Category Archives: Real Estate Investing

How to afford an investment property on $5 a day

investment property

Most people believe that it takes a ton of money to buy a quality piece of real estate. They feel that it will cost a whole lot more money than they will ever be able to accumulate from their paychecks alone. While saving for a mortgage is tough if you are trying to accumulate a lump sum of money, it is a whole lot easier if you start by saving small amounts of money. Use these methods to make your dream of owning an investment property affordable.

Save small amounts of money every day

You may not think that saving a couple of dollars a day can help you to buy a property investment but it really can. You could cut out a cup of coffee a day or start eating lunch at home to save yourself five bucks or more a day. You might be surprised to know that an amount as small as $5 a day comes out to $1,825 a year. If you do this for three years then you will have saved almost $5,500 in cash. That is just in principal alone! That is a nice down payment to put down on your investment property.

Invest a small amount of today

The same $5 that you are socking away and saving can grow even higher than that $1,825 a day. If you took that five dollars a day in savings and invested $150 each month then your money would grow at an even faster rate. You could get guaranteed interest with a certificate of deposit or a savings account. You could also take the money and buy some short term government bonds. The amount of money that you have to put down on an investment property will continue to grow. Your mortgage broker will be shocked at the large amount of money that you saved just from some small cutbacks in your budget.

Earn an extra five bucks a day

If you do not want to cut out five dollars a day from your budget then another method you can use is to earn an additional five bucks a day. You can perform a simple task that nets you an extra $35 a week. It is incredibly easy to do this. You could do an extra hour or two of overtime on the job or you could start a little business that just makes $150 a month. It will take you under 10 hours a month to do this and you will have the satisfaction of knowing that all of the money you earned is going to an investment property.

The Things You Must Avoid and Must Do When Buying Real Estate in Your IRA or Pension Plan

Real Estate Investing

Hi everyone. I just came across the most recent edition of Escape from America magazine and I found an interesting an useful article that I’d like to share with you all. It talks about the 3 things you must avoid and the 5 steps you must take when buying real estate in your IRA or pension plan. All of this advice is very good and I strongly recommend you follow it.

Here is a listing of the 3 things you must avoid:

1. Taking title in your IRA  administrator’s name

2. Lack of an overall plan

3. Do not involve yourself or disqualified parties

And now for the 5 steps you must follow:

1. At closing, have the property deeded into a land trust

2. Record a lien

3. Get Homeowners’ Insurance

4. Use an attorney or title company to close

5. Begin with the end in mind

To read the complete details of each “must and must not do” step I suggest you checkout the full article over here.

Hope you found this useful.



Pros and Cons of Buying Properties off the Plan

Real Estate Investing

Buying properties off the plan is an exciting method of investing that has a great deal of potential for profit. But there are very real risks involved in this type of real estate investment. Make sure you know the risks and the potential rewards before you dive in head first.

Buying Off the Plan: Pros and Cons

Buying off the plan when it comes to real estate investing can be an extremely profitable way to do business in high demand real estate markets. What it is, is buying property at today’s prices even though it hasn’t yet been built. In some instances, ground hasn’t even broken on the projects before entire buildings are sold out or “on contract.” The idea behind this type of real estate investing is that you can buy at today’s prices and bank on the fact that real estate investments are going to increase in value by the time construction is complete and units are ready to be “lived in.”

The Good News about Buying Off the Plan

There are plenty of benefits for buying property off the plan. The first and perhaps biggest benefit is that in boom markets, the value of a property can easily increase substantially by the time construction is complete. This means a huge payoff for what is a minimal investment in many cases. How is it that this would be a minimal investment? Another benefit is that you don’t need all the money to make the purchase at the time you make the offer and “buy” the unit. In many cases, earnest money of five to ten percent is adequate to hold the property for you. There are also many tax benefits to making this type of investment. Be sure that you get the specifics from a qualified accountant before you invest so you can be certain that the investment you’re making will serve you better in the end.

The Downside of Off the Plan Investing

While the good is really good, the bad with this type of investment is really scary. First of all, there are a lot of scams going on so do your homework about the company you’re investing with. Make sure you’re not getting into some sort of scheme that will ultimately take your deposit and run. When you consider that many of these properties sell for half a million dollars or more, even five to ten percent is a sizeable amount of money. The second problem is that there are no guarantees that the property bust will continue or that prices will continue to rise. It is very possible to get stuck with properties that are worth less than what you offered for them and now you have to come up with the money to buy the property and make good on your offer. This often leads to short sales and in addition to the loss of the investment and deposit (again not an insignificant amount of money by any standards) but also to the potential loss of your good credit score.

The Bottom Line for Buying Off the Plan

In the end, there are a few things you’d do well to remember when buying properties off the plan. You should never buy from developers that don’t have a good reputation or are unknown. You should also ask around and talk to people who have invested with them (with good results) in the past. Get specific information about every aspect of the sale and what is included in the sale of the property. Study the market. Yes, an upward cycle or real estate boom is exciting. But don’t invest more than you can afford (even if it would be painful) to lose. Don’t risk your livelihood or retirement on what could amount to an expensive gamble. When you have everything in order before going into the sale you will be better prepared to buy with confidence. Be aware of the risks and mindful of the potential. Good luck!

Does Energy Efficiency Add Value To Your Home?

green home

Improving the value of your home is important for resale and investment purposes. One of the most beneficial ways to do this is to improve your homes energy efficiency. By doing this you will increase the value of your house, save money, and help to save our precious environment all in one swoop.

