I think this is a great time to invest, especially if you want to keep the property for a period of time. There are a lot of homes on the market because of the large number of loans made to people with less than stellar credit during the recent housing boom. Many of these loans were made with adjustable rate mortgages. Some homeowners have seen their initial monthly payment double after an end to the 2-3 year freeze on the interest rates. People are also losing homes because they are losing their job. I’ve never before seen so many foreclosures in the marketplace.

Before you invest it is wise to determine why you want to invest in real estate.There are many different reasons that draw people to the real estate arena. You might want to invest for additional monthly income (cash flow). You might want to invest for retirement income (appreciation). You might want to accumulate a lump sum of money. You might want to to get extra money for your child’s education. Or you might have inherited property or moved from a home and want to turn it into a rental property.Knowing your end game will help you make a wiser decision when making that purchase. If you want monthly income the cost of the home must be kept low so that you will have a nice margin between your mortgage amount and your rental income. If you plan on selling the home when you reach retirement age or when your kids go off to college you want to make sure you get a home in a good stable neighborhood where the value will appreciate.

Once you’ve done your homework, don’t be afraid to buy that first investment property or add to the ones you already have. One word or caution: It’s easy to buy right now but its hard to sell. Make sure you have the financial stability to hold on to the property for a period of time if necessary. Don’t use money that you’re going to need in the near future.


Financing Real Estate Purchases with Your Own Money

There are lots of ways to finance the purchase of you investment property. There are, of course, two major categories: your money or other people�s money. In this article I want to talk about using your money.

The advantage to using your own money is that you do not have to share the profits. Financing the deal yourself may be easier than you think. A small down payment may be all that is needed to get the property. If you have a decent credit score you may be able to take over the payments on the property.

There are many motivated sellers out there that are desperate to move. Some are willing to walk away from any equity they may have in the property just to prevent a foreclosure. Others may have been forced to move because of a job relocation and are now trying to support two homes.

Don�t assume that you need deep pockets or a pot of gold to invest in real estate. Don�t be too quick to look for partners or outside financing. Not having to split the proceeds when you sell or rent can make it worthwhile to be a lone ranger in your next real estate purchase.

Have you ever wondered if your rental rates need to be changed based on market value. If your occupancy rate is 100% and there is a waiting list I know that you could probably raise your rentals. The first step is to raise the rate for your tenants. If you are still able to attract new tenants then you know you didn�t raise it too high. Owners usually raise the rent about 5% at a time. That�s $25 on a $500 apartment. If you still have a full house over the next 3 to 4 months, I�ll raise the rates again. This is a no risk method. It�s easy to lower the rate if the phone stops ringing.

Once I have established that the market will bear higher rents I then take a look at my current rent roster. Since I use month-to-month leases I can change anyone�s rent with a thirty day notice. I personally don�t like to raise the rent on tenants who have been renting from me for less than a year. It�s also a good idea to check the rate of your major competition before you determine how much to raise a current tenant�s rate. Tenants will move if they feel like their rent has been raised unjustly. It is not necessary to take current tenants up to the rate of new tenants. Unless you�ve made visible improvements in the building you won�t raise rates over $25 at a time. (Of course, you can raise the rent much more if you�re dealing with luxury, high end apartments.)

In general, you would raise rents every year. Even if it�s only $5 or $10 per unit. Most people don�t even complain about such a small amount. Tenants certainly won�t move to save that amount. Plus, it gets them in the habit of getting rental increases. A $10 per month increase on a 20 units apartment building will add $2,400 to the bottom line for the year. That�s a $24,000 increase in the value of your property!

There is a time when you didn�t raise rents at all. The economy was bad and the rental market was very soft. Every building had �rent specials� signs hanging from them. Many were offering free rent or no move in costs. You can�t raise rent when there is a glut of empty apartments in the area. Wisdom not rules is the key to success.

Buying a new home can be the most important and significant financial step you'll ever take. When you make that decision, you need to start with a vision--a big picture, if you will. Sometimes, that vision starts when a friend or family member offers you a tour of their beautiful new home. As you venture from room to room, your aspirations grow and you find yourself asking "How do I make this happen for myself?"

With some careful financial planning and some minor adjustments to your spending, your dreams of homeownership may become a reality sooner than you think. Here are several steps you can take to help steer you in the right direction:

1. Define the Big Picture

A good way to gauge how much money you will need to save for a down payment will come from knowing how much you can afford to spend on a home. There are many online mortgage calculators that can help you determine a fair estimate of how much home you can afford. It's also a good idea to connect with a mortgage advisor who can provide you with some basic information and give you a more accurate picture of a reasonable price range.

