With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
What Home Loan is Right for You?
With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
The 3 Types of Mortgage Pre-Approvals: What You Need to Know
With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
What’s in a Closing Cost?
With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
The Benefits of Buying vs. Renting (At a Young Age)
With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
What is the VA Vendee™ Home Loan?
With the VA Vendee™ Loan program, borrowers are given the option to take out on a loan for a house they love without the headache.
VRM Lending’s Go-To Home Loan Tips
When it comes to purchasing a home, there’s a vital step that needs to be touched on: taking out the home loan itself. The loan process can be a long (and stressful) one if you choose the wrong servicer, which is why it’s so important to find first-hand knowledge that makes taking out your home loan as painless of a process as possible.
What Does Covid-19 Mean for the Housing Industry?
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When It Comes to Real Estate Investments… What’s a good deal?
Real estate investments are a good way to build wealth and have financial freedom. A key part of successful real estate investing is finding the best real estate deals on the market. When purchasing an investment property, clever investors ensure that they are getting a great deal. However, getting a good real estate deal is usually not easy, particularly for first-time investors. So, how do you know if a real estate deal is a good one? In this article, we discuss what makes a good deal in real estate. Read on to find out.
What Is a Great Real Estate Deal? Things to Look For
1. Low listing price
An investment property’s listing price is critical when looking for a good real estate deal, depending on your financial capacity. As a real estate investor, you should never purchase what you can’t afford. An expensive real estate investment property will usually have high operating costs too. Purchasing an investment property below market value could provide you with a higher return on investment.
To know whether the purchase price of an investment property for sale is reasonable, you need to compare it with its fair market value. If the listing price is lower than the fair market value of the property, it would probably be a good real estate investment deal. Consider doing a real estate appraisal to estimate the value of the rental property for sale.
2. A profitable location
Location is one of the most important factors when it comes to investing in real estate. A rental property’s location will determine the rental income and occupancy rate. When looking for a good real estate venture, you first have to research the real estate market at both city and neighborhood levels. A great location can make up for some of the limitations of a rental property. However, there is little you can do if you invest in a poor location.
Here are some general features of a good investment location:
- Job opportunities
- Low crime rates
- High population growth
- Nearby amenities like hospitals, restaurants, etc.
- No zoning issues
- Public transportation
- Future developments
- Booming tourism industry
- Safe from natural disasters like earthquakes and floods
3. High rental income
The main purpose of purchasing an investment property is to generate income. As a real estate investor, it’s best to find an investment property with a high monthly rental income. If your monthly rental income is high enough to cover your monthly rental costs, you will be able to create positive cash flow. And as you know, cash flow is a top priority! Before making an offer on a property, research the average rental rates of comparable rental properties in the area, and estimate its rental income.
A good way to find a great real estate deal based on the rental income is to follow the 1% rule in real estate. The 1% percent rule measures the ability of the rental property to generate rental property cash flow. This rule of thumb states that the monthly rent should be equal to or higher than 1% of the total purchase price of a real estate investment property. This rule is used to determine whether or not the monthly rent from a rental property will be enough to cover its monthly mortgage payments. Worst-case scenario, you should break even on the rental property.
4. Low rental expenses
Rental expenses are also essential in finding a good real estate deal since they will also affect rental property cash flow. Before purchasing an investment property, you should find out all costs associated with purchasing and operating it. Expenses may be in the form of repair and maintenance costs, insurance, property taxes, HOA fees, and mortgage payment.
If rental expenses are too high, they will eat into your rental income and likely lead to negative cash flow. If you are wondering how to determine a good rental property, rental expenses are something that you should unquestionably take into consideration.
5. Low repair cost
While purchasing below market value rental properties has its benefits, a beginner real estate investor should be cautious about buying a fixer-upper. If a rental property needs a lot of repair work before it can be rented out, it can wash out any profit you may have made from rental income.
Therefore, when looking for a good real estate deal, you should do a home inspection to know the repairs required and how much they will cost. A rental property that is in excellent condition can be rented out right after purchasing. You don’t have to wait long before you start earning rental income.
Nevertheless, you can also buy an income property that needs repairs. Just make sure you account for those costs when determining your return on investment. This will help you understand if purchasing the property is a good deal or a bad real estate deal.
