Feb 05

Learn How to Write A Contract – Contract Considerations And Contingencies – Rich Investor Series

For a contract to be legally binding, it can be anything from a note handwritten on a dinner napkin to complex terms and conditions written on a fancy print form. Back in the day, a contingency could allow a buyer to easily weasel out of any contract. In other words, they could call off a contract without incurring any penalty which means if a buyer holds on a property and changes his mind at the 11th hour, you will be left stuck with your property and start looking for a new buyer.

 

These contingencies will often vary from one state to another but there are those that are almost universal in all states. This article will look at the basic contract considerations you will need to make, what needs to be included in a contract for it to be legally binding, and also look at what is expected of each party that appends its signature to a legally binding contract.

 

Contract essentials

The following items must feature in any legally binding contract

 

  1. Any contract must be dated for it to be a legally binding instrument.
  2. A contract should also list the full price of purchase for a property in question i.e. the price that has been agreed upon by both parties
  3. A contract should also contain the full official names of the buyer and seller plus any third party that is likely to challenge the contract in a court of law. A third party can be someone like a wife of the seller plus their official addresses.
  4. Of course a contract can never be complete without the address of property that is being sold. You can always put a street address if the houses on that street are not numbered – in which case you may need to get a lot and block number from your local tax map. In case you are buying a condominium, you should ensure the building and apartment number, along with the street address are clearly mentioned in the contract.
  5. The other thing that has to be mentioned is the date and place of contract closing. While this date is often subject to change, naming the time and place for property transfer is an integral part of any agreement.
  6. Last but not least, a contract can never be complete if there are no signatures. Each person adversely mentioned in the contract, and who plays an integral role in the transfer of property ownership should append their official signature. In case a signature is missing, the whole contract can be invalidated.

 

Some of the common purchase agreement contingencies include appraisal fee, loan contingency, home inspection, roof inspection, lead-based paint, wood destroying pest inspection, private well inspection, asbestos, mold, or radon inspections etc.

 

Be sure you understand everything that is contained in a contract before appending your signature. Most certainly it is a lawyer or closing agent who will help draft the contract. Sometimes they may use jargon that you may never live to clearly understand the meaning. You can always ask your agent or lawyer to give you a copy of a blank contract so you can look over it in detail at your convenience.

 

 

Feb 05

How do you plan to finance your real estate investment business?- Rich Investor series

Beginning real estate investors will almost always need some financial boost for their initial investment. As a matter of fact, sometimes even seasoned investors who can afford to pay cash for their investment will often opt to secure financing instead of using their cash reserves. This is often seen as a safer way of cushioning liquid cash in the event that things don’t work out well. So where do you get financing for your real estate investment business?

 

For starters, you can always check out your local bank where you have a saving or checking account. More often than not, the good business between you two can lead to better terms than starting out afresh with a new institution. But what happens if the bank does not offer such kind of loans? No doubt they can always refer you to another institution.

 

Be advised that most real estate investment loan products would need you to place a minimum of 20% down payment and will often come with a higher rate of interest than loan products for owner-occupied homes. Needless to mention, such terms can be hard for new investors to handle, particularly if they are yet to generate a stable flow of cash from their investments. The good news is that there are alternatives to work around the issue and come out as a rich investor in the long run.

 

For starters, you can always seek referral from family and friends. If you know of someone who has worked with a loan officer or lending institution and made the loan process less of a hustle, you can always ask for their contacts and get started with them.

 

The options at your disposal

The type of loan product you can get will be pegged on several factors including the type of property you wish to invest in. is it a multifamily dwelling, a house, commercial real estate or land. You should know by now that different properties will qualify for different kinds of financing. Another determinant is your credit history, which will have a huge impact on the rates of the loan you plan to take.

 

Savings banks and other savings associations have for a long time now been specializing in home mortgages. Commercial lending institutions sometimes prefer to fund short-term construction projects which are then paid off with another lump sum amount once the project is complete.

 

Another option is from credit unions which have become very popular with mortgage loans. Federal and state laws that control and govern most banking activities are not applicable to credit unions, hence their large popularity. Further, this has made the loans very flexible and can be customized to meet an investor’s needs.

 

When you apply for a real estate investment loan at a savings and loan association, credit union, bank, or any other lending institution, you will have to work with a loan officer who will evaluate your financial details so as to determine your creditworthiness and know the type of loan product that is customized to your needs. Such a person will always be a good point of contact as you start to acquire properties and kick start your journey to becoming a rich real estate investor.

