Tuesday, June 11, 2013

Should I Purchase a Rental Property?

By: Lea France at Fannie Mae

With rental rates increasing, many buyers are interested in purchasing rental properties. Below are some tips you may want to consider before you start investing in real estate.

1. Get Involved in the Landlord Association
This is one of the best ways to become involved with other Landlord's and to keep updated on new laws. Join the Landlord Association and Tenant Associations and go to meetings so you will be informed on "how to be a landlord" before you purchase any properties.

2. Do Your Homework
Read everything you can about real estate investing. You need to understand all the expenses and headaches that are involved in owning rental properties. Talk to other landlords about their experiences and what they would do different next time they buy a rental property.

3. Size of Property and Tenants
Find out what size of property that you can actually afford to purchase, and what location you want to purchase your property in. When you are making this decision, you will need to know what type of tenants you are going to target, (students, families, retirees, or young professionals). If your target is going to be students, then you need to consider purchasing your rental property in a close location to a college or university.

4. Profit, Rental Income and Rent Increases
Profit? There is profit in rental income properties. But you need to know how to generate it.
How much profit do you want to generate per month after all the expenses have been paid?  Ask yourself what the profit is going to be used for, (immediate spending or long-term pension plan)? Keep in mind that when you invest in real estate, your aim should be to put money to work today and make it grow so you have a lot more money in the future. Remember that you need to make enough profit to cover the risk you take, taxes you pay, and the costs of owning the real estate. Once you have reliable tenants, be reasonable on the rent increases. Raising the rent by a large sum, could drive your tenants away and  could cost you a lot more money in the long run. If you lose all the tenants, due to rental increases, or tenants decide to purchase a home, or move out of state, will you have the funds to pay the expenses for 6 months?

5. Repairs and Getting out your check book
You are going to continually be making one repair after another to the property. The repairs will maintain the value and some repairs will increase value. Repairs are something you will have to do through out the life of the property. 

Written by:  Lea France, Sales Representative at Fannie Mae

Wednesday, May 29, 2013

5 Biggest Mistakes When Buying a Home

By: Lea France at Fannie Mae

If you are thinking seriously about buying a home, below are "5 biggest home buying mistakes" that some home buyers make. You may want to keep this list with you, when you are looking at homes.

Mistake #1
Keep your emotions out of the way. This means, don't buy a home that you cannot afford. And don't buy a house just to impress your friends and relatives. You will end up "house broke". Many times, all of us love homes that we cannot afford. Keeping your emotions out of the way, means using discipline. A home purchase is a "big decision".

Mistake #2
Many baby boomers are downsizing and selling their big house, and purchasing a smaller house for their retirement years. This is me, I am a baby boomer. Home improvements, such as "outdoor lighting" are important for resale. And it is important for security reasons. One buyer told me that she does not have to worry about resale, because the new house she and her husband just purchased, will be where she will live out the rest of her life. That statement is not always correct. Many times, people need to sell their home, because they have to move to a facility that offers assistant living. None of us knows what the future will bring. There is no crystal ball. So don't try to save money on home improvements that are needed for resale. You could end up not being able to sell your home and you could lose money.

Mistake #3
If you are paying cash for your new home, you still need to get a home inspection by a certified home inspector.

Mistake #4
Additionally, if you are paying cash for the house, because the house cannot qualify for financing, make sure that you can afford the repairs to make the house livable. This best way to do this is to create a budget, so you know what you can and cannot afford. Get estimates for each repair, before you purchase the house. So many home buyers think they can make all the repairs without a contractor, not realizing that many of the repairs may need a permit pulled and a certified contractor that can actually perform the work per code.

Mistake #5
Do not sign the "home purchase contract" or any other legal documents until you have read each one of the documents thoroughly and understand every word of the documents". Also to be reassured that you understand the contract, have your realtor or your attorney review each word in the document with you.

Finally, once you own the home, you will have a great time decorating it. Click Here for some good ideas.

Written by:  Lea France, Sales Representative at Fannie Mae