Whether you are moving out of your house or have bought a second property you will not want to leave it standing empty. Although history has shown that in time your property will always eventually go up in value, you are well advised to leverage your asset by having tenants who will pay your mortgage and hopefully also provide you with a steady monthly income.

If you have not prepared a rental property before then you may be worried about what is involved but here are the twelve most important tasks that you should be planning to do.

1. Inform your mortgage company that you intend to rent your property.

You must do this to ensure they have no objections. There will likely be a fee but this should be small. This permission may only be valid for a year but if there are no problems then it should be easily extended.

2. Find a good rental agent. Unless you are looking to do all the work then it will be beneficial to have an agent who will know where to find the best tenants and know how to manage the property for you. This way you will be able to let your new business run by itself and so the relatively small loss of profit will be worth the cost.

3. Inform the tax office that you will be receiving rent. If you use an agent then they are legally bound to withhold the tax until they receive confirmation you have told the tax office. You will need to declare the income anyway in a tax return.

4. Make sure you have the necessary certificates such as gas and energy performance. This is another reason for using an agent as they will help you know what you need and how to get them.

5. Carry out all of those repairs to the property that you have been putting off. If you do not do them now then it will be harder to get tenants and when someone does move in, they will complain and you will have to do them anyway.

6. Get the chimney cleaned. You are likely to be asked for evidence that this has been done within the last year.

7. Decorate to a high standard. If you think about the times you have stayed in holiday or hotel accommodation you will remember that you expected a higher standard than your own home. Your prospective tenants will expect a high level of cleanliness and decoration. It may cost a lot to do but it will be worth every penny.

8. Think about replacing all your white goods. These can be quite reasonably priced and you will then have a fresh warranty for each unit that you or the agent can call upon. These do not have to be luxury items, just the basic easy to use equipment.

9. Do not forget the garden. It is best to cut it right back so that the new tenants can make something of it.

10. Cancel all of the local services. These will be the responsibility of the new tenants.

11. Arrange for a local company to take on the maintenance of the boiler, gas and plumbing. Then either they or your agent can call them out if there is a problem.

12. Finally create a helpful folder for the tenants to tell them about the property so they know how to use the appliances and where to turn off the water and change the fuses.

Your local requirements may differ a little but if you carry out these basic 12 tasks you will be well prepared for rental of your property.

When it comes to money no one can debate the fact that people can become untrusting and untrustworthy, and when you are already paying someone to handle their money, the thought of them getting one over on you is not a nice one. For this reason you might have asked yourself can property managements companies be trusted? Am I being charged too much? How would I even find out?

First of all, you must make sure that no matter which side of the coin you are on, you have someone dealing with you specifically, and not your landlord’s realtor or tenant’s realtor. Their responsibility is usually to the client that was theirs initially, and for this reason it is possible you are getting the short end of the stick.

Property management companies are oftentimes regulated and watched by the government and homeowners to make sure that there is no false conduct, because it can affect everyone if a company is acting wrongly.

Yes, most of the time they are trustworthy, but in any case it is always a good idea to monitor everything yourself to be sure, even if just for peace of mind and to make sure there are no accidental mistakes being made by the company. It is also easy nowadays to hear and see what other people have to say about a business based on their user reviews and ratings that can be found by simply typing it into the search bar on your internet browser. If a company is good and effective they will be recommended and receive positive feedback, and if they are bad, then it will not take too long for people to catch on and not use their services any longer.

Professional Property Management

Are you having problems paying off your housing loan? Do you fear you might be about to lose your home to your bank or loan provider? Before you stress yourself out thinking about this possibility, consider mortgage loan modification. This is a program that allows your loan to be reinstated so that its terms are more suited to your financial capabilities. All it takes is for you to get yourself familiar with the system and then you start making it work for you.

So what is a mortgage loan modification? How does it work? Basically, it is just like a refinancing modification program which allows you to adjust your existing loan to more affordable terms. With this, you will not need to re-loan but rather, you just have to modify your existing loan. The process makes it much easier both for you and your loan provider.