Dec 12

An Exposure to Creative Financing for Real Estate

An Exposure to Creative Financing for Real Estate

Real estate is one of the most exciting investment options out there. There are many deals both nationally and internationally and the versatility of the market makes this one of the most ideal investment to add to your portfolio. In addition, there is always a demand for housing being that the population is increasing every year and if you are able to target the appropriate market strategies; your cash flow will be impressive. Read the rest of this entry »

Dec 11

The Benefits of Foreclosures as an Investment Option

According to the National Association of Realtors (NAR), the foreclosure inventory has reached the lowest levels since 2010. While this might be a good indicator in the overall real estate market, it also points to diminishing opportunities that lie within the foreclosure market for investors. If you are looking for a chance to get hold of good property and high return on investment, this should be the time to go out and grab the few existing foreclosed properties in order to help grow your investment portfolio. There are many reasons why these properties have been a hot cake in the market and understanding these will help you create a calculated strategy in investing.

Valued Property
There is no denying that foreclosures are painful and through the pictures and reports you might have seen in the media, it is obvious most owners had put a lot of money in their homes. As such, most of these properties are either prime or very high value homes which only the bad economic times have forced the owners to give them up. Investing in foreclosures in most cities is thus a profitable venture which will increase your cash flow in time especially as the economy starts picking up and more people return to the market for their homes.

Quick Transactions

In most cases, banks will give the seller an opportunity to sell and pay off what they can from the sale. This is called a pre-foreclosure and at this stage, you will find the seller is too eager to offload the property and downgrade to another home. As such, you will not be boggled down by unnecessary haggling which slows down most of the real estate market deals.

Value for Money

The best selling point of foreclosures is the affordable price. These properties present great bargains options whether it is pre-foreclosure or even REOs. In all cases, the homeowner wants to sell as fast as possible and if the property is already in foreclosure, banks also want to offload the property in order to concentrate on their core business. If you are suave at picking foreclosure deals, you will in no time have a very wonderful looking portfolio.

Other benefits especially for REOs include the fact that such properties have good titles. In addition, you have the opportunity to remodel the house especially if the price is very favorable and then resell the home at a higher profit margin that can be provided by any other investment in the market. Before jumping into the market, always do your research especially through online listings.

Evaluate the process too and inspect the property plus the neighborhood to ensure you get value for your money. The fact that most sellers are desperate to offload the property should also be used to your advantage and hence, try to negotiate as much as possible in order to bring the price down as far as possible. So, go out and enjoy seeing your portfolio grow gradually.

Nov 25

Debunking the Myth on Short Sales

Since the home bust in 2007 the real estate market has been in a flux. Many home owners had to watch in trepidation as foreclosures loomed without any way out of it. However, most property owners are now using short sales as an exit strategy and as an investor; this might be your way of owning property at favourable prices. If you are looking for property in the real estate market, you might have noticed that the hitherto popular properties with equity are very few today and it is thus imperative to get a few ideas on short sales in order to enjoy the apparent benefits.
In the simplest terms, a short sale is an agreement between a lender and the current owner of a home to accept an amount lower than what is owed to pay off the money. It is different from a foreclosure because if your property is foreclosed by a bank, then it will already be repossessed and sold and you will still be pursued for the deficiency on your mortgage repayments. To get a short sale on a property, the owner will have fallen several months back in payment and though it sounds very applicable on paper, it is a very complicated process.

To instigate the process, the investor will have to find a bank officer with authority to accept a discount. This is the loss mitigation rep.  This is obviously easier said than done and involves calling the loss mitigation department of your bank and before they accept your offer, it might still take time. For the lender, short sales help in saving costs associated with the complicated process of foreclosure including attorney fees among others.

If you are a suave investor, then you can buy a short sale from the lender and with the agreement of the homeowner. There are many misconceptions about these properties out there but you need to get the right information in order to succeed in the market. As a buyer, you will obviously get a bargain once the complicated process is over. The waiting time is the only hurdle and as long as you are patient, then you can recoup your money or even have a home which people can pay anything for.

The lender is interested in the property’s information and the kind of deal you have agreed with the homeowner. The property will have to be evaluated again, but you can also include your own appraisal as a form of the aiding this transaction. For the homeowner, the lender will still go in-depth and try to ascertain whether they are really broke or if there is any benefit they want to accrue from the short sale. This means a signed contract must be presented to the lender to ascertain there is nothing fishy going on. Short sales might not be the most popular ways of buying property but with careful assessment of property and availability of considerate lenders, you will soon have the best property the market has to offer.

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