What everyone should know about being a Realtor, from one.

What everyone should know about being a realtor, salesperson, agent, houses, sales, home, tucson, az, arizona, salary, education, information, expect http://jessicacoaches.com/2017/04/what-everyone-should-know-about-being-a-realtor-from-one/

Jessica Deratany a licensed Realtor with Tierra Antigua Realty.

I love real estate.  I listen to podcasts about real estate for fun.  When I have access to cable television I will choose HGTV, Income Property is, of course, my favorite! I love touring houses, especially the really old gross ones that can be transformed into something beautiful.  I have been involved in many complete renovations and even a new build.  I have become very skilled at most things it takes to renovate a home, construction, and design.  I love negotiating a deal.

Real Estate is kinda my thing.

So, I decided to get my Real Estate Agent License, the entry requirements seemed pretty low in Arizona, and we have some of the higher requirements in the US.  Minimum of 18 years old, 90 hours of licensure course, background check, and pass a state and school.   All in for the license I was looking at under $1000, for a career with unlimited earning potential what a steal!

 

real estate agent giving couple their dream home keys

 

So I enrolled in a local quality school.  It became very clear that with a few exceptions the bulk of the course was about legality.  I enjoyed learning all of it, but there was a theme throughout the course that troubled me.  Refer out most knowledge, do not give opinions on most things to avoid fault, and full disclosure of any facts you do get. (Which most often seemed to be in a huge page that people would skim because of so much legal talk.)

 

Okay, Okay, I get it, my knowledge about anything other than real estate sales and marketing should not be used in this.  I passed the test with ease.

 

Then I started looking for a brokerage to work for.  This was very eye opening; the big companies straight up wanted half of everything I made.  This was usually till I had paid them up to some cap which in our area was around $20,000.  I also had to pay for all my consumables, marketing, insurance, MLS Access, associations, and necessities.  I managed to find a more human, charitable, local brokerage company, Tierra Antigua, which didn’t seem like my wallet was their bottom line.  So they are out there! However, it had become very clear, very fast that I was now a walking milkshake and everyone had a straw.  

 

 

 

 

It got worse.

 

I was thrust into an environment that was all about how to close.  Everyone who spoke to me, save a few, just sounded like a predator talking about the kill.  Sales is an intense world.

 

So where did that leave me? A person who wants to tell people:

  • Buy a house that makes you money, and never to buy one that would not rent for a good chunk higher than your mortgage. See: 4 Ways Real Estate Investing Could be Making You Money Right Now!
  • Selling your home is costly, and if you’re hoping to make money and not just break even or lose money in real estate, you need to hold on to that house as long as possible if there has not been significant forced appreciation (Owner fixing the house), or market appreciation. (Your neighborhood prices are skyrocketing.)
  • That the big American dream home is an unhealthy obsession and provides a lower quality of life.
  • That signing an agreement with me locks you into a decision for a period of time, and I like choice?
  • That house while pretty on the surface could be a potential nightmare, for this, this, and that reason.

 

Honestly, if my being a Realtor were our main source of income, I would have a quit a while ago and used my Real Estate Salesperson Licence for one of the other many jobs it affords; or maybe sold out and hustled?  I am not a shark, nor do I fit in with them. Perhaps, if I felt more positively towards American consumerism, it would be a better fit for me.  Right now, I keep it to help friends, family, or maybe someone who wants be told what they need to hear instead of want.  But, sadly, they do not seem in high supply.   The access to the MLS is also a great perk, as we are investors ourselves, and it is an amazing tool.

 

 

What is your experience with Realtors?  If you are one, have you experienced the same thing?

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

4 Ways Real Estate Could be Making You Money Right Now! Investment Properties, Rentals, Landlors, Cash Flow, Passive, Income, Appreciation, Leverage. http://jessicacoaches.com/2017/03/4-ways-real-estate-investing-could-be-making-you-money-right-now/

“People always need a place to live.”  This was a statement made by my real estate investment mentor.  He had been a real estate investor from the age of 20; he tried all manner of operations, land to single family homes; commercial store fronts to multi-family housing.  Slowly and steadily he weathered the economic climates, and he worked his way to an early retirement at 45.

Countless people are investors in real estate, some small like me who own only seven units, some big who own apartment complexes all over the place.  Some passive who have all their properties managed by someone else, some active who play the role of the property manager.  Real Estate should be in your portfolio.  When held for long times it is steady.  When leveraged the return percentages can be very high.  When fully paid off they are an amazing constant source of income.