Since we have identified the nature of the program, it is now a question of who is eligible. This program applies only to mortgagees who applied for their loans before January 1, 2010. There are two classifications of eligibility for a mortgage loan modification. One is for people with updated mortgage payments and the other is for those who have missed payments but have paid at least 31% of their total mortgage.

Since it is a mortgage loan modification, the government will be in the middle the system being the only entity allowed to regulate modifications. It subsidizes the cost resulting from the drop in payments from the regular 38% to the discounted rate of 31% based on the modification program. If you’re asking how else a loan may be modified to suit the financial capability of the mortgagee, there are a number of possibilities. The interest rate on the loan may be reduced, the terms of payment may be extended up to forty years, the mortgagee may be offered another type of loan or a combination of any of these three may be applied possibilities. Aside from this subsidy, the government is also actively pursuing a campaign that motivates banks and other loan providers to participate in the program.

It is important, however, to differentiate between a forbearance agreement and a loan modification agreement. The former is a temporary solution offered to mortgagees who are undergoing financial difficulties which are expected to be short-lived while the latter is a long-term program for those who are completely unable to pay off an existing loan.

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Recently I spent some time researching statistics related to mortgage origination, foreclosures, and our economic climate as it regards to investing in real estate.  Based on all of my research I am convinced that we are going to see a massive increase in opportunity in 2010 and I am excited to position myself in front of these trends to capitalize on it!

Foreclosures have been booming around the country, and with the limited ability to get funding we have seen a surge in creative real estate investing.  We have also seen the average investor lay low because of the difficulty of today’s real estate market which has presented even more deals and opportunities for sophisticated investors who know how to negotiate and move properties.

Here is a summary of reasons why I feel that 2010 will be the year that sophisticated real estate investors create a tremendous amount of wealth…

SUPPLY AND DEMAND

As the population goes up, the demand always goes up as well.  Many amateur investors are focused on where the market is today, rather than looking at the past to recognize trends for the future.  Supply and Demand always rules but only savvy investors allow logic to lead over emotion.  Remember these three words: “Numbers Never Lie”.

Currently the population in the United States is soaring and according to an article in USA Today, we are projected to reach over 400,000,000 people by 2042.  According to the US Census Bureau we are gaining a new person every 11 seconds (one birth every 7 seconds, one death every 13 seconds, and one international migrant every 31 seconds).  We are also seeing record numbers of births as more babies were born in the United States in 2007 than any year in the nation’s history, topping the peak during the baby boom 50 years earlier!

In order to become a more sophisticated investor, it is important to understand population trends related to your local market that you are investing in as well.  Use this tool to compare population growth of the states you are investing in to get an idea of whether your market is growing or not.  Here is an example of the DC Metro population growth comparing Virginia, DC & Maryland.

So as you can see from this graph, DC has maintained it’s population while Maryland and Virginia have shown tremendous growth.  Also take into consideration that this date is only up to the year 2000.

Understanding supply and demand truly helps separate the sophisticated investor from the average investor.  When we take a look at the rolling 12 month single-family permit activity across the nation, it become pretty evident that we are ready for a rebound in permit activity in 2010 and many educated investors believe that we will start to see this turnaround in 2010 for a variety of reasons.

REAL ESTATE IS ON SALE

When we look at the cost of housing compared to family incomes we can see that today’s down real estate market is completely different from the real estate market of the 1980’s when the ratios reached as high as 60%!  From this chart we can easily identify that real estate is on sale and is very affordable for the average family.  We are currently seeing a 25% affordability ratio on homes nationwide which allows investors to move properties much faster as their are more able buyers out there.

MONEY IS ON SALE

Next we take a look at the 30-year FRM rates vs. Prime Rates from 1971-2009.  I remember back in 2004 when every loan officer and mortgage broker was urging everyone to refinance and lock in low rates before they catapulted back up to over 10%.  Of course we all believed the could not possibly stay that low so record numbers of refinances started happening and people were happy they locked in such a low interest rate.  However, here we are several years later and interest rates are still unbelievably low!  In a traditional real estate bubble you would expect rates to jump up as high as 15-20% but we are in a fortunate situation where rates have stayed low and money is still on sale!

