HOW TO BUY INVESTMENT PROPERTY IN SEVEN SIMPLE STEPS
Are you thinking of buying an investment property? If so, you’re in good company. Investment property is a great way to grow your wealth, and there are plenty of opportunities out there for savvy investors. But buying an investment property can be a daunting prospect, especially if you’re not familiar with the process. One little-known but very valuable real estate investment strategy is to target the low end of the market. At MY SMART COUSIN, we specialize in helping new property investors conceptualize, fund, and build their Real Estate empire. As seasoned Real Estate Investment coaches, we work with clients to penetrate the lucrative market of buying a house for the price of a car, or buying at a higher price point if preferred. Our expert team works with aspiring homeowners and investors, with a special focus on Black and Brown folks and women, and customizes a tailored strategy and roadmap to gain entry into the real estate industry and thrive. Are you looking for ways to invest your money and see a good return? If so, buying an investment property may be the right choice for you. But, investing in Real Estate can be tricky – especially if you’re new to it. That’s why we’ve put together this guide on how to buy an investment property. Keep reading for steps that will help make the process smoother and more successful. WHY BUY AN INVESTMENT PROPERTY? When it comes to investing in real estate, there are many different options to choose from. However, one of the smartest choices you can make is to invest in an investment property. Here are three reasons why an investment property is a wise choice: · First, an investment property will provide you with a steady stream of income. Unlike other investments, such as crypto, precious metals, stocks, and bonds, an investment property will generate rental income that you can almost set your watch by every month. This rental income can help offset the costs of the mortgage and other expenses associated with owning the property. · Second, an investment property can appreciate over time. While housing prices have cooled some since the Spring-time highs earlier in the year, prices remain robust throughout most of the U.S. due to high demand among renters for affordable housing. This underlying foundation will likely support the value of investment properties for many years to come, providing solid annual returns when you eventually sell the property. · Finally, an investment property can offer significant tax advantages. The IRS allows owners of investment properties to deduct a portion of the mortgage interest paid on their taxes. This deduction can save you thousands of dollars each year, making it easier to afford your monthly mortgage payments. Buying an investment property is one of the smartest choices you can make when it comes to real estate investing. With a steady stream of rental income and potential for appreciation, an investment property can offer significant financial rewards. And with tax advantages that can save you money each year, owning an investment property is a wise choice for any investor. SEVEN STEPS ON HOW TO BUY AN INVESTMENT PROPERTY 1. FIGURE OUT JUST HOW MUCH YOU CAN AFFORD Just because a property is a good deal doesn’t mean it’s a good deal for you. If you can’t afford it, then it likely will be a terrible and painful investment. Be realistic about your budget and make sure to factor in all of the associated costs, such as repairs, preventative maintenance, property insurance, and property taxes. Once you’ve done this, add a contingency factor of ten percent, or more, to account for any expenses that were under-estimated, or never estimated at all. As the old saying goes, you don’t know what you don’t know. Thus the reason for a contingency: is to add a fudge factor that helps absorb these expenses. 2. RESEARCH THE MARKET Not all investment properties are created equally. It’s important to do your homework and understand the market conditions in the area where you’re looking. Look through news articles and property valuations to see what the trends have been over time. Likewise, read forward-looking city plans and local economic reports to see what’s on the horizon for your target market. If an environmental hazard has recently occurred in the area with the little political will or economic focus on fixing it— think Flint, Michigan’s water crisis in the early days— view these as red flags. 3. GET PRE-APPROVED FOR A LOAN Once you know how much you can afford to spend, it’s time to start talking to lenders. Getting pre-approved for a loan will give you a better idea of what kind of interest rate you can expect to pay, and will help streamline the property-investment buying process. You want to ensure that when you make a purchase offer, you can actually follow through on it if it is accepted. Lining up financing in advance will lend credibility to your offer. 4. HIRE A QUALIFIED REAL ESTATE AGENT A good real estate agent will have experience with investment properties and will be able to guide you through the process of purchasing an investment property, which can differ from purchasing a primary residence. An investor-focused real estate agent can also offer helpful advice on negotiating prices and finding contractors. 5. MAKE AN OFFER ON THE PROPERTY When you find a property that you want to buy, your real estate agent will help you make an offer that takes into account the current market value of the property as well as any repairs or upgrades that may need to be made. 6. HAVE THE PROPERTY INSPECTED Hard money and other non-conventional lenders may not require a property inspection. That said, a property inspection can still play an important role, especially for new investors. An inspection shines a light on what needs to be fixed or replaced, and how urgently. This information is vital in helping to determine the fair market value of
