Real Estate Financing - Creative Financing Tips

This year, Americans are expected to borrow $1.33 trillion in acquiring 7.4 million houses, condominiums and co-ops. Before you do any real estate financing, if you have bad credit because of consumer debt like credit cards or personal loans, you'll want to try to eliminate or reduce this debt since it will affect your ability to qualify for a commercial or home mortgage and make the estimated monthly payment. If you have monthly obligations like car payments, credit card payments, personal loan payments, student loan payments, etc., be sure to take these into account when you are determining your bottom-line affordability figure.

If rates in the current market are high, you'll probably get a better price with an adjustable-rate loan. A fixed-rate mortgage means that the interest rate and principal payments remain the same for the life of the loan but the taxes may change. Loan programs for down payments of 20% or less require that you purchase Private Mortgage Insurance (PMI).

Interest rates may go up if a rosy picture is painted that the economy is flourishing - like more jobs being available; this can lead to inflation which will send the rates up. You'll also need to consider closing costs and the escrow account for your taxes and insurance. Also keep in mind when you're financing or refinancing that most people move or refinance within seven years.

Most of all you'll need to decide what you can afford to buy. And if a loan application isn't approved for the first time, it can always be resubmitted after modifying it, for example, like raising the amount of the down payment. If you're a first-time home-buyer it is possible that you may qualify for a lower down payment or lower interest rate; check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs like this available.

Revealing a FICO credit score is not a requirement for most conventional or government loans like FHA loans or VA loans. Thirty-year fixed-rate mortgages offer consistent monthly payments for all of the 30 years you have the mortgage; if the market is good, you can benefit from locking in a lower rate for the full term of the loan. 15-year mortgages are an ideal option if you can handle the higher payments and if you'd like to have the loan paid off in a shorter period of time, for example, if you plan to retire.

A 20-year fixed rate mortgage term will mean higher payments, when compared to the 30-year fixed-rate mortgage. If you've applied to other lenders, when you finally do select a good lender you may have to explain why there are other inquiries from lending institutions on your credit report. Check with your CPA or accounting professional; you may be able to deduct the interest you pay on the mortgage loan and some of the financing costs of the home, like points, on your income tax return.

Be careful when working on your real estate financing; if you make too many loan inquiries, with applications, it may look like you're shopping for credit; this can be a red flag for many lenders. Keep in mind that adjustable rate mortgages are best for homeowners who aren't planning on staying with a property for a very long period of time.

Collect a few of the local home guides you see stacked up at the local grocery stores or supermarkets and look at a few of the ads in the real estate section of your Sunday newspaper for houses you might consider buying. Get lots of advice about real estate financing, mortgages, interest rates, mortgage rates, mortgage refinance, bad credit mortgages, etc., from many different sources, don't rely on one source, and think about what makes sense to you. And thinking positive about real estate financing is important but so is being realistic.

World's First Billion Dollar Home

Nestled in the heart of one of the world's poorest countries lay the construction site of all construction sites. Ranked #14 according to Forbes' latest edition of the world's richest people with an estimated net worth around forty billion dollars, Mukesh Ambani is building the world's first house with construction costs that could break the billion dollar threshold.

Mukesh Ambani serves as chairman of the India-based conglomerate Reliance Industries and is constructing a towering edifice that will be called Residence Antilla, after the mythical island. A maverick that split from his brother a few years ago over the family business, Mukesh Ambani has seen his wealth soar as the petrochemical company, Reliance Petroleum has seen profits skyrocket the last five years. With that growth as well as strategic investments in a number of other industries and developments, Ambani has become the obsession of many young men's dreams and arguably one of the most disliked people in all India.

When Mukesh Ambani joined his father's company, he recreated it, shifting its focus from textiles to petrochemicals and polyester fibers. He also oversaw the construction of sixty technologically-advanced manufacturing facilities that enabled Reliance to raise its capacity from one million tons annually to over twelve million. He also spearheaded the building of the world's largest, non-corporate governed refinery in Jamnagar, India. It produces over 660,000 barrels a day. Coupled with the other power generation and port infrastructure investments, Mukesh Ambani spent upwards of twenty-four billion dollars.