When you take into consideration that money is on sale and real estate is on sale it starts to really become clear why NOW is such an ideal time to become an investor.  I.D.E.A.L. is actually a great acronym for real estate investors because real estate can provide:

• Income
• Deductions
• Equity
• Appreciation
• Leverage

FORECLOSURE BOOM

According to My Budget 360 the foreclosure filings nationwide have risen from 100 million to 300 million in the past few years alone!

There are countless reasons as to why our country got itself in this mess, and it is incredibly sad for many people that are facing foreclosure, faced with losing their homes, their dignity, their equity and their credit.  On the other hand if you are someone that is looking to purchase a home, the opportunity has never been better!

in 2001 only 1% of all mortgage loans originated were interest-only or neg-am loans.  By 2006 that number had reached nearly 30%!  The first graph below shows the Option ARM (adjustable rate mortgages) reset schedule, totaling hundreds of billions of dollars in the next two years. The next graph is the interest only and negative amortization share of total mortgage purchase origination’s for 2000-2006. Keep in mind that “73 percent of homeowners with ARM’s don’t even know how much their monthly payment will increase the next time the rate goes up.”

My reason for sharing these graphs with you is to help you understand that we are getting ready to see another wave of foreclosures come in as a result of the ARM’s resetting and people not being able to afford their new payments.  When I really started diving deep into these statistics it became clear to me that 2010 would be a great year of investing, but that it would require becoming a sophisticated investor to take advantage of it.

• I believe that we will start to see a turnaround in the single family permit activity in 2010.  Most of my professional contacts in the construction industry share this opinion with me as well.
• I also believe that we will continue to see a steady flow of foreclosures that won’t stop anytime soon.  This provides a great opportunity to pick up properties at deep discounts either directly from homeowners in the pre-foreclosure phase, or from auctions and banks after they have been foreclosed.
• Due to the difficulty in getting traditional financing, the majority of these properties are going to be picked up by sophisticated real estate investors using creative acquisition strategies.
• Since real estate and money are both on sale, now is the time to take advantage of these trends and opportunities.

So in summary, I would encourage any would-be real estate investor to start studying pre-foreclosure investing as well as auctions and REO’s.  There are opportunities in today’s market to pick up properties for 50% of the appraised value when you know what you’re doing and there is an influx in hard money lenders and private investors out there that are looking for better returns than they have been getting in the stock market lately.

The key to becoming a sophisticated investor to take advantage of this perfect storm in 2010 is to first get educated.  Learn about Subject-To as a technique to pick up properties with no money and no credit.  Learn about Wholesaling as a way to move these properties quickly to other investors who will fix them up and retail them.  Learn about Hard Money Lending and how to raise private capital by helping people self-direct their retirement plans.  And most importantly get connected with other local sophisticated investors in your area that you can do deals with and partner with to help ease your learning curve.

For more information on Real Estate Investing Tips or Social Media Marketing search for Chris Record on the web.

Home sales have become increasingly popular. Home owners unable to make their mortgage payments will eventually find themselves being served with a foreclosure notice from their bank or lender. In order to stop the foreclosure they can opt to ask if they may move towards a short sale. This is an agreement between the lender and homeowner to sell the home at a discount, which sometimes ends up being less than the actual mortgage balance. The difference that results is called a deficiency.

To give you a better understanding of how a deficiency happens here is an example. At the time of impending foreclosure the house goes into a sale. The lender agrees to stop the foreclosure process and put the house up for sale. The house sells but it’s not for enough to pay off the mortgage entirely. The balance owing by you on the mortgage is $100,000. The short sale results in the home being sold for $70,000. Now here is a deficiency of $30,000 and lender has to absorb this loss.