6. Real estate appreciation
Aside from the profitability of an investment property now, an investor should also consider its potential to grow in value over time. Real estate appreciation is normally realized when one is selling a property after an increase in the selling price. To get a good estimate of whether an investment property will appreciate, check local real estate market trends.
How to Find Good Real Estate Deals
Now that you have the answer to the question “what is a good real estate deal”, the next thing is to know how to find real estate deals. With many people getting into real estate investing, it’s becoming even more challenging to find a good real estate deal. As a real estate investor, what can make the difference is using the right tools to do your due diligence in real estate. If you are thinking of how to analyze real estate deals in the best way, consider working with VRM Lending LLC.
The best way for investors to find good real estate deals in the United States housing market is by using the Listing Portal (vrmproperties.com). With this tool, you can search for the best performing investment properties in your market of choice that meets your search criteria. The portal allows you to set your search criteria using filters like budget, the number of bedrooms, location, and property type.
The Bottom Line
Successful real estate investing starts with understanding how to manage a good rental property. The above features provide the solution to the question “what is a good real estate deal?” So, next time you are looking for a real estate investment property to buy, be sure to consider the above features.
5 Common Mistakes Short Sale Buyers Make
5 Common Mistakes Short-Sale Buyers Make
- Skipping the home inspection.
- Ignoring property problems.
- Ignoring legal and insurance information.
- Leaving too little time for closing.
- Falling hard for a bad home.
Know what you’re getting into before you buy a short sale or foreclosure property, and be watchful of these five common mistakes.
1. Skipping the home inspection process
Tag along when your home inspector shows up at the property. You might be surprised what you can learn.
- Ask for repair estimates when an inspector notes a problem, or do some research on your own later. Many homeowners underestimate how much renovations can cost.
- You may want to use specialized inspectors to look for expensive problems such as mold, structural damage, and termites, especially if it’s a common problem in your area.
- Be sure to hire an inspector that’s highly rated. Get recommendations from friends, or weigh online user reviews carefully. Like with all industries, there are excellent, marginal, and bad property inspectors.
- You are granted a certain window of time to inspect the home, known as the inspection period. Reducing an inspection period may give you leverage in a regular real estate situation when you’re placing a bid, but don’t skip or skimp on the inspection period when you’re looking to buy a foreclosed or short-sale home. Utilize this time to make an informed decision.
2. Ignoring property problems
Homeowners who face foreclosure can become angry and take their anger out on the house they’re about to lose.
Vacated houses in foreclosure may sit empty for months or years before they’re bought. As a result, problems occur, such as mold, leaks, termites, thieves, filth, and squatters.
There are a couple of little-known loan programs, the FHA 203(k) and Fannie Mae HomeStyle, which offer solutions for homebuyers who want to renovate.
Learn about the Vendee™ Program and apply today.
3. Ignoring legal and insurance information
A standard disclosure statement will usually reveal whether a house is in a flood plain or had any unpermitted renovation. But REO properties often sell as is, without disclosure, so buyers need to do extra research on the home.
Ensure that all renovations have been permitted and approved. If not, and there is an issue, the city can cite you.
4. Not leaving enough time for closing
Short sale and foreclosure home buyers need to be cognizant that the sale won’t necessarily close as soon as it would for a regular home purchase. The short seller’s lender must approve the foreclosure terms or short-sale price, which will be less than what the seller owes. Banks may also be slow to respond.
It’s not always possible or even advisable to get a home loan from the bank that has a mortgage on the short sale you’re buying. In fact, it’s best if you show the lender a preapproval letter that you received from your own lender inside the last 30 days.
5. Falling hard for a bad home
Never just assume you’re getting a great deal.
Ask yourself these common-sense questions:
- If you were to buy this property, could you afford to rent it out for as much as, or less than, your mortgage payment? Use the VRM Lending payment calculator to estimate your mortgage payment.
- If the home’s value falls 20 percent, will you still feel satisfied with your purchase?
- How much money will you have to spend on the property to make it livable?
As long as you completely understand how foreclosures and short sales work, nothing should stop you from getting a great deal and finding the house of your dreams. Just be sure to fully consider the home inspector’s advice and report before making your final purchasing decision.