Such savvy have helped Ambani develop the conglomerate that is Reliance Industries. His most ambitious undertaking may be Reliance Infocomm. A network of information and communications technologies, Reliance Infocomm looks to connect over 1,100 cities across India with a broad array of voice, data, and other services along a fiber-optic network at the lowest cost in the world.

Part of his charm and problem is ventures like the new billion dollar home he is constructing in the financial heart of Mumbai. A nation with significant problems, Mukesh Ambani is moving forward in constructing a grand tower that will serve as his permanent residence but be the ire of peoples contentment just as long. According to architectural plans, the billion dollar house will measure in excess of 570 feet tall. It will have twenty-seven floors. Of that, six will be used to park the one hundred and sixty-eight cars he owns. Another four will be used for living quarters for the Ambani family of six. There will be one floor for vehicle maintenance. One floor set aside as a theatre floor with some expensive garden features. And one floor completely dedicated to gym equipment. The roof will have three helipads, one for him, one for his wife, and one for the kids. It is believed that a staff of 600 will be used to maintain and keep the house and its dwellers.

With hanging gardens and high ceilings, the billion dollar home on Altramount Road will be eco-friendly as well. The frame of the building will be serviced by a spine, similar to a human one that will be supported by structural pillars. Included in the construction are waterfalls and a huge garden that will cover an entire floor. The outside of the home may be even more impressive than the inside with what is being called, a living wall, running the length of the home. Plant life will scale the entire height of the building, setting a world record for the tallest continuous living thing.

That six hundred staff will be citizens in one of if not the poorest countries in the world. While the Indian economy is doing extremely well, there has been very little trickle-down to the working class citizens of the country. In fact, the amount of money that Mukesh Ambani will spend on the home is equivalent to the annual income of over 1.5 million Indian workers. Mumbai is home to over seven million slum dwellers. And an additional three to four million live in substandard housing. Mumbai is a study in contrasts. With square footage costs exceeding $1,800 in the district where Ambani is building, housing in Mumbai is hard to come by.

With the economy in India, the practices of the newly minted wealthy have ruffled the feathers of the established, old money. A generation ago, wealthy families had little desire for material possessions. Many of them avoided owning cars and lived in small apartments. They did not drive Mercedes or BMW. They did not want to have any association with appearing eccentric or indulgent. That practice has gone out the window with men like Mukesh Ambani building extravagant, opulent buildings to suit their fancy. With tracts of land unavailable, wealthy families have decided to build up. Skyscraper construction has risen in Mumbai as evidence that land is at a premium.

Recently Mukesh Ambani had construction of the billion dollar home put in jeopardy as a government agency attempted to rule the land deal that paved the way for the house illegal. The tracts were owned by an orphanage who received what was considered fair market value for the property. In fact Ambani's offer was the highest received by the orphanage. With work only a year away from completion it is difficult to believe that the government will be able to do anything more than fine Ambani if it is found that he did something illegal. But with his bid being the highest and the orphanage believing it got the best deal available Ambani hardly has a worry. Therefore he can look forward to his birthday celebration in October when a portion of the house will be made available.

Mukesh Ambani must have found his current home, the 14 story Sea Wind unsatisfactory to hold the gala. It does not have the ballroom the billion dollar home has. But it also does not have the headache.

Outsmart Uncle Sam and Keep Your Real Estate Profits!

What if you could have a cool million dollars in your IRA within a few years so you'd never have to worry about retirement income?

What if you could do this without writing another check to your IRA?

The information you're about to read is unknown to most of the world.

Most people think the way to grow your IRA is to make annual contributions and let the manager of the IRA invest it in stocks and mutual funds.

Then, over a period of 20 to 40 years, it grows into a large sum of money for your retirement.

That's the thinking of conventional wisdom.

Let me tell you how I feel about conventional wisdom.

It's almost always wrong!

Let's take a look at a better way.

I speak to groups of people all over the country and sometimes

I ask how many in the room have an IRA. I have never had more than a third of the class answer yes.

So, why don't more people invest in an IRA?

Here's what they tell me:

They can't turn loose of the $2,000 or $4,000 maximum contribution.