2. Budget Yourself

Creating and following a budget is crucial to the outcome of your savings. There are many unexpected costs that can come with homeownership, such as home repairs or the need for extra furniture, that you may not be currently paying and will need to budget for. Learning to budget your finances now will increase your rate of success as you take on this major commitment.

3. Know your Credit History

Your credit score will factor heavily on the interest rates you receive on a mortgage as well as the type of mortgage you get. Reviewing your free annual credit report--by going to www.annualcreditreport.com--will help you gain perspective on your current situation. Address any flaws that may appear on your report and make arrangements for payment on items that are outstanding.

4. Save! Save! Save!

Setting money aside could be the most important thing you do. Deduct what you can consistently afford from your paycheck into a savings account. You could request that your employer have that amount automatically deposited into a savings in order to avoid temptation. Remember, there are low and no down payment mortgages available if you can't save 20 percent of the home's value for a down payment. However, the more money you have going into the mortgage transaction, the easier it will be for you in the long run.

5. Make Your Money Count

Check to see if your employer offers flexible spending accounts. These accounts allow you to stash pre-taxed dollars from your paycheck directly into a savings that can be accessed monthly for personal expenses like car payments or child care, instead of paying for those things out-of-pocket and after taxes. Utilizing your money to its fullest can save you big dollars in the long run.

6. Determine Your Necessities

Downsizing your expenses can be key in pinching those needed pennies. For example, preparing meals at home each night, rather than dining out too often, can dramatically decrease spending by hundreds each month. Also, cutting back on telephone services and cable TV can make a big impact on your monthly savings. Keep in mind, if you can live without it, you should do just that.

7. Track Your Expenses

Tracking your monthly spending can help you pinpoint where all those unaccounted dollars are going. When shopping, make a list a head of time and stick to it. Do your best to avoid unnecessary purchases.

8. Reduce Credit Card Spending

Those little pieces of plastic we call credit cards can often cause a great deal of temptation and damage. It is not uncommon for a person to make an unexpected purchase because they had a credit card handy. The best way to avoid these situations is to avoid using your credit cards whenever possible. Credit card companies can charge very high interest rates. When you pay cash, you don't have to pay interest on it on top of what you're spending for an item, thus you're spending less money in the long run.

Remember: lenders like to see you use your credit so long as you use it wisely. It's not necessary to get rid of your credit cards altogether, but it is important that you not live beyond your means. In fact, canceling your credit cards will shorten your credit history and can substantially lower your credit score.

9. Be Patient

Challenges and financial setbacks can undoubtedly arise as you set financial goals for yourself and cause you to become frustrated. It takes great discipline to avoid breaking your budget. Hang in there, for great is your reward!

10. Be Realistic

To choose your first home which you will feel comfortable living in, you need to do the necessary research on your side. You should always search for your home early so that you will not be rushed into any impulse buying decision by any agent. Let me share with you some tips when you are looking to buy your first home.

One very important that you need to take note of is the market rate of the type of house that you intend to buy. Without knowing the market rate, you are just inviting people to give you ridiculous pricing. Therefore, it is wise to conduct a research to find out what is the going rate in the market now. With this information, you are better equipped to negotiate with the sellers and prevent yourself from paying too much.

Other than the market rate of the house, there are also other things that you should consider such as your credit rating and pay check. Do not get into a huge debt which you cannot afford to pay off just to buy a luxury house to live in. Buy something that is within your means and confident to pay the mortgage every month.

Once you have plan out your budget for buying your new home, it is time to network and find the right people to assist you in finding your dream house. One very important person that you absolutely must have in your team is a real estate agent. A good real estate agent will be able to get you a better mortgage, as well as a more desirable type of house. He or she will conduct a research and locate the house that is best for your needs. Other important people that you might want to get them on your team are home inspectors, lawyers, and right lenders. With the right people in your team, you will be able to leverage on the expertise of each of them to get the best deal for your new home.

After you have found your ideal home, before you sign any contract, make sure that you understand the terms and conditions that are presented to you. Things such as loan and mortgage terms and other real estate jargons are important for you to understand first before you sign anything on the dotted line. If you are unsure about anything, do not be shy to ask. It is better to be safe than sorry.

The process of looking for your first home is always exciting and fun. It marks the beginning of another chapter of your life. By following these tips, you can be sure to enjoy this process and get the best deal for your home as well.