An investment property is one that is purchased with the intent of making money.  Your home can build net wealth, but it is not an investment property unless it is multi-unit and you are renting the other units out.

 

1.  Leveraging yourself into a fortune.

Loans are still available at historic lows in the United States, when you compare our rates to the 15% of times past our buying power is stronger than ever.  The advantages of using a loan to purchase real estate are you can take a smaller amount of money to purchase a large asset that yields more money and which puts more money in your pocket every month.  It allows the little guy to get into the game and get great returns.

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

 

Rental Investment Properties Rate of Returns Why Two Houses is better than one, the power of leverage

Click to Enlarge.

2. Tax Deductions.

There are three ways to get tax deductions on investment properties.

  • Operating Expenses, these include but are not limited to property management, water bills you pay for the property, and repair costs.
  • Interest on Loans, your loan company will send you a tax form at the end of the year, and it will be a tax deduction.
  • Depreciation (Cost Recovery), this is only for investment properties, not your personal residence, this is an incentive from the government.  This tax incentive is to help counteract the natural wear and tear your investment receives. They deem the economic life of a property to be 27.5 years; the deduction is the properties purchase value divided evenly over that time per year.

 

3. Appreciation.

Real Estate does not have a static value, it changes with the market and time, however, over time almost all real estate in the United States has gained a great deal of value. This is a wonderful thing because it means that for long-term property investment keeps up with inflation and has the potential to yield you a great deal upon sale.

Two things of note:

  • When you invest only for appreciation short term, you are moving into a different investment strategy of speculation.
  • There can be significant capital gains taxes on home sales; please seek advice from a tax specialist for more details on this.

real estate rentals property investment passive income

4. Cash Flow.

This is my personal favorite of the four ways I am making money from real estate right now.  Cash flow is the reason people call Real Estate investing a passive income, and I would personally call it a mostly passive income.  Cash flow is the money that is generated from your asset in excess of the costs.  I use a conservative estimate of half of your rent going to losses, repairs, vacancies, and costs.  Many people use this to pay off additional on the mortgage, save for another investment, or just fund their life.

 

Are you ready to buy an investment property?  Get PreQualified before you talk to a Realtor!

Owning a Vacation Rental – Ready to Have That Winter Home and an Investment Too?

Owning a Vacation Rental, ready to have that winter home and an investment too jessica coaches real estate blogger life coach http://jessicacoaches.com/2017/03/owning-a-vacation-rental-ready-to-have-that-winter-home-and-an-investment-too/

Have you thought about buying a property near the beach? The mountains? You could vacation there whenever you want, a little home away from home, but it seems out of your reach? Or maybe you just hate finding, and paying inflated rates during yearly events, like our International Gem Show here in Tucson, AZ because everything is full, but wouldn’t imagine buying a house here because it would just sit empty for the rest of the year.

What if I told you: You can have that vacation home, and not only break even, but make a profit!

I have owned a vacation rental for a little over two years now and the gross yields off that vacation rental are over DOUBLE the gross yields of what it was getting as a month-to-month rental.  Keep in mind that vacation rentals have significantly more expenses though.  But, that means if you bought two homes, lived in one, and managed your own vacation rental out of the other it could potentially pay for both homes!!

 

 

 

 

 

 

 

Here are all the things I have learned during this time:

The Good-
1. No more hotel bills when you visit your favorite vacation spot! You have a home there. You can have all your stuff locked away in the garage or a storage cabinet so you feel like you just left.
2. Great money. In general, the yields off a vacation rental are higher than a normal rental. People will pay significantly more for shorter stays.
3. Lower wear and tear. On average you have a lower occupancy rate with more dates that no one is using your appliances, walking on your floors ect. The premises are also being cleaned regularly which helps with this a great deal.
4. There are management companies that will take care of the whole thing for you.  These vary widely in how much they charge and the extent of what they do.

The Bad-
1. Most of the time you want to go to your rental when everybody else does. I have decided to stay with family instead of at my vacation rental because I really wanted that 2k paycheck!
2. You might be the one stuck paying all the utilities and bills for the property if your manager does not do that. These homes tend to have everything you do at your home, internet, cable, water, ect. This is mostly just an inconvenience but something to keep in mind.
3. The risk is higher than a month-to-month rental. There are periods of time when you might have no renters, such as low tourist season. You will still have to pay all those bills, and maybe a mortgage, while there is no money coming in. This will need to be planned for by saving back some earnings from better times of the year.

 

What are your experiences? Do you own a vacation rental or would you like to?

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?