
437
Summary:
Is it hard to spot these places. Yes, it is very hard. So please read my articles for advises that will help you for lifetime!
keywords: #DFW, #Tarrant, #Johnson, #Dallas, #home_appraiser, #home_appraisal, #Property_appraiser, #home_value, #real_estate_appraisal, #Appraisal, #Appraiser, #Home_ownership, #equity, #REO, #foreclosure, #property, #Home, #House, #Real_Estate,
Article Body:
Can you spot the difference? Let me give you a hint; it is not the landscaping. It is not the location. It is not the gold plated fixtures in the master bathroom. In fact, it is not anything you would ever notice with the naked eye. The $566,000 differences are in how much the buyers unwittingly may pay for this home if they are not careful.
I recently met with a gentleman who was referred to me by his financial advisor to receive some consulting on how to best structure his mortgage in preparation for retirement. He wanted to retire in 13 years and he had refinanced his mortgage last year to a 15-year fixed rate loan, taking advantage of the low rates, and wants to own his home free and clear right about the time he retires.
Most home owners have the misconception that the wisest method to accelerate the pay-off of their home is to simply pay extra principal payments to their mortgage by utilizing a 15-year mortgage, bi-weekly payments or even by adding an extra $100 each monthly. In actuality, none of these methods usually proved to be the wisest method to accomplish a ‘free and clear’ home.
You can accumulate sufficient cash in a conservative tax-deferred mortgage acceleration plan to pay off a home just as soon or sooner than utilizing the methods described above. In addition you can accomplish the goal of paying off your home just as soon (typically in less than half the time) plus you will have the following advantages: 1) Maintain flexibility, liquidity and safety of principal by allowing the equity to grow in a separate side fund where it is accessible in case of emergency, temporary disability, or unemployment. 2) Maximize the only real tax-deductible interest allowed by tax reform by keeping the loan balance as high as possible until you have the cash accumulated to pay off your home in a lump sum.
Let us look at our example above; by strategically refinancing and taking advantage of the tax deductibility of mortgage interest we were able to accumulate enough money (at only 6% rate of return) to pay off the home in 8-1/2 years instead of 14 years. If he continued to invest his monthly saving he would have over $566,000 more than the balance his mortgage at the time he was ready to retire. Do not be fooled into giving up the liquidity, safety and potential rate of return on your money by giving it to your mortgage company. Get the facts and structure your mortgage to give you the greatest advantage from the start.
Do not be afraid to consult a professional like an experienced realtor or home appraiser!
