Sunday, September 30, 2007

Investment Property Do’s and Don’ts

Are you an avid real estate investor? Do you have some extra disposable income and have been exploring the possibility of doing some rehab houses? Are you a realtor that is looking to take the next step and advance your real estate career? Are you a past investor that got out of the business because you were not making the margins you expected? If the answer to any of these questions is YES, then read on.. When looking for an investment property –there are several questions to be asked. First, do you want a minor cosmetic fix up or a major renovation? This answer usually depends upon the skill level of the investor and/or his/her contractors, the time that the investor wants to put into it, how many current properties are outstanding in his/her inventory, and how much profit you wish to make. For instance, many investors now do very little of their own work. Ideally, they hire contractors that will guarantee a low rate due to the volume of work that will be provided. You may be thinking that if you hire the work out you will not make as much money. FALSE. This is called working smarter and not harder. You can treat your investment/rehab business like a general contractor new home business. When is the last time you have seen Mr. Builder Class A Contractor swinging a hammer, nailing a two by four and walking on the roof to place sheathing? If he is a profitable builder, I will submit to you the answer is NEVER. Your time can be more wisely spent pursuing the deals, determining when and what to buy, and directing the subs to ensure timely completion of the work. Obviously, the major renovation will be more time consuming but the margins will be greater. This poses the next question. Are you better doing five large projects and making $100,000 or doing ten little cosmetic fix ups and making $100,000? If you are just an investor, then the answer is probably you don’t care. If you are a realtor who also happens to be an investor, the answer should most certainly be TEN FIX UPS. Why you ask. That gives you five additional properties with which to gain commission on its purchase, pick up many, many clients upon its return to the market, and save commission upon its sale. If you are a Realtor/Investor your profit mentality must be different than your Investor. Your visibility in the investment market also helps to add to your visibility as a realtor both for prospective buyer/sellers and also to assist prospective investors. Remember, there is enough investment property to go around. You must have an ongoing relationship with your local bank. A line of credit should be established to give you the ability to purchase property for cash. Yes, CASH.. this word speaks volumes for a seller who usually is in financial disarray, which is why their home got in the condition it is currently in. Your bank may even, depending upon your credit situation, offer to give you fix up costs rolled up in the loan amount so that you are out of pocket virtually nothing initially. A frank discussion along with a well documented business plan with your background should be provided to your lender. Don’t be afraid to ask for purchase money and fix up money for all of your purchases. The other thing to consider when buying is whether or not to do a home inspection. They are just about useless for distress property. If you are an astute contractor or investor, a thorough look at the property should give you what you need to make a viable offer to purchase. NO INSPECTION AND CASH WITH A QUICK CLOSING usually will seal the deal.

If you are not a realtor, you should think strongly about getting your license. You are leaving money on the table that could add to your margins if you could represent yourself in the transaction. There is a whole different section on the pros and the reasoning on whether or not to pursue differing properties if you are an agent. If you choose to use a realtor, select them wisely. Use one that is familiar with investment property. They can provide an abundance of information from areas to buy where properties sell quickly to where to spend your money in fix ups - What really matters to the consumer. Contrary to what you may think or have heard, this market is a great investor market. You can buy low now due to the slowdown in the market and the increased inventory. It is imperative that you spend your money wisely on rehab – your house has to really stand out among the others on the market. It is also wise to choose an agent that is innovative with technology to give you the edge over all others that have listings similar to yours on the market. Most importantly, if you are going to do investment property you must have a strong gut. You can’t second guess your decisions and definitely can’t get antsy if a property stays on the market longer than expected. Remember, you will have more gains on some properties and more losses on some. The measure of success of the real investor is minimizing losses, and maximizing profits with inherent risks. This is done over the long haul. If you would like more information on investment property, or how to become a Realtor/Investor, please contact me.