HOW TO ACHIEVE FINANCIAL FREEDOM WITH AFFORDABLE RENTAL PROPERTIES
Are you tired of working for someone else? Are you looking for a way to achieve financial freedom? If so, then investing in affordable rental properties may be the answer for you. By buying low and keeping your expenses manageable, you can create a steady stream of income that will allow you to live comfortably, without having to rely on a 9-to-5 job. Buying a house for the price of a car is an even straighter path to saying goodbye to your 9-to-5, as the number of years required to break even and begin earning a pure profit on your investment is much shorter. Although the housing market remains strong, there are always opportunities to find a great investment, no matter how hot the market is. At MY SMART COUSIN, we work with aspiring homeowners and investors who are looking for their own slice of heaven in a home-sweet home or are looking to buy an investment property. Whether you’re just getting started or have a few years of experience under your belt and are looking to quickly build, we are able to help you develop and implement a strategy to buy a house for the price of a car— our personal favorite way of investing— or buy a great investment property at a higher price point. As your Real Estate Investment Coach, and a dedicated supporter of Black and Brown investors and women, in particular, we’ll help you move from idea to execution. If you’re like most people, the prospect of financial freedom is incredibly enticing. In this blog post, we’ll explore how to invest in rental properties and what to look out for when making your purchase. So whether you’re a first-time investor or just curious about the topic, keep reading for some helpful tips! UNDERSTAND WHAT FINANCIAL FREEDOM MEANS TO YOU Financial freedom is a term that gets bandied about a lot, but what does it mean? For some people, it means being debt-free, while for others, it means having enough passive income to cover all of their expenses. Either way, achieving financial freedom is no easy feat. But there is one tried-and-true method for building wealth and achieving financial independence: investing in real estate. Real estate, especially rental properties, offers several advantages over other types of investments. · First, rental properties are a long-term asset that in theory, will never go away when you consider the land beneath the property, and the ability to continually renovate, expand or rebuild the house that sits on it. This is in stark contrast to stocks and bonds where the investment doesn’t have the same forever-quality associated with it. · Additionally, unlike stocks or mutual funds, rental properties offer multiple ways to earn a return, be it renting the property by the room Airbnb-style, house-hacking by taking on a roommate or renting the property in its entirety through a traditional one-year lease. · Finally, rental properties are a solid long-term investment. With proper care and maintenance coupled with strategically selecting neighborhoods poised for growth, the property will appreciate over time, providing you with a nest egg that you can tap into when you retire or hold onto as part of building generational wealth. RESEARCH THE RENTAL MARKET IN YOUR AREA Achieving financial freedom through rental properties is a great way to increase your net worth and build long-term wealth. But it’s not without its challenges. Before you start investing in rental properties, it’s important to do your homework and understand the local market. Keep in mind that the goal is to find an area with high demand and limited supply. This will help ensure that your property is always rented and that you’re able to charge a premium price. Another key consideration is the local job market. COVID-19 has increased the amount of remote work to some extent, making the strength of the local job market less of a factor. However, a community that is ringed by high-paying job sectors such as technology and finance, for instance, has a much larger pool of renters who can afford the rent than a community with few good-paying jobs. By doing your homework upfront, you’ll be in a much better position to achieve financial freedom through properly located rental properties. CALCULATE THE NET OPERATING INCOME FROM THE PROPERTY BASED ON MARKET RENTAL RATES AND OPERATING EXPENSES For many people, the dream of financial freedom is just that – a dream. But it doesn’t have to be that way. With careful planning and a smart rental investment strategy, you can achieve financial freedom. The key is to look past the top line, the amount of rent you’re collecting, and hone in on the bottom line, the number of rent revenues you’re ultimately keeping. The top line can be determined by evaluating the market rate for similar properties and minimizing your vacancy rate. Keep in mind, though, that no matter how high the rent, a vacant property earns no revenues, so minimizing turnover is key. The bottom line will be a function of property management costs, property insurance, and property taxes. When considering investment properties to purchase, spend time calling insurance companies and checking county tax rates to gauge your potential expenses. Once you’ve estimated your expenses, add a ten percent contingency to that amount to serve as a shock absorber for unexpected repairs or unbudgeted expenses. By taking these steps, you’ll ensure that your rental property generates enough income to cover its cost of investment, and upkeep and then eventually set you on the path to financial freedom. FIND A PROPERTY MANAGER TO HELP WITH TENANT SCREENING, MAINTENANCE, AND OTHER TASKS Most people will never achieve financial freedom because they’re too busy being tethered to their financial present, courtesy of the demands of their 9 to 5. The way to hop off this treadmill lies in asking for help, or more pointedly, paying for help through property management, office assistance, and other services. While these expenses will feel unjustified initially,
