Real Estate Investments and Mortgages

To make the maximum profit on your investment properties, you’ll need to save money wherever you can. One way to save significant amounts of money is to mix your own paint.

I recommend that you use only water-based paints. Technology improvements in latex and acrylic paints have made painting easier than it was with the old fashioned oil-based paints, and the new acrylics provide a great-looking finish. Purchasing “oops paint,” marked down at home improvement and paint stores, can save hundreds of dollars on your painting projects.

By mixing your own paints, you can also guarantee a harmonious result for the entire house, blending the colors from the exterior to the interior and from room to room. For instance, during one of our projects, we purchased ten assorted gallons of paint from the Restore thrift shop. The paint hade been donated by Lowe’s after having been returned by the original buyers, and included a lot of blues, greens, and grays. We used a fifteen-gallon plastic kitchen trash can to mix all the paint together, and then poured it back into the original cans. The color ended up a complex sage-green, which perfectly complemented the existing teal-green tile floor.

We used the original trash-can paint outside first, and then added white interior paint as we continued our color scheme inside, first painting the living room and a bathroom. Then I added a little green to the remainder and painted a bedroom. For each room, we added a little more white semi-gloss paint. As we went along, we saved a glass jar full of each paint blend for touch ups.

Paint experts suggest mixing only the same type of paints: exterior latex with exterior latex; interior acrylic with interior acrylic; interior latex with interior latex, and so on. But we routinely mix exterior and interior paints, and have never experienced any difficulty. The amount of sheen makes little difference in mixing paints, either, unless you’re looking for a particular finish.

For one project, I started with five gallons of thrift store baby-blue paint, and then added a quart of black, in order to “gray down” the baby-blue. As we progressed through the bedrooms, I added a little more white semi-gloss latex paint to the mix. When I was done, the entire upstairs of the home blended harmoniously, yet each space had its own color and personality.

For another doghouse transformation, I added amber pigment, which you can pick up at most paint suppliers (but use it sparingly, because a little goes a long way), to five gallons of boring beige paint. We started in the main bedroom with the darker color and added white as we went along. The lightest shade ended up in a living room with a 23-foot-high ceiling.

Remember: oops paint is no different from regular paint. It was just a mistake, for whatever reason, and in case you’re wondering how long oops paint can last, we recently drove by our very first doghouse-to-dollhouse home in Apple Valley, California, and the paint still looks great, even though that home was originally painted in 1979.

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.

If you want to become a real estate investor, find a “fixer-upper” owned by an anxious seller. Finding distressed houses at bargain prices, fixing them up, and then selling them on a consistent basis can make you a multi-millionaire.

Why Sellers Sell At a Discount

Home owners’ problems often prevent them from staying on top of their home’s upkeep. Factors such as job loss, divorce, serious illness, various addictions, or other personal problems quickly overwhelm distressed home owners, forcing them to sell. These sellers can’t make the needed repairs because of financial or physical limitations, and when that happens, their home becomes a low priority and sometimes will go into foreclosure.

Look for the “Triple D”

Home sellers with three problems give beginning investors a great opportunity. A “Triple D” is a Doghouse, involved in a Divorce, and in Default. The label “doghouse” comes from Southern California Realtors who used this term to describe the worst fixers. These houses maybe “tired” and need only cosmetic work in order to favorably compare with other homes in the area.

What to Look for in a Doghouse

The hardest house for a homeowner to sell is a “doghouse,” “dump,” or “fixer-upper.” These run-down houses scare off most buyers, who don’t have the money to cover the down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring the home back into top condition.

As you look through the classified ads or at Realtor listings, keep an eye out for terms like “handyman special,” “as is,” “fixer,” or other tell-tale words. Also have your agent use similar terms when scanning the Multiple Listing Service for your target area.

Once you’ve found a property that you can turn from doghouse to dollhouse, find out the seller’s problem and then offer a solution. Distressed sellers frequently experience financial problems and need cash as soon as possible. Therefore, if you’re ready to close quickly, you’ll be set to negotiate a lower sales price.

How to Close Quickly

Find an experienced lender and get yourself not only “pre-qualified,” but also “pre-approved.” Taking that second step assures worried sellers that you already have your loan in place for their property, and this puts you well ahead of other potential buyers.

How to Know When “Bad” Is Good

When you first start out in the real estate “fixer” business, you’ll want to look for “ugly” houses needing only cosmetic work. Look for entry level fixers that just need some cleaning up, painting, and carpeting.