Compliments of: Kathy Holland, Broker/Owner Resource Realty Services

How To Become A Successful Agent In Richmond, Virginia


Are you an agent struggling to gain market share in this ever changing real estate industry? Are you aspiring to possibly join the real estate market as a new agent? Here are some tips that will help with both scenarios. First, if you are already in Real Estate and are treating this as a sales business – STOP!! If you haven’t yet become a realtor get the word sales completely out of your mind. This is the biggest misnomer involved in our industry. If you do not remember anything else, please make sure that you consider yourself a service provider and not a salesperson. A client/customer does not buy a home because you “sold” it to them; they decided to make and offer due to the fact that it meets their criteria and that you have provided them with quality, pertinent data to ensure that they have paid market price or less. This approach will ensure that you create relationships and not deals. Relationships will result in more sales through means of referrals. Referrals, do not forget this word, as it is the means to the end!! The second biggest thing to remember is that referral sources, past clients and your network of people, will make your business grow. Third, listings are the fastest way to grow your business. What is the one thing, among others, that this should tell you? Do not become a buyers agent!! Yes, you may receive some portions of commissions when working for an agent or team as a buyers agent – but you typically only take a portion of what is due for commission and you absolutely do not build your database since the team leader keeps the clients names in their database. You can build your database by doing open houses for listing agents (as long as it is understood that you keep any buyer prospects that come through) Fourth, you must invest money in branding yourself. Remember, you are starting and/or trying to increase market share with a brand new business (you!!) You act as an independent contractor is most cases – so you are really on your own. Set a budget. In your first two years, you should set aside at least 18% of your sales commissions to go back into brand advertising. If you have little to no sales, assume a figure of $50,000 and borrow or ask your broker if they have an agent marketing expense account that they might front the cost and you pay them back on your next commission check. Fifth, choose your broker company wisely.. The old adage that you are “judged by the company you keep” could not be more true in Real Estate. Choose a reputable company with agents that treat people the way you would want to be treated. Make sure you select a company that is innovative and moving forward with technology – as it is the wave of the future. This does not mean a national company, necessarily. In fact, this is the second biggest misnomer. Real Estate is a service and relationship business between you the agent and the client. It truly doesn’t matter whether you are an agent in a company with (5) licensees or (500) licensees. There are numerous advances in technology that some small companies are using. This helps to move real estate quickly. The question is simple, have you provided the data required to make a sound judgment decision on a piece of real estate for your client? Lastly, be honest and forthcoming. This is not rocket science; but it is in most cases the most important decision for a prospective client. Use care, and compassion when working with your client. Work hard!! You get a nice paycheck; and the knowledge and service you provide to a happy client is crucial to determining how many more of those you get from referrals from that satisfied client. Remember, if you do a good job, hopefully that person will tell many more people about you. If you do a bad job, guaranteed that person will tell everyone they know about you. Happy Selling!! If you would like more information on how to become a successful agent, please contact me.

Kathy Holland is the Owner of Resource Realty, A full Service Real Estate Broker located in Mechanicsville, Virginia.

Six Simple Things You Can Do to Ensure a Smooth Home Purchase

Six Simple Things You Can Do to Ensure a Smooth Home Purchase

Buying a home can be an emotional, time-consuming, and complex process. There are a few things that you can do to help make the process go as smooth as possible:

1. Check your credit.
Before you apply for a home loan, regardless of your credit, it's a smart idea to obtain a copy of your credit report from the three major credit bureaus and review the information. If there are errors or things that need to be addressed, it's easier to address them before you have found a house, than after you have found a house and are trying to close your loan.
If you know that there are a few blemishes on your credit, let your lender know what they are, why they are there, and why you are a still good credit risk. Lenders look at your credit to determine how likely you will pay back the loan. If you had extenuating circumstances - like a loss of a job or medical bills - let them know so that they understand that it is not likely to happen again in the future.

2. Get approved before you buy.
An approval means that a lender has reviewed your credit history, verified your assets and employment, and has approved your loan before you have found a home to purchase. As long as the home appraises for at least the purchase price, the loan should close.
Getting approved also gives you an advantage over other buyers. Your firm approval makes it easier for you to negotiate on the price of a home, than a person who is not approved or is pre-qualified.
While getting pre-qualified may sound official, it is really just getting an idea of what you can afford. Its having a person plug in a few numbers that you give them - your monthly income and your monthly debt - and getting an approximate payment calculated. From the payment, the calculator can approximate the house price range that you can afford. No information is verified. Because your assets, income or credit is not verified, a pre-qualification has little value when purchasing a home.

3. Find a great buyer's agent.
Traditionally real estate agents represent the sellers in a transaction. When you are not working with a buyer's agent, they are less likely to negotiate the best price or contingencies for you.
A buyer's agent's job and fiduciary responsibility (meaning legal duty) is to you, the buyer. Before working with an agent, establish if they are a buyer's agent or a seller's agent. After spending a lot of time with a Realtor, it's natural to feel like you're a team. But if they are not negotiating for you, then they are not on your team.