HOW LONG IS AN APPRAISAL GOOD FOR? 5 FACTORS TO CONSIDER
If you’re in the market for a new home, you’ll likely encounter an appraisal. What would be more gracious than Buying a house for the price of a car? An appraisal is a process where a licensed appraiser assesses the worth of a property. Appraisals are used by buyers, sellers, and lenders to help determine a property’s value. At MY SMART COUSIN, we are here to provide our people with the best and most updated information on Real Estate Investment strategies. We help our Black & Brown folks (especially women) to Buy a house for the price of a car. As a Real Estate Investment Coach we encourage people about how they can be the owner of their own sweet home and can scale their finances. Have you ever wondered how long an appraisal is valid? If so, you’re not alone. While the answer may seem straightforward, there are a few factors to consider when it comes to home appraisals. In this blog post, we’ll take a closer look at five of the most important factors to keep in mind when it comes to appraisals. Read on for more information! WHAT IS AN APPRAISAL AND WHY DO YOU NEED ONE WHEN BUYING A HOME? The value of your home is determined by an appraiser, and if you want to get the most out of it financially then be sure that there will not only be one but several reports generated. A licensed third-party specialist in this field creates these invaluable documents which provide crucial information about what kind or condition property each instance might present as well as any notable features such—as visible defects/ damage on exterior surfaces among other things not visible from afar. If you want to get the best deal for your home, it’s important that an appraiser reviews and records all of the upgrades or improvements. The middleman will assess how well-maintained property is before lowering its price based on what buyers want; he also has experience in raising prices when sellers haven’t taken good care of their properties – giving them more incentive than ever! You might not think that an appraisal would be important while buying a house, but you’d likely regret it if the price set by your appraiser is too high. The cost of getting this done can make or break whether someone buys your home! So take advantage and get as much information out there about what’s going on with all aspects before meeting any deadlines–you’ll feel like a hero when they finally open escrow!! HOW LONG IS AN APPRAISAL GOOD FOR? Appraisals are a great way to get an idea of what your home is worth. The length depends on the factors such as loan type, market state, and location but six-month validity typically applies more often than not means you’ll need two-six months’ worth when going through this process with any one client! One thing that can affect, is how long they last though? Comps – these use prices from recently sold homes close in size/conditions so expect 90 days instead if outside those ranges since there isn’t always enough data available yet within each specific region or city block. FACTORS TO CONSIDER WHEN DETERMINING THE VALUE OF YOUR HOME 1. THE TYPE OF LOAN The type of loan the buyer is seeking may influence the length of time an appraisal is valid. · CONVENTIONAL LOAN – These loans are less restrictive and highly flexible in terms of appraisal. On existing homes, an appraisal is good for 120 days while on new construction, the appraisal will be good for an entire year. · USDA LOANS – These are government loans that are specially structured for people in rural areas. Appraisals for USDA loans are valid for 120 days in addition to a grace period of 30 days. · FHA LOANS -On an FHA loan, the appraisal will be valid for 120 days and if updated it will be valid for 120 days. If the case number assignment changes, you’ll have to order a re-appraisal. · VA LOANS– VA loan appraisals are valid for 6 months and after the expiry period a re-appraisal will be required. · FANNIE MAE LOANS – Fannie Mae (FNMA) loan appraisals are normally valid for a full year but require a second appraisal after 120 days. 2. THE CONDITION OF THE PROPERTY The state of the property affects its appraisal. If any major changes occur, like an improvement that would increase or decrease the value by 100 thousand dollars for example (even though it might only seem like a small change), then we will take those into account when determining how much your home is worth today versus if there was no such event occurred over time since this could have led to significant differences in net equity between you and preset grammar rules The damage can come from fire breakout accidents, natural disasters such as Floods earthquakes, etc 3. THE PRESENT SCENARIO OF THE MARKET The state of the market also affects how long an appraisal will be valid. If there’s slow change and stability, then it should only take six months for a new one to come out before you get your money back on previously paid-off homes; but when things are changing rapidly or becoming unstable – like during economic bubbles– appraisals can last 30/60 days instead because they’re more focused around specific dates rather than just general periods throughout time 4. UPDATE & EXTENSION OF APPRAISAL The lender might order an update or extension of approval if your appraisal expires. This is because they want to make sure the property’s value has not declined since it was last appraised, and also give them more time before paying out any mortgages on these properties with decreasing values at risk (as would happen over time). 5. RECERTIFICATION OF VALUE An appraiser might make a valuation that’s conditioned on the property meets certain conditions. In this case, they’re simply following up to see if those requirements have been met and will conduct certification of value when necessary. The original assessor valued your home at $500K