When you’re new to the fixer business, always remember your limitations and use caution when considering houses needing structural repairs. My husband replaces structural beams, sub-flooring, walls, plumbing, and electrical systems, but he acquired those skills after years of experience.

If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced professionals to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.

The Easiest Houses to Sell

A dollhouse, located in a popular neighborhood, sells the quickest. For instance, we once sold a home we named “Orange Tree Cottage” in just three hours! To qualify as a dollhouse, a home must be in a location that buyers want and must offer the number of bedrooms, bathrooms, and amenities they’re seeking. Beyond the price, however, buyers purchase the house that meets both their basic requirements and their emotional needs.

Filling Buyers’ Emotional Needs

After many years of investment experience, we’ve found that using Design Psychology and Marketing Psychology techniques greatly increases our profits. Both concepts go far beyond “curb appeal.”

For instance, we use colors that target our prospective buyer’s income level and match the selling season. Generally, buyers of higher-priced homes prefer complex colors. And using cool colors during hot weather and warm colors in cold seasons makes buyers feel like they’ve found an oasis or sheltering haven.

We also paint the front door a happy color and entice buyers into the house by placing potted plants on the porch. Once inside, we use home staging strategies to create a buyers’ dream home. We don’t use a lot of furniture; just a few accessories to suggest happy activities. The idea is to make the buyers believe that if they buy your home, they’ll enjoy a new lifestyle.

Over the years, we’ve bought and sold dozens of distressed properties. By using caution and common sense, as well as following a few simple rules and using Design Psychology strategies, you, too, can become a wealthy real estate investor!

(c) Copyright 2005 Jeanette J. Fisher. All rights reserved.

In addition to finding the right property, one of the most difficult aspects of property development is being able to fund the purchase and re-development of the property before putting it back on the market.

Many would-be property developers have the skills and flair for property development, but lack the financial clout to put these into practice. So what are the options for funding a property development?

Property development mortgage

A good place to begin is to talk to your bank or building society about taking out a mortgage to fund the development, however most high street mortgage providers are not fully equipped to service the needs of property developers and are more likely to refuse finance.

A better bet would be to try one of the niche mortgage providers who specialise in providing finance to property investors and developers.

Mortgages provided by these companies are often repayable on an interest-only basis and in some cases it is possible to borrow up to 100% of the development cost, however the developer is often required to own the land on an unencumbered basis.

It is also worth noting, that as the risk increases to the lender, the interest rate on repayments will also increase.

Using other people’s money

A cheaper way of raising money may be to borrow from other people, such as friends, family or colleagues at work.

The core advantage is that you are less likely to be saddled with expensive interest rates, but it is important to keep all business dealings above board and well documented, as it is all too easy for relationships to go sour if problems occur with the development.

Seek private investors

Another approach that the savvy property developer might take is to ask people to invest in the development, so that they can enjoy a profitable return on the sale.

This removes much of the financial risk from the developer and means that money can be spent on business expenses and not repaying high-interest loans.

Whilst selling a stake in the development is an attractive idea, it does require a good level of marketing skills by the developer to find and convince potential investors to part with their money.

Start small

It is still possible to find low cost properties around the UK, which are much easier to finance, before working your way up to larger, more profitable developments. Growing your property development business in stages allows you to gain valuable experience, reduce your risks and helps you to build up cash reserves to invest in future developments.

It’s high time someone advocated the use of common sense and suggested that those people looking for that dream home in Spain actually apply a cautious approach to buying!

After all, real estate is such a significant purchase for most people that you’d think people would be only too ready to think twice and long and hard before committing to purchase ? especially when buying abroad where the rules and customs differ greatly to what we may be used to.

But it seems that so many people are seduced by the sunshine in Spain and by aggressive and slick agents and developers that they are willing to purchase unseen, to buy off-plan or even remotely via the internet and to basically purchase without the slightest clue about just what it is they’re getting for their money.

People are buying Spanish property without the completion of surveys, without employing independent legal advice, without considering the long term investment potential of their property and without considering the practicalities of owning a second home in an overseas location?and what’s more worrying is the fact that due to Spain’s universal appeal more and more people are doing so every year.

So, the time has come to promote the idea of applying a cautious approach to buying property in Spain starting with - don’t leave your brain on the plane?

