9 Real Estate Disasters!

9 Real Estate Disasters You Will have to see to believe, home, buying, tarmls, houses, gross, fire, fixer uppers, outdated. http://jessicacoaches.com/2017/04/9-real-estate-disasters/

What you are about to see is pictures of actual old listings of Real Estate that sold.  We have decided to throw a little honest advertising spin on it. Enjoy!


Previous Owner was an artist!  One of a kind murals adorn the walls of this gem.


Character! This home is a little bit of France at your fingertips!


 

This deal is on fire! Owners had to leave without notice, their loss is your gain!


Quaint no more! This home has a brand new addition.


Pride of ownership! Owner put some unique touches on this home.


Lagoon-like Pool! You’ll feel like you are in the jungle when you swim in this delight!


This home is a diamond in the rough, polish it till it shines!


Move in Ready! This home has everything and more that you need to make this house a home!


Vintage Charm! This home will transport you to a different time.

 

Do you like fixer-uppers?  Huge Renovations?

Related: 4 Ways Real Estate Investing Could be Making You Money Right Now!

What you need to know before you buy a home!

What you need to know before you buy a home, financial freedom, money, real estate, Tucson, AZ http://jessicacoaches.com/2017/03/what-you-need-to-know-before-you-buy-a-home/

Here is the honest truth about renting versus buying.  The popular line is you are just throwing your money away renting when you could be paying yourself! Right? I know all the investing books I read seemed to tout that line.  It, however, is so much more complicated than that.  So here it is the nitty gritty, no slanted views, pros and cons to owning versus renting.

Renting:

Pros:

You have more freedom.  Leases can somewhat limit this, but you are not tied down.  You don’t have to be in a good seller’s market to leave quickly.  If you get a new job and the commute is far, just move.  Want to take a three-month sabbatical traveling?  Just plan it between moves for no at home costs.

-Simplicity.  You get to pay one lump sum for many housing needs. Maintenance? That isn’t you.  Property Tax? Included! Sometimes even your utilities are included.  Does something need a repair? Just call! No stress for you, one less thing to think about.

-Amenities.  If you are renting an apartment, you get access to many luxuries through communal space.  Pools, Gyms, Lounges, and more. Houses with those amenities can increase price drastically.

-Low upfront costs. An application fee, a security deposit. These can be very small compared to the upfront fees of purchasing a house.

Related:  How to Buy a Property With No or Low Money Down!

 

Cons:

-You have no control.  A landlord can choose not to renew their lease with you, and you will have to find someplace new.

-Your rent will increase.  Your rent should keep pace with market conditions and likely will go up unless the property is in disrepair.

-Does not build net wealth. You are building someone else’s net wealth not your own.

moving boxes financial freedom minimalism real estate renting vs buying

Buying

Pros:

-You have control. While HOAs (Homeowners associations) if you are in one, lenders, and the government has some say on your property it is relatively minimal.  You can change things in your home.  No one can kick you out unless you are seriously delinquent and do not catch up in time.

-The mortgage does not increase. When you buy your house, if you chose a fixed rate mortgage, your mortgage payment is set at the market values when you purchased your home.  This means that your debt will become less significant as inflation increases.  Property taxes and Insurance which are lumped into your payment, however, can and will increase.

-You build net wealth.  Yes, you can build net wealth in your home, but you will also be giving a lot of other entities a cut. There is money lost to fees of buying and selling, and of course, the interest which is front loaded into those first years.  It takes a long time! The longer you hold the home the better.  I would suggest not buying a home, if you do not plan 100% on owning it for the next five years, even then you are gambling on the market to have been stable or good to be able to get out without financial harm so try to plan for ten years.

-You get options. You could rent out your home and make money.  In a tough spot (While generally not advised it is better than credit cards if done correctly.) you can take out equity from your home.  Paid off your home? You could Seller Finance out to get a nice high predictable rate of return that is secured by a property you know better than the buyer.