Having the money at hand for immediate usage is a lot more important than retirement.

They never thought about it.

They feel they can invest in other investments that can produce more income.

They know they should but never seem to get around to it.

If you're one of these people, it's probably time for you to wake up and take action before it's too late.

You see, an IRA is about all we have left that our ‘’Uncle’‘ will allow us to use to grow filthy rich without paying taxes along the way.

''But my accountant tells me I can't contribute more than $2,000 for me and $2,000 for my spouse each year.''

Your accountant may be right.

There is a limit to how much you can contribute.

But wait!

Go back and ask your accountant if there is any limit on how much your IRA can make in a year from its investments.

He'll scratch his head and tell you no. . . There Is No Cap On How Much Income Your IRA Can Produce!

''OK, so tell me how I can make my IRA wealthy without making any contributions.''

Keep your shirt on, I'm getting there.

If you're a real estate entrepreneur, you're making money from buying and selling or keeping houses.

If I've trained you, you're doing this by using little or none of your own money. The objective is to create cash and cash flow by leveraging your brain, not your wallet or credit.

Your IRA Can Do The Same Thing

That's right. Your IRA can buy houses, the same way you do.

Of course, there are a few rules and more questions.

I strongly suggest you do not do this without good, competent advice and participation.

I must warn you that Uncle Sam frowns on buying a house in an IRA with the intent of flipping it quickly.

They may tax you on the profit.

Perhaps you may want to hold it in the IRA awhile before you flip it.

Perhaps you'll only do one or two a year.

I can't answer these questions for you and frankly, many accountants can't either.

Seek the best advice you can find and do what you feel is best for you.

Your IRA must be self-directed.

You shouldn't get your IRA involved in any deal you or your entity was previously involved in.

If your IRA buys a house, it should go directly from the seller to the IRA and not pass through you. Don't take back notes on houses and give or sell to your IRA.

Keep it clean.

The last thing I want you to do with your IRA cash is to buy real estate. Why?:

Because You Don't Need Money To Buy Real Estate . . . And Neither Does Your IRA

Put some deals in your IRA that don't require cash.

Of course, there are exceptions and rules. So, take the time to learn about the ROTH and use it.

If you qualify I promise you it will be a huge return on your time investment.

Can you option a property without money?

Yes!

Can you wholesale a house without money?

Yes!

Can you take a house ''subject to'' without money?

Yes!

Can you lease/option a house without money?

Yes!

Did you know your child or grandchild can have an IRA you can start without their knowledge, that can become their own when they come of age?

What a way for you to provide for your child's educational future. Without Writing A Check! Without Borrowing A Dime!

Most people spend more time buying a car, planning a vacation or taking in a football game than planning for retirement.

So, what about you?

Getting the Most Out of Your Investment!

Great, you have decided that you want to invest in real estate, perhaps you are thinking of flipping a house or thinking of renting it for long term appreciation. Regardless of your exit strategy, more likely your investment will include challenges such as finding the funds to support the project, finding the right property, dealing with contractors and so on.

The truth is that everyone invests in something throughout their lives. Some of us invest in stocks, gold, stamps, cars, their hobbies or real estate. Personally I believe in real estate not because of what the media says on the 6 o’ clock news but rather due to the fact that history shows that over 90% of all millionaires have become wealthy by owning real estate. If this is true, why isn’t everyone doing it? Unfortunately there is more to investing than most people might think. The first obstacle that most of us have to cross is coming up with the money to invest.

Who says it has to be your money to invest? Lets get high on OPM or other people’s money. Generally humans go through three phases in their lives. When we are born we are dependent on our parents, then we want to become independent and finally we realize that we cannot do everything ourselves therefore we become interdependent of others. You can easily approach your circle of influence to partner with you in a project. For example if you know someone who has some cash sitting around and he is tired of earning 2%-3% at the bank you can create a win-win relationship by offering your real estate expertise in exchange for his investment. Your expertise could include finding the property, renovating it, and taking care of the day to day management activities. The key is to remember to make sure that each one of you brings different values to the relationship. If neither of you have any investment funds but you are great buddies, it’s not going to propel you forward.