When you arrive in Spain you will undoubtedly be seduced by the surroundings of your chosen destination, you will be able to immerse yourself in the dream of owning a home in the idyllic location and living a holiday-like lifestyle all year round should you so choose?and these feelings will leave you elated but vulnerable to the traps and pitfalls that are there at every stage of the property buying process. Remember, those traps and pitfalls exist in every country in the world and do not change just because you’ve change country!

Therefore, before you even travel to Spain you have to arm yourself to deal with buying a property. If you get your mindset right and you set yourself a realistic budget based on the research you do into the types of property you’re interested in and the region you’re interested in you will step off the plane prepared.

Employ defensive tactics - know that if something looks like a bargain and is selling at a price that is ‘too good to be true,’ chances are you should walk away! Remember how you would behave if you were buying back home and while I’m definitely not suggesting you set out determined to see the bad in everyone and convinced that each person you speak to is trying to rip you off, I am telling you that not everyone you come across will have your best interests at heart!

Find out how the property buying process works in the region of Spain you’re interested in, you need to know whether you will be asked for a securing deposit when you register an interest in a property, you need to know how much this will likely be. You have to know whether an offer is legally binding, you need to understand how property law works in your region of choice. All this research can be done before you even set foot on the plane! If you arm yourself with solid basic facts then you will be in a strong, confident position and you will be less likely to fall for estate agent exaggerations.

Don’t be rushed into making a decision or parting with cash. Make sure you employ independent and qualified legal support to ensure your interests are protected. If you are unsure of the meaning of any paper work you are asked to sign make sure you get it translated. Pay attention to detail ? make sure boundaries are marked on the contract you sign, make sure your solicitor confirms them with the local land registry office.

Never ever assume anything; never ever accept it when someone assures you of a fact?get facts and assumptions confirmed by having them written into the legally binding contract. Don’t become a victim of the Spanish property market by failing to do your homework and by being a passive purchaser.

Do your comprehensive and boring homework and approach buying a property in Spain in the same way you would approach buying a property back home ? it really is that simple!

If you turn on the TV, listen to the radio, or even surf the internet, you’ll notice that there is a lot of people talking about the “Real Estate Bubble”, and asking the question, “when is it going to burst?” They (these so-called experts) have been saying for years that the real estate market can’t continue this type of growth. These “experts” remind me of chicken little, with all of their prosphesy of doom and gloom, and the “sky is falling” syndrome. The truth is there has never been a real estate bubble in the past, or presently, and there will certainly never be one in the future. Talk about there being a “real estate bubble” is the stuff that urban legends are made of.

Here’s the readers digest version of what it all means. The real estate market is really, a “wave”. It’s cyclical, and we are riding on a big wave right now. Real Estate is just like Investing in the stock market, There are good years when values rise and there are years that are better, when values rise even higher. That’s it, in a nutshell. Real estate has gone up and down throughout history, and generally speaking, it is fairly stable. When you look at a graph of real estate values, you would be able to see a clear pattern of increasing values. Now some years would have higher peaks than others, and all in all, it is a gradual building slope from left to right. And it looks just like a wave.

In addition, there are more up cycles, than down cycles. So the recent growth we’ve had will be followed by ones of downturn. The only difference is that it may not be as much of an increase, in other words the increase will be slower. The bottom line is, it will still be growth. This is why there will always be growth. Real Estate is a basic need. People need a roof over their heads. You can rest assured that people will be renting, buying, leasing, and selling homes. And it doesn’t matter if the market is low or high or if the interest rates are up or down. Real Estate is a sure thing!

Remember Real Estate cycles tend to be regionally based. Real Estate is always driven by the economic principles of supply and demand. Some areas of the country, like Seattle, are going gangbusters, and real estate values are going sky high, and other areas like parts of the northeast are not increasing by the same percentage. However almost all areas are going up in value. Historically, property values increase in a strong job market. Other factors to think about include; program funding, interest rates, population growth, climate, and user-friendly state and local governments, including school system changes. These are critical points to consider when investing in real estate, either as a landlord or for personal use.

The key to successful real estate investing is to understand what drives the market. Stay on top of what is going on in your market place. Research the internet, read articles, get involved with your community. One other key to staying at the top of your game is to get a mentor or coach to help you succeed in your real estate investing career. If coaching is good enough for sports figures like Tiger Woods, why not you?

To sum it up, Real Estate bubbles don’t exist, but there is a real estate wave. As any surfer knows, if you want to ride the waves, you need to get in the water. Watching the action can be fun, but will it put any money in your pocket? Invest with the intention of providing a service for others, and you can become rich investing in Real Estate.