Value Added Efficiency

If you are considering making changes to your home before you put it on the market, your best bet is to make it more energy efficient. Most everyone will tell you that conserving energy is important to them, but it is hard to know if it really matters when it comes to making choices about actually purchasing a home. The short answer is that yes, it does. Although an increased awareness of the environment and the need to save energy is part of the reason, it really comes down to the all mighty dollar. Everyone knows that if your house is more efficient you will spend less to heat it, cool it, and keep all your appliances and computers running. That savings is the bigger driver of getting an energy efficient home then the idea of conservation.

We should not ignore the ever increasing conservation awareness either. Ever since the former Vice President Gore released his Inconvenient Truth film there has been a move toward greater conservation and awareness of our energy consumption. From installing more efficient windows and appliances to unplugging items around the house, loads of people have cut back on their energy use and seen the reward in their monthly bill.

General Appeal

But, it was hard to know if that awareness translated when it came to the actual value of your home to a buyer. Now there has been some research done that proves that indeed a more energy efficient home is more appealing to most buyers. In a recent poll more then half the people who were asked said that they energy rating of a home played a big part in their decision to purchase it. Just over ten percent said the energy rating of a home had no affect on their choice. However, people tend to talk a big game when it comes to ecology, but they do not always follow through which is why this needed to be further investigated.

As it turns out there was a study done just a few years ago that took a homes energy rating in terms of stars. one star meant that a home was not at all energy efficient and five stars meant it was very efficient. In this study, improving a homes efficiency rating by just one star increased its’ value by three percent. Broken down into money terms that meant you could spend $1200 to improve the insulation in a $360,000 home and see a return on that investment with an increased sales price of around $8,500. That is a big profit for just a small change in your home. Imagine how much value you could add if you made even bigger changes like installing solar panels or changing out windows and furnaces.

You will probably find that homes with a poor energy rating are not as saleable as they once were. Most buyers will not be inclined to consider a home that they know is going to cost them a fortune to run or that they will have to spend a lot of money on to make more efficient. This is especially true in areas of the country that face extreme heat or extreme cold, in those places buyers want to know they will not have to spend a fortune to keep their home at a comfortable temperature.

Before you consider making any improvements to your home you should look at ways to make it more efficient. Not only will this increase your homes value for resale purposes, but it will save you money right now on your monthly electric and gas bills.

10 Ways to Maximize the Return on Your Property Investment

Climbing up the property ladder with the help of an investment property is a smart move, provided you are geared up for the challenge, and you know what to look out for to avoid potential shortfalls.

Many say the property market is tight, meaning you can invest into property at any given time and not risk a financial downfall. While theoretically this might be true, given the fact that most markets grow and fall in a 7-year cycle, many investors go bust. So why do some people stand to make millions with properties while others lose the last pair of pants they own?

Find out by reading on…

# 1 – Look for potential, not appeal

Plenty of property investors make the mistake of looking at a house with their goo goo eyes. Unless you plan on living in the property (and that would be silly if it is an investment property), do not fall into that same trap.

You need to view the property with its potential in mind. Forget the heaped-up dirt pile, forget the shaggy carpet and the fact that the paint is peeling off the wall. How does the property look when you envision it with a clean coat of white paint?

Where is it positioned? Is it near a school or university, near the beach or close to shops? Answers to all of the above will define the true potential of a property.

# 2 – Shop around

It is rarely a good idea to pick the first property you come across. By shopping around you will get a good feel for the local market. It will enable you to accurately determine the true market value of your chosen property, avoiding inflated price tags. Try to keep watch of the properties you’ve visited. You might want to go back again for an additional inspection. Keeping all the necessary details handy will help you to stay organised.

# 3 – Pick the right investment loan

You can choose from three types of investment loans; line of credit (you borrow against the worth of your home), fixed interest rate and variable interest rate. Speak with your bank manager about your best option.

# 4 – Make sure the property is not ridden with mice or termites

The best investment you can make into a potential investment property is to pay for a pest inspection. You should also inspect the property several times during different times of the day and check for the following:

  • Leaky pipes – expensive, especially if they are hard to access (i.e. behind walls)
  • Mould, musty smells – potential water damage or dampness
  • Cracks in walls – expensive if they are structural
  • Adjoining bathroom walls – to check for leakages
  • Termites – pest inspection!
  • Excessive noise – make sure you understand what you buy

# 5 – Get your legal affairs in order

Make sure you deal with a solicitor when you sign any documents. As soon as you make an offer on the property you need to see your lawyer. He will do the necessary title searches on the property and more.

# 6 – How is your property geared?

If the expenses of your investment property are higher than your income from the rent you can negatively gear it (say your loan repayments are $500/week but you only earn $430/week in rent you are paying out-of-pocket expenses). This has tax benefits. To see if this is a viable option it is best for you to speak with your financial advisor.

# 7 – Budget for capital growth

When you are ready to sell your investment property remember that you will be legally accountable to pay capital gains tax on the increased value. A lot of people conveniently forget this fact, and are therefore caught out financially when the tax man comes calling.

# 8 – Consider a strong rental property

If your investment property is empty it will end up costing you money. You want to make sure you pick a strong rental area to increase your chances of income returns.

# 9 – Equity = more buying power

If you already have a mortgage you might be able to borrow against your existing equity (any money you have paid off your loan). This can give you increased buying power and therefore less hassles when you negotiate the financial aspects of your loan with your lender.

Be warned, only borrow what you can comfortably afford if you were to lose your job tomorrow. If you can’t put food on the table because there is no existing emergency fund you might be best advised not to dream about owning an investment property at this point in time.

# 10 – Consider sticking around

Most property markets cycle every 7 years or so. You should plan to hang around if you want to see a maximum ROI. This is even more important when you buy a property in a strong economy. Chances are the prices are at their highest, therefore giving you very little return if you plan on selling 6 months down the track. Be wise – and stand to make a dime.

This post was submitted by William. William writes about personal finance and investment for a mortgage comparison website offering a range of competitive investment loans and other financial products to consumers

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