If you have owned a house in Calgary for the last couple years you should have seen a substantial equity increase in your home. The money sitting in your home is a great feeling, it gives you security and piece of mind to your family. Ask yourself the question, how much profit is that equity putting in your pocket each year? Banks nowadays will be happy to provide you or your investor partner with a PLC (personal line of credit) against your home and then you can use those funds to invest in real estate and earn a lot more than your savings account would generate.

The Calgary real estate market is so expensive, where do I buy? Probably 99% of the listings today aren’t going to fit your criteria. But that still leaves you with lot of options available to choose from. One of the biggest mistakes that I see Investors making is calling up their REALTOR® and asking them to give them a call when he sees a great deal out there. In my point of view this statement is no different than saying to a Doctor to fix your problem but you won’t let him to examine you. My suggestion to serious investors is to decide what part of Calgary or communities he is planning on investing and get familiar with the neighborhood. The investor will need to consider the type of homes he is after, general size, garage or no garage etc. The more specific the criteria the better chances a REALTOR® have of finding a solution. This approach will also forge the investor to become a specialist in the area and he will have a great insight on property values. It will take some time to go through the learning process but dividends will be rewarding especially when an undervalued property shows up on the market.

You think you’ve found the right house, how do you make sure it’s going to work? Doing too much due diligence will never get you into any trouble, not doing any research will cost you a fortune. At this point you should be educated enough to know approximately how much do certain renovations will cost. It’s worth the effort to visit suppliers to get familiar with prices. I suggest outsourcing the same suppliers as builders are using, this could easily save you 10%-25% compared to retail price. If you just need to replace a couple of doors you can find business in the city who sells recycled materials. Most of the time if you just paint it, it will look brand new and you could buy it at 1/3 of the new door. At the time of making an offer, you aren’t going to have any time to ask contractors to provide you with a quote. Plus homeowners wouldn’t appreciate strangers coming through their homes. Prior to your house hunting, you can interview a few contractors and have a general idea of what their prices are. For instance to replace a carpet in a house it would probably cost $3.50/sq.ft. supply & install or paint $2/sq.ft. I don’t recommend starting to measure floor space when you are viewing a home but you should be able to estimate an approximate cost of repairs in 5-10 minutes by using round figures to the nearest thousands. Always over estimate your expenses because it’s guaranteed that you will have surprises.

What kind of renovations should I be doing to maximize my profit? The trick here is to renovate the house to the point where the potential buyer will fall in love with it but it doesn’t cause the resale price to be above the norm in the community. According to the Appraisal Institution of Canada finished basements will only return about 1⁄2 of the investment and the greatest values are usually gained from the renovated kitchen and bathrooms. If you are planning on doing multiple renovation projects you need to set up a system to follow. You need to now exactly the type of colors, carpet, baseboards, window coverings that you are going to use. Once you have this information nailed done, you are just repeating the same process over and over until it becomes “cookie cutter” and that will save you a lot of time.

After the renovation is complete staging always helps to sell a home quicker and for a higher price. To speed up your learning curve on how to stage a house you can visit a few show homes on the weekend. You don’t need to reinvent the wheel you just need to get some ideas from what works for others.

Finally you’ve got the keys to the house and you are ready to swing the hammer. Prior to submitting your offer you’ve decided what kind of renovations you will be doing and you have an idea how much it’s going to cost. How do you orchestrate the contractors so it won’t be nightmare? First and most importantly who ever you choose to hire at whatever price, make sure that both of you understand the exact plan. The best way to avoid any misunderstanding is to have everything in writing and in great detail. If you want to establish a long term relationships with contractors it doesn’t hurt to discuss your policies and perhaps have them to sign off on it.

Keep in mind that you must take action. As with anything in life, knowledge without action equals nothing. Although, dreaming is an enjoyable and important process, only actions can transfer dreams into reality.

The Best Time to Sell a Vacation Home

Whether a vacation homeowner is trading a house in the woods for a pied-à-terre or exiting second-home ownership altogether, he or she needs to know that putting a vacation property on the market requires a different strategy than selling a primary residence.

