The Art Of Buying Free And Clear Real Estate Properties
July 31, 2010
What does free and clear in real estate mean? It means that there are no liens on file at the country recorder office and the owner owns the home or property, free and clear of any liabilities or liens. In short it means that the property is debt free.
According to realtors, 35% of the properties owned by Americans are without any encumbrances and liabilities. This is very important from the investors point of view as they can safely invest in such properties, which are free and clear.
The biggest factor to be kept in mind while interacting with a seller holding free and clear property is that most clear and free properties are owned by people in their late sixties or even older. Hence, the investors have to think about the sudden developments when dealing with older people.
Let us analyze what an investor should avoid, to prevent the seller from turning down the offer.
- Pursue the deal slowly: Mostly, elders look out for security and they fear making a mistake or getting ripped off. As an investor, you should make every move slowly while dealing with elderly people and give them time to know you first, without pushing an offer. Slowly does not mean weeks, it simply implies that when you meet the seller, spend more time with him and make him comfortable. Be friendly and even be willing to accept tea or coffee offered and the moment you find them settled, you can relax and start negotiating.
- Use age as an advantage factor: If you are younger than the seller, you can help him to identify you as a younger version of himself or remind him of his children or grandchildren. If you belong to the same age group, then you can build a rapport of friendship with them.
There are many investors who click best deals during this kind of transaction because they understand the seller mind and behave accordingly. The biggest desires of such sellers are:-
1. Security: No matter what you offer, the primary fact is that once the seller is comfortable in the deal and feels safe with you, he will definitely consider selling the property to you. If you are dealing in cash, then stress on how this deal could be the safest path for him, since there is cash involved, which would avoid risk. You can even highlight your history of on-payments to other sellers.
2. Positive attention: Always remember that people sell houses and properties to people they like and sellers like people who make them feel good about themselves. Be a good listener and listen to their stories and even encourage them to tell you about their past. This is the best way to build a rapport with an elderly person.
3. Hassle free income: Many older sellers look out for a stable income. If you are negotiating the payment, stress on an easy way in which they can convert their house equity into a monthly income for themselves, without much tax involvement.
Kris Koonar
http://www.articlesbase.com/non-fiction-articles/the-art-of-buying-free-and-clear-real-estate-properties-134014.html
Buying Real Estate Investment Property For Retirement
July 21, 2010
What is the difference between rich and wealthy? The difference could be described as either working for a living or your money working for your living. In other words, when you are wealthy, your money works for you such as real estate property providing a cash flow so you do not have to work an 8 to 5 job. That is being wealthy.
It stands to reason that the purchase of a rental property today can make your retirement comfortable because the added income is a positive cash flow. Achieving financial wealth through real estate investments is long term, and can be risky if you don’t do your homework.
There are so many get rich quick scams out there, and some of them are get rich quick using real estate investments. Some of those infomercials are really so much hot air. They have the right idea but the wrong way to achieve it. That is why it is crucial to work with your tax advisor and a knowledgeable real estate professional rather than taking advice from an infomercial at one o’clock in the morning.
The problem most people face at retirement is that the cost of living has gone up faster than the increase in their 401K. Investment property can make a huge difference at not only what you can do when retired but also when you can retire. Working an 8 to 5 job generally does not allow you to save enough out of each pay check to acquire real wealth. Even those high paid executives can fall into a security trap thinking their income is assured, so therefore their retirement is assured. We don’t have to look any further than Enron or Worldcom to know that nothing is totally assured in this life; which is why you need to take control of your life and your retirement.
If you were to take $50,000 and use it as a 10% down payment on a $500,000 investment property, assuming: a breakeven cash flow and not including any tax credits or tax breaks, the value of the property appreciating over 20 years, the value of the property would be three times as much as when first purchased. That means that your initial investment of $50,000 has equity of over $1,400,000.
Take that same investment of $50,000 to a market fund or other bond-type, non-risk investment, and you can expect an 8% to 10% increase on average. After 20 years, you would realize $266,000 to $366,000.
When you put it into perspective in a real life type of comparison like this, you can see that real estate investment can provide a very lucrative retirement with little or no risk to you. The added benefit is that you are able to leave a nice legacy to your loved ones which is priceless.
Alex Anderson
http://www.articlesbase.com/advertising-articles/buying-real-estate-investment-property-for-retirement-67558.html
How to Minimize Risk When Buying at Real Estate Auction
July 10, 2010
Some of the greatest returns on real estate investments are earned by purchasing foreclosed or distressed properties. By investing money in foreclosed properties, savvy real estate investors have learned that they can purchase real estate property significantly under value. You can too if you do your research and avoid common pitfalls.
With every type of investment, there is risk. In most cases the higher amount of risk that you are willing to take results in larger returns on your investment. The same is true in real estate investing. This means that the properties that stand to make you the most money also present the most challenges.
While there are three stages of the foreclosure process where it is possible to purchase the distressed property, only one offers the greatest return. This is the Sheriffs sale or auction phase. If you are able to purchase a property at this time you could realistically take ownership of the property for as much as 45 percent under the listing price of the home. But with this reward comes great risk.
The greatest way to minimize risk when investing in real estate is to do your homework. Heres a checklist to help you out:
Find out how much of a cash deposit you will need at auction. In many cases this is 10 percent with the remaining balance due within months, weeks, days, or hours. Make sure that you know the laws in your state and county.
Try your best to inspect the property before the auction. If you can not inspect the property, strive to build up a relationship with the homeowner so that you can learn about any costly repairs that need to be done and calculate them into your bid price.
Verify that there are no other liens on the property through a title search. If you purchase the property at auction, these will become your responsibility.
Know your competition. Since the original lender for the property wins at auction 80 percent of the time, forming a relationship with the lender is a good idea.
Set a bid price and stick with it. Avoid becoming emotionally involved in the bidding process and over bidding. Have a solid idea of what you are investing in, how much you are willing to pay for it, and what type of return you expect.
Remember; the goal of investing is to minimize risk and maximize profit. By doing your homework before the auction, you will be sure to do both. Never buy a property blindly. Doing so only sets you up for failures that will cut into your profit margin.
James Klobasa
http://www.articlesbase.com/non-fiction-articles/how-to-minimize-risk-when-buying-at-real-estate-auction-91664.html