Although it is not common, the lender may decide to turn around and sue for the difference. Most lenders won’t sue for smaller amounts because to do so, they would then have to hire expensive lawyers, file a lot of paperwork and spend more money on the court proceedings. It is all very time consuming and costly. Most lenders today aren’t suing homeowners as there is simply no money to get even if they won a judgment. Most banks will release the owner during the Short Sale if the Realtor or Agent demands it for their client. This is one of the greatest things a good Agent can do for his client.

Here are other options homeowners have:

• Deed In Lieu of Foreclosure. This is an agreement drawn up in advance that states the lender will not sue you for the deficiency (if the form is provided by the lender). You are agreeing to give up the deed to the house in exchange for complete absolution of the difference. It is strongly recommended you get this agreement done.

• One of the other methods is to take a chance on the short sale and to demand to be released at the end of the Shortsale.

• Lastly, some finish a Short Sale and then declare bankruptcy if it all goes bad. Too many owners file bankruptcy when they didn’t need to. My experience is to not file unless the bank is proceeding against you, but ask an attorney for legal advice as I am a realtor and broker and not an attorney. If home sale creates a deficiency that is more than you would ever be able to pay off then bankruptcy may be the only solution. Bankruptcy will scar your credit rating but if you don’t declare and the lender files a judgment, they may have the right to go as far as garnishment of wages. Save yourself the headache and protect yourself from a judgment right at the time of short sale.

Original Picture Source: http://www.flickr.com/photos/abnelgonzalez/2058764760/

Owning real estate has grown as a profitable vehicle used to gain financial freedom for many investors.

It is very important to be aware of what is involved to ensure the success that is desired. One of the key factors is being aware of the trend. Purchasing real estate in an area where the trend is going down is counter productive. Buying a property because it is cheap should not be the only criteria contemplated before investing. This is where many real estate investors lose money.

You may have heard it said over and over, that you need to do your due diligence before purchasing a property. But what does that really mean? Basically this is like planning a well deserved vacation. You don’t just get up and book the first thing that pops up on the screen. You take the time to look up what is on offer based on how you want to spend your time on vacation. To book your vacation based on purely a cheap package could work out to be quite catastrophical.

Likewise to ensure you achieve a substantial return on your real estate investment it is important to select property that fulfills a specific criteria. A key component is being able to identify emerging real estate markets. This simple consists of identify specific indicators which will let you know before agreeing to anything whether or not your investment will be profitable right from the start.

Step 1
Look at the demographics of the area you are interested in and find out what the potential growth of the area will be like in the next 20yrs.

Step 2
Find out if this a place people want to live

Step 3
Find out whether or not the area is attracting jobs

This will give you a very clear picture from the outset how profitable your investment will be and save you the worry of losing out.

Original picture source: http://www.flickr.com/photos/akeg/1243700483/

A slow market is usually identified by little or no activity going around in the market. Normally, real estate bubble bursts are followed by slow markets where sellers find themselves at the wrong end. Sellers are reluctant to sell at low prices (because they have purchased it at insanely high prices) while buyers are reluctant to buy at high prices (because the actual value of the property is less than what the seller is demanding). It results in lots of properties lying vacant for months; supply outstrips demand, which gives buyers an upper hand over the sellers. Eventually, sellers are forced to revise their pricing and buyers are in a strong position to negotiate.

Quite obviously, Buying in a slow market is not a problem; however, you are in for some real stress if you are the one, looking to sell your property in a slow market. If you are not in urgent need of money, you may think of delaying the sale, but even then you will have to incur carrying cost (e.g. utility bills, mortgage installments or property tax). You must start from realizing that you’ll have to compromise on your asking price. Irrespective of how much the property cost in the past, you must settle on a price which is in line with the current situation. In some cases, waiting too long for market recovery will result in unsustainable financial burdens, so it’s better to sell it out on give and take basis.