Towns with a predominance of second homeowners have seasonal quirks to their real estate markets. Sales activity is driven not only by the time of year when most visitors descend, but also by the season when potential buyers hope to get the most use out of their homes. Pinpointing when demand ebbs and flows is the first step in deciding when to put a vacation home on the market.

On Michigan’s Upper Peninsula, where second-home buyers flock for summers on the lakes or winters on snowmobiles, the busiest sales months are from March to October. Putting a house with lake frontage on the market in the dead of winter will not attract many buyers, said Jeff Dohl, the owner of Yooper Land Realty in Iron River, Mich. Buyers want to see the house when the lake shore is not piled high with snow.

If a property must be listed in the colder months, Mr. Dohl said, selling it requires elbow grease: At one listing last February, he shoveled and drilled through several feet of ice and snow to the ground level for the benefit of two potential customers from Chicago. “They wanted to see the beach,” he said.

And while buyers are looking for lake homes in the warmer months, by late fall, Mr. Dohl, said, there are more buyers on the lookout for hunting cabins. “It shifts gears,” he said. “You move more into camps and hunting properties out in the wilderness.”

Sales activity on the East End of Long Island is driven by year-end bonuses, usually distributed in December and January. Many buyers look to close on homes by April in order to be moved in by summer, though sales are still strong throughout the summer season, too.

In Sedona, Ariz., the opposite is true; there is little foot traffic from second-home shoppers in the hottest months. “We don’t get a lot of second-home buyers over the summer,” said Lon Walters, a Sedona real estate agent. “Spring is absolutely the biggest time. It’s double of anything over fall.”

And in Truckee, Calif., 12 miles north of Lake Tahoe, sales traditionally peak after the Fourth of July, when cold summer fog settles over the San Francisco Bay area, the home base of most vacation-home buyers. The selling season goes through the winter ski season.

Rich Harter, the owner of Pacific Crest Properties, says some owners take their properties off the market if they don’t sell by the start of ski season; that way they can rent out the house to skiers. “A lot of sellers are under the misconception that winter is a slow sales time,” he said, “but that is erroneous. We sell a lot of homes in the winter, especially if there is good skiing.”

Realtors say that second-home sellers have an advantage because their homes generally have less in the way of belongings and furniture. “Vacation homeowners typically don’t have as much clutter,” said June Slusser, the owner of Coldwell Banker High Country Realty in Blue Ridge Ga. “That is so important in showing.” She noted that many of the cabins she sells are outfitted with high-end log furniture, and those that are not, are increasingly staged to create a cozy mountain atmosphere.

Those looking for a summer home want to see houses set up to look like warm-weather retreats even in the cooling days of fall, brokers say. Second homeowners in the Hamptons might not open their swimming pools until Memorial Day, and might close them up for the winter by mid-September, but Cathy Tweedy, a vice president at the Corcoran Group in Bridgehampton, recommends that sellers stretch the season. “The earlier they can open the pool and start landscaping the better,” she said. “And the longer they can keep it going, the more attractive the property.”

Five Key Things to Consider When Choosing the Estate Development for Your Investment Property

Purchasing a home or unit as an investment is often one of the biggest challenges you will face in life, outside of the purchase of your own home. We all know what we like and do not like and because of this it is really easy to buy a home that you like but quite often what you like in a home does not translate to the likes of potential tenants.

There are five key things to consider when choosing where to purchase your investment property and what Estate Development you should choose.

Key Issue 1: Choose an Estate Development with Lots of Parks Close By

Nobody wants to live in a concrete jungle. Even in large unit developments today, you will notice that developers spend an enormous amount of money ensuring they build a complex that contains at least one large area that residents can use like a park, so why would you want to buy a home in an estate that has no parks.

If you look at the majority of people who want to live in rental properties, they are one of two types of people, they either have children or are grandparents with grandchildren. Having a park close to your investment home will ensure that people will want to rent it because they know they will be able to let the children play in the park with some level on safety.

In many estate developments in Australia, the developers are ensuring that all homes are within viewing distance of a park. This means you as a parent can be working at home but still able to see you children. This will give a potential tenant with children a certain level of comfort.

