Real Estate Basics
Understanding the real estate market before diving into buying anything will help you find the best home within your budget. Real estate investment is not everyone’s bag of tea, but those who have already tried investing in real estate know that it can be very profitable. Real estate investment experts say there are several keys to making significant profits in real estate investment deals. And when the deals are profitable, you will certainly be well on your way to success. There is definitely a lot to learn, but in the long run after you have gained some experience, you’ll hopefully become a master at closing profitable real estate deals.
Three major types of properties
1. Vacant land
2. Residential properties
1. Vacant Land: Farms and ranch lands are good examples. Generally the property size and price is quite large, with corresponding commissions. Specific buying requirements and motivations should be understood before looking into buying a vacant land. Specializing in building lots for properties can be lucrative in rapidly growing areas.
2. Residential properties: Used purely for living only. Condominiums, separate homes, duplexes, high value homes, vacations homes etc. are good examples.
3. Commercial properties: An empty land zoned for commercial use or any existing business building(s) come under this category.
Buying real estate
It used to be a luxury to own property(home/office), but not anymore. It is , however, a very important decision because of financial security (or risks) it provides. First look for a reliable realtor/real estate agent, arrange for funds/prequalify for a loan, select the property, make an offer and once you ensure arrangement for finances, close the deal.
Very few people buy home for cash. Nine out of ten get the property financed. The real issue with real estate financing is not getting a loan (virtually anyone willing to pay lofty interest rates can find a mortgage). Instead, the idea is to get the mortgage with the lowest cost and best terms. Based on his or her experience, an agent may suggest one or more lenders with a history of offering competitive programs and delivering promised rates and terms. The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most-closely meet your needs. Getting pre-approved helps since it allows for time to shop for best terms and rates.
Selling real estate
Summers are a good time. Prepare your property for selling first. People like to buy a house better than it's neighbourhood but at the same price. Your best bet, only invest in very small yet important improvements. Cosmetic changes - paint, wallpaper, landscaping and mechanical repairs to ensure all the systems and appliances are in good working condition - are the basic requirement to get the top value of the house. After you get the property ready, find a certified/authorized real estate agent. Setting the price: If you are in an area with increasing population, jobs - you're in a seller's market. otherwise, its a buyer's market. After the price is set, the property is put in market on local MLS and newspapers.
Interested buyers negotiate the deal with either the owner or his agent. Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. The sale agreement only sets the price of the house on paper. The actual closing requires various inspections for lenders that is, if the buyer is getting the property financed. It takes about 30 - 45 days to close a deal.
Closing or settlement or escrow, as it is known in some areas, is a meeting where the closing agent (the party conducting settlement) takes in money from the buyers, pays out money to the owner and makes sure that the purchaser's title is properly recorded in local records along with any mortgage liens.
In the event that a property buyer cannot make mortgage payments, the lender has the right to foreclose. That is , to auction off the property and keep the proceeds in order to recover its investment. On the other hand, a foreclosure allows an investor to buy a property much below its market value thus, allowing him to make profits.
Investing in real estate requires understanding of the local economy and a visualization of how it is going to perform in future. It looks easier to make money in real estate however, the factors that determine the property prices are entirely unpredictable and considering the size of investment required, it does make it a risky business. But risks are there in all investments and the bigger the risks, the bigger are the potential profits. To summarize our tutorial, there are three types of real estate properties: Vacant land, residential property and commercial property. It is wise to get pre-approved for mortgage loans since it allows shopping for best available terms and interest rates. When selling a property, before approaching an agent, prepare the property by making any small cosmetic and mechanical upgrades. This goes a long way in getting a good price of the property. Foreclosures can be a great method of buying property below market price, thus can be good for making profits in real estate.