Apart from the compromise on prices, you’ll have to be a little creative when it comes to marketing your property for sale. Remember that there are thousands of properties lying vacant in the market; you need to make sure that your property stands out from those properties, one way or the other. In a market, where buyers are few and far between, you need to work extra hard to tempt these buyers. There is no need of getting desperate and setting a price too low, the best idea is to do a little research and watch out for the prices of properties which were sold in recent past. It will give you a good idea of what is the appropriate selling price for your property. You can also offer good commission rates to real estate agents to tempt them into selling your property sooner than the others. Take maximum advantage of the low cost or free advertising mediums such as online property portals or local newspapers.

One of the most basic advices, for anyone conducting business/trade with anybody else is to write down the agreement and have it signed with all of the concerned parties. It saves you from various complications and tricky situations in the future. A business agreement or contract illustrates the rights and obligations for both buyers and sellers, the terms and conditions described in the contract allows the signers to seek legal help, in case the other party has deceived them. In real estate transactions, contracts are even more important, for the reason that a routine real estate transaction involves huge amount. A real estate contract includes the credentials of the parties involved along with their signatures, exact information about the property in question and the purchasing price. However, a contract is not the only document which is needed to transfer the ownership, the document that transfers the ownership is known as deed.

Almost all deeds are the same in nature (all are used to transfer the ownership from seller to buyer) but the accompanying terms and conditions differ to some extent. There are three common types of real estate deeds, let’s read about each of them in detail. Remember that the word ‘Grantor’ denote seller while ‘Grantee’ stands for the buyer.

Warranty Deed:

Most common form of real estate deed is known as warranty deed. In this deed, the seller pledge that he/she has the absolute right to sell the property, that’s the reason it is also called the full covenant. Which means the grantor is providing specific warranties regarding the title of the property along with the ownership, itself.

Grant Deed:

It is more or less the same as Warranty deed; however in some cases it carries fewer guarantees as compared to the warranty deed. They are the most commonly used form of real estate deeds in a number of US states and even though the law doesn’t necessitate the notarization, people still certify it legally to be on the safe side.

Quit claim deed:

Quit claim deed (as the name suggests) is limited to transferring the ownership to another party, in other words the grantor quits his/her right over the property. A quit claim deed usually comes without any kind of warranties, the grantor just gives up his/her rights without guaranteeing anything about the accuracy of the title, which means a quit claim deed is relatively insecure one. Although, these are the three most commonly used deeds, there are other types of deeds like Tax deed or Gift deed, as well.

Technology has continuously advanced in a fast-paced manner and has totally revolutionized how businesses are conducted and how communication takes place. Looking back many years ago, people are forced to travel long distances by foot just to sell their services or goods. People used carrier pigeons just to get a message through to who lives thousands of miles away. But now, thanks to man’s limitless innovation, he was able to develop better of means of conducting business and getting in touch with countless people, just by sitting in front of a computer. Websites, blogs, and social networking sites are just but a few means of communication which the modern man can utilize. One such website is called Twitter. With Twitter, you need not wait the whole day or a number of days just to get information about a particular individual or subject. Not only that, you can actually address someone in real time through it. By utilizing this website, the frustration that people before used to go through just to be able to get an incomplete answer will no longer be an issue. Since tweets of most people are also informative, it provides fresh ideas and latest updates about real estate. Homeowners find it easy to look for reliable information over the internet.

Twitter is one remarkable social networking website wherein people can immediately obtain information just by simply browsing it, regardless if it is about a particular person, topic, business or whatnot. Looking at the business perspective, this is one reliable asset. Through Twitter, they will be able to better address the needs of their customers and employees in a short period of time, resulting in better customer service and eventually increased in sales. Furthermore, a company can get conveniently get feedback through this from dissatisfied customers and then be able to do something about it in a fast timeframe, preventing a negative feedback from escalating. This will then establish a better and healthy relationship between customer and company, bridging the gap caused by bad service or product.

Overall, utilizing the technology of social networking, particularly Twitter, can make a huge difference in one’s lifestyle and business. Being able to update people just by a few simple online navigation can mean better sales, results, customer service improvement and a better interactive relationship. This is really a great advancement in technology and we should utilize it for the prosperity of our business.

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