Key Issue 2: Choose a Development Close To Public Transport

When I am choosing to purchase any property, especially an investment property, I always assess how close the property is to Public Transport. Throughout the world, many people are dependant on public transport and if your property is not close to public transport you may find it difficult to lease the property.

For example, my own wife comes from Brisbane in Australia, because she grew up in a city which has a very well defined train system and because of this she actually didn't get her license to well into her 20's because there was no need. This meant that when we were choosing a property to live-in we had to ensure that we were always close to the Public Transport system. I have found that people who live in cities with quality Public Transport, have a larger number of people without licenses which means if your investment property is close to public transport it will certainly attract potential tenants.

Key Issue 3: Choose a Development Close to Public Facilities

No one wants to drive a million miles or spend hours on public transport to access public facilities such as Hospitals, government services etc. The general rule of thumb that I use for choosing sites is that a range of government services such as social security, hospitals, Centerlink etc should be within a 10 km radius of the potential site.

Key Issue 4: Choose a Development Close to Schools

Many tenants are choosing today to live close to the school their children go to for one of two reasons. The first being safety and the second being for the health of the children. With the world's politicians on a major push to deal with childhood obesity, many people are moving into properties that allow their children to walk to school. Being close to school ensures that they will be safe but also ensure that they do their daily exercise.

Key Issue 5: Choose a Development Close to the Shops, Doctors etc

Most new developments today are required to include land that has a commercial use for services such as shops, doctor's surgeries, offices etc. However, some older developments have not had theses requirements and you will often find that they are more difficult to lease properties to tenants because the tenants need to travel too far to access these types of facilities.

Whilst there are many issues that will affect whether a property will be rented such as vacancy rates, number of rental properties on the market and the type of property etc ensuring that these five key elements are satisfied will give you a certain advantage to those who have not met these key issues.

How A Cash Out Mortgage Can Help You Get Your Equity And Save Money

Getting money out of the equity in your home is certainly one of the cheapest ways to get the money you need. No matter what the money is to be used for, the equity money on your home is probably the best way to pay for it. Here is how a cash out mortgage can help you to finance your projects - and do it cheaper than any other method.

In order to get a cash out mortgage, you will need to refinance your existing mortgage. The idea behind this, though, is to save money - not add to your existing debt. By waiting until you can get an interest rate that is lower than your current rate, by at least 1%, you will be able to save some money. But there is more - if you can shorten the length of your existing mortgage, by at least 5 years, you will be able to save a lot more money - possibly many tens of thousands of dollars.

Although it is possible with some lenders to refinance your mortgage for as much as 100%, or more, of the value of your home, this is not advised. To avoid having to pay Private Mortgage Insurance, you want to stay away from a mortgage that involves more than 80% of the loan to value of the home, and some lenders may only let you borrow 75% of it. This may cut down on the amount of equity you can obtain - but you still should be able to get a lot of it.

The amount of equity that you add to the total amount you owe to the lender, is the amount of equity available to you. This means you want to carefully select how much equity you will get, and it should be determined by how much you need for particular projects or bills. It is not a good idea to take out all you can. The lender may also limit the amount of equity you can obtain because they will decide how much debt, and the payments you can afford, which will be based on your credit report and current income.

A cash out mortgage is a great way to get access to your equity. However, you do need to remember that there are costs to getting a first mortgage - which involves a few thousand dollars. For this reason, you should not consider refinancing, unless you are planning on staying in that home for at least another 5 years. The added costs will take you at least 3 years just to get back your money and break even. Only after that period of time will you begin to enjoy the savings, and start seeing more equity being built up in your home.

After you get the equity out of your home, you do have the liberty of spending it the way you want. This means that you can use the money for a wide range of things including, vacations, debt consolidation, college education, getting another car, and more. Because of the low interest rate (lower than any with other form of borrowing), it gives you the best way to go as far as interest is concerned.

However, your greatest investment, though, will come from equity money that is to be put back into your home by remodeling, additions, or other improvements that you make to your home. Not only will this improve your level of living while you are in it, but it also could instantly raise the value of your home, too - giving your home even greater equity.