 

Cons:

-If you are not careful, it can end up a financial trap.  If markets dip as they have done before home value can go down and you could end up stuck in your house for a very long time.  My methods of protections are never buying a home that if rented the price fetched would not cover the mortgage, insurances, and taxes and still leave some wiggle room.

-You cannot control everything.  A methadone clinic could move in close to your house.  A large employer could go belly up.  Your neighbor could let their house go to pot.  All of these can tank the value and your ability to sell your home.  Bye, bye equity.

-It can be an expensive hassle.  Insurance, taxes, maintenance, repairs.  These are all things you have to plan for and come out of your pocket.  Unseen, non-mortgage costs can sneak up on you in a house. Doubling your electricity bill, all those tools and stuff you end up buying, that urgent repair that comes up and costs three thousand dollars.

How to Buy a Property With No or Low Money Down!

How to buy a property with no or low money down investment real estate http://jessicacoaches.com/2017/03/how-to-buy-a-property-with-no-or-low-money-down/

Most of us have heard that it is smart to have 20% downpayment to purchase a home.  And it is.  Your payments will be lower, less interest will be paid over the course of the loan with a large downpayment.  However, if you are using these loans as a vehicle to purchase an investment, meaning not just a place to live but to make money, it can be a wise choice for a variety of reasons.  There are also people who just prefer to own a home, though sometimes it does not make sense.  Check out this article about the pros and cons of homeownership:  What you need to know before you buy a home!

Loan Types

1. FHA – Federal Housing Administration. 3.5% Downpayment.
Pros: Low down payment, good for up to 4 unit properties, accepts lower credit scores.
Cons: MIP (Mortgage Insurance Premium)  this is additional insurance you must purchase and pay monthly with your mortgage which lowers buying power.  If you are competing with other offers with everything but the financing being the same, FHA tends not to get the contract.  This is because FHA loans have a base quality standards the house must maintain to loan on it, and the lender will often require repairs.

 
Can I get an FHA Loan? LendingTree.com
 

2. VA – Department of Veterans Affairs Loans 0% Downpayment
Pros: No down payment, good for up to four unit properties, mortgage insurance is only a one-time premium which gets wrapped into the loan.
Cons: None to speak of.  If you have access to a VA loan you should have a house.

 

3. Insured Conventional – 3% Downpayment
Pros: Low down payment, good for up to four units
Cons: Not as widely advertised, PMI (Premium Mortgage Insurance), this is additional insurance you must purchase and pay monthly with your mortgage which lowers buying power.

 

4. Seller Financing (Seller Carryback, Land Contract) – terms vary widely but can be low or no downpayment.
Pros:  You are dealing with a person so you may be able to negotiate your terms as there are no standards anyone is being held to. Closing fees will be lower as the mortgage company will not be charging fees such as the origination fee.  You can sometimes get this type of financing with lower credit scores.
Cons: They are harder to find, most people just want all the cash up front when they sell.  The interest rates can be much higher than standard loans.  When you default on a seller financed home the property reverts to the owner and does not go through a standard foreclosure or trustee auction.

 

5. USDA Rural Loans – 0% downpayment
Pros: No downpayment, low-interest rates, not just rural also encompasses small towns, available to people who would normally not qualify for loans.
Cons: There are strict property and borrower restrictions.  Check those out here: https://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans

  

Related: How I never have to pay another penny for my retirement at age 34 on a 30,000 per year salary!

Additional ways to keep up front costs down

1. Negotiate in 3% closing cost coverage into your purchase offer.  This will cover all other fees and leave you with just the down payment.  Be considerate of the seller though and know that this is worse for the seller then selling the property for 3% less due to commissions.

 

2. Purchase a HomePath.com property.  These are foreclosures and short sales.  They have low 3% down payments and often give 3% in closing costs.  They also work to accommodate the first time buyer, giving some homes owner occupant preference and try to make it easier to qualify for.