4. Learn about the neighborhood.
Often times the house you find may be in a neighborhood that you're not familiar with, which is ok. It just means that you'll have to do a little more research. If you find a house that you like, ask for a list of the neighborhood properties that sold in the last year. How does your home rank? Is it at the top of the price range? If so, it might be hard to resell. Is it average or on the low end? If so, great - as the other home prices go up in value, they will pull your home's value up as well.
Check out the schools - are they sought after? A good school district means your neighborhood will always be valued by families which is a great reassurance to purchase, not to mention the value-add if you have school-age children.
Next, contact the police station and obtain crime statistics? Are they acceptable to you? Sometimes, if they won't give them to you, it could be a cause for alarm.
Talk to the neighbors. The more people you talk to, the better sense you will get of who makes up the neighborhood and how they will effect your time spent in it.
Check out the location of the shopping, police and fire stations, schools, and air traffic overhead. These are all things that might affect your property value or quality of your life.

5. Protect Yourself.
Ask your Realtor for a copy of the documents you will be asked to sign if you decide to buy the house. Read them ahead of time so that you'll understand the questions that you will be asked, the things you need to know, and the decisions you will need to make.

6.) Have reasonable expectations.
There is a lot of money at stake. No house is perfect. Understanding and remembering these two statements will help diffuse the negotiation stage, the inspection stage and the closing stage.
Emotions are high for both buyers and sellers. - The seller may have loving memories and years of sweat equity in the house. Maybe they are being relocated and don't want to go. Understanding their motivations for selling will help you appreciate their situation and predicament during these emotional times.
There is a lot of money at stake for all the parties involved (and that includes the realtors) - Just remember that market value (the value of a home) is the price that a willing buyer and a willing seller can agree to. If you can not agree on a price, ask yourself: Is there something you missed? Are there comparables that support the price that they want? Are there motivations that might factor into the price they are demanding? In the end, does it matter? What is the house worth to you today and what do you think you can reasonably sell it for based on the amount of time you plan to spend in it? Think about the answers to those questions before you make your move.
No house is perfect - Always get an inspection. It might be a few hundred dollars, but it's worth it. It's the inspector's job to find any problems with the house that could cost you thousands to repair down the road. Some inspectors have a tendency to over play the importance of their role and the items that they find. Get objective opinions that you trust before making a decision on an inspection report. Likewise, if an inspector says a foundation is cracked but its nothing to worry about - get a second opinion. Ask a handyman for an idea of how much repairs will cost and how complicated they are. The home buying process is an emotional, complex and time-consuming process, but it is worth it. Nothing compares to owning your own home in a neighborhood that you chose.

Compliments of: Cindy Strobel, Broker/Owner

Resource Realty Services

Thinking About Buying Your First Home?

Thinking About Buying Your First Home?

Many renters are starting to think about purchasing a home of their own. Several factors should be considered when purchasing a home:

How long you plan to live in the home.

If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.
The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

How long the home will meet your needs.
What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

Your financial health - your credit and home affordability.
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.
Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it's within your comfort zone.
To determine how much home you can afford, talk to a lender or go online and use a "home affordability" calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

Where the money for the transaction will come from.
Typically homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

The ongoing costs of home ownership.
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.
If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.


Compliments of: Cindy Strobel & Kathy Holland - Broker Resource Realty, Mechanicsville, Virginia, Brokers/Owners Resource Realty Services


First impression is EVERYTHING!!! In today’s competitive home selling market, you need all the edge you can find to sell your home quickly and painlessly. Home Staging is proven to be the easiest and most effective way to sell you home for the most money in the Hanover, Mechanicsville, Richmond, King William, Chesterfield, Highland Springs areas.

In as little as one day, you can transform that “just another house on the market” look to a fashionable, one of a kind home that will grab the eye and make prospective buyers want to live in it!!!

According to Jill Bartley of “Expert Home Stagers of Hanover”, a home that has been staged properly will sell 40% faster than a home that has not been staged. The cost of professionally staging your home is significantly less than the difference between asking price and that first offer. Professional home staging increases potential buyers by up to 80%. The average increase in selling price of a professionally staged home versus a non-staged home is 6.9%. In this market of home staying on the market long, the average time on the market for professionally staged home is 11 to 22 days.


Compliments of: Cindy Strobel, Broker/Owner

Resource Realty Services