 

3. Pathway to Purchase Programs.  This program may or may not be renewed with the changes in the government.  It was downpayment assistance program.  There are income and purchase price limits, but they are relatively high.  There is a limitation to what cities the program is in.  For Tucson, AZ they would give up to $20,000 toward your mortgage.

 

4. NHF Grants (National Homebuyers Fund Inc.). http://www.nhfloan.org/programs/index.shtml   Non-repayable grants up to 5% of the mortgage amount.  Not available in all states.  Low to moderate income requirements.

 

5. Other Downpayment assistance programs.   Check out  http://downpaymentresource.com for a search of programs you could be eligible for.

 

6. Ask your lender to see what fees they will waive.  I have found the big lenders more willing to waive fees than small lenders.  Small lenders tend to work harder to get borderline qualifiers into loans though!

 


Do you have any experience with any of these?  Any that I missed?

I never have to pay into my retirement again!

How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/
How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/

That is right, if I decided to hold all my current investments and not pay another cent into my retirement, I could retire comfortably at 65.  What is my secret you may wonder?  Well, it isn’t a secret, this is a proven wealth building strategy that has been used for a very long time.  The only difference from then to now is it is easier to get into the game.

Here it is:  I have someone else investing in my retirement for me.

 

I am a real estate investor.  In particular a buy and hold rental property investor.  What this means is, I buy properties with the intention of keeping it forever, and renting it out to others.  Not only are my renters paying my mortgage, giving me more net worth every month by paying my principle down.   They are also giving me extra to set aside for rental management, repairs, and cash flow which can be used now for life or to get to that retirement faster.

 

If we just held everything we have now at our current rents we would have $3,700 dollars of monthly income at 64 which is when our longest mortgage finishes at.  This is a conservative estimate, paying for property management, capital expenses (big repairs averaged over time), and vacancies.  The best part, rent keeps up with inflation.  So $3,700 today will be the equivalent in the market in 2047.  Which for us would be a very comfortable lifestyle for us.

 

 

So how did a family on a 30,000 salary start real estate investing?  Houses are expensive!

 

Our six-part strategy to fast tracking our retirement:

 

1. Finding a property that needed fixing up and getting a good deal.

 

2. Choosing a property that had at least two units so we could live in one and rent the other out to help cover our costs. See:  House Hacking: Lets You Get Your Housing For Free

 

3. We leveraged ourselves with owner-occupied, low-downpayment, mortgages.   See:  How to Buy a Property With No or Low Money Down!

 

4. We lived in the unit we were renovating doing as much of the work ourselves as possible.  

 

5. We went slow.  This is not a story of buying four properties in one year.  We have been at this for six years and have three multi-unit properties.

 

6. We managed our money, we didn’t let our money manage us.  See: Are you tired of worrying about money?

 

 

Lessons from our first rental property:

 

-Don’t over improve the property for the area.  When you are living in something you tend to fix it up for you, don’t improve it to your standards, improve it to just above the average standard for a rental in your area.  You will be more worried about what renters will do to your property, and you just don’t get the money back.

 

-Rental properties are a numbers game.   Make sure you get all the data and give yourself a conservative cushion to make sure it will be a profitable rental after renovations.

 

-Separate the electricity between the units if it is not already done.  It is just so much more hassle to provide utilities included!

 

-It is better to jump in on something you think is good, than wait for perfect. Even though our first purchase was not the ideal purchase, it still built us wealth and taught us an innumerable amount of things.  It was better to jump in with some basic knowledge than procrastinating finding the perfect property.

 

Now, I don’t have to invest another penny in my retirement, but I am going to! A retirement age of 65 seems so far off and I think with dedication I am going to try to retire before my husband hits 40, which gives us….. just less than 2 years.  Think we can do it?

 

Do you have rental properties? Or are you wanting to get in the game?