Buying A Second Home to Rent

There are some financial benefits of investing in rental property, but at the same time there are some risks. As a landlord, you must know about the tenants who do not pay their rents. This is a headache for the landlords. You will have to need to weigh taxes, real estate appreciation, mortgage and maintenance costs. You want to own a rental property to become a landlord and earn. Is it a good financial move for you? To know the answer, read this article for some Do's and Don’ts.

Pay Keen Attention to Tax Advantages

Do think about the tax advantages. You can cut down rates to lower down the expenses. You have to deduct interest, tax, insurance and other expenses. Do these deductions against the property’s income. You usually do deduction, which deducts losses from other income. For more deductions, you can deduct depreciation cost from taxes. Because of the deductions you can sell a rental property. You can sell out rental property without paying capital gains taxes.

Think like a Landlord

Rental property is also a business which needs full time and energy like any other business. You will need to keep in touch with rental laws and formalities. Keep yourself up-to-date on legalities. It is necessary in order to maintain safe and habitual property for your tenants. Always remember, a tenant who is paying you dollars has right to expect better response from you. A tenant does not expect any problem in the building. Tenants who are paying little less rent from the market, they are usually less demanding. But other tenants who are paying up to par rent are highly demanded. As a landlord it is your responsibility to make up your home. Repair your home before renting it out. If taking care of your home seems difficult for you because of time or any other factor. You can ask for a manager or caretaker.

Do Your Homework for Real Estate property

Spend much time in searching rental property. Do not crack the first deal you come across. Research in the rental property business is important. So, do your homework in searching the best real estate rental property. You should know about the market rates, zones, locations, laws and rules, market trends and all fees. Always look for the location like near to school, parks, shopping malls and offices. In these areas most tenants want to live for their own convenience.

You will have a thought of making your property attractive to tenants. Look for a property with good landscape and interior. Always try to buy rental property near beautiful views, beaches, or near to school, colleges and offices. The neighborhood is important to many tenants. They always look for good neighbor. So, you should opt out a stable community so that more and more tenants want to live.

Do Calculate your Numbers Monthly.

Always analyze your monthly housing costs. So, it is important for you to calculate all the numbers regarding all expenses and costs. A calculation needs keen attention so, use smartphone apps, online software or online mortgage calculator. A calculator will allow you to enter and calculate purchase price, down payment, taxes, insurance and mortgage loan interest rate. The one important note about the mortgage rates on rental property are, they are typically higher than the rates for a primary home.

Also add the costs of maintenance and repairs. A good rule to nail the rental property is about 2% of the purchase price per year is compulsory for repairing and maintenance. So, a $600,000 property would cost roughly $6,000 per year to maintain. Although, you can increase the percentage from 2% to 2.5% if you want and the property is getting older. 

13 Steps to Closing a Real Estate Deal

Closing a real estate deal can be a time consuming and stressful exercise. It may involve lots of steps and procedural formalities. Closing of the deal falls when you sign the papers that make the house in your own. But before that happy day arrives, numerous things have to happen. Read this article to know some important guidelines for a property buying. These guidelines should be followed during the closing process from the moment your offer is accepted to the moment you get the keys to your new home. The steps are:

1. Opening of Escrow Account

Escrow is an account which you never heard before. This account is held by a third party on behalf of the two principal parties that are involved in a transaction. Since home sales involve multiple steps which can take your ample time. The best way to alleviate the risks of either the sellers or the buyers have, is to have a neutral third party which holds your all the money and documents related to the transaction. Once all procedures and formalities are done, the money and documents are moved back from the custody of the escrow account to the seller and buyer.

2. Title Search and Title Insurance

Do a title search and obtain a title insurance. These two significant things will provide you peace of mind and a legal safeguard. So. That the property you buy, no one else can utter to claim it. A title search is an inspection of public records to determine and confirm about property's legal ownership. The title search is to find out the claims. If you find any claims, these may need to be fixed before the buyer gets the property. Title insurance is to protect the holder from financial loss sustained from defects in a title to a property and protect both real estate owners and lenders against loss or damage.

3. Hiring an Attorney

The best decision is to get a professional legal opinion on your closing document. Well, it is optional whether you want to get a legal aid or not. Legal opinion will help you in your potential problems. Hiring an attorney will give you multiple benefits.

4. Importance of Getting Pre-Approved for a Mortgage 

To close a deal getting a pre-approved for a mortgage is no important. It only helps you in closing the deal quicker. Getting pre-approved for a mortgage will help in bargaining. It will give you more bargaining power and helps you in a negotiation.

5. Interest Rate

Try to lock your interest rate for the loan in advance. For example: a rise of 0.5% interest rate can significantly rise your repayment amount and repayment tenure. If you lock your interest rate it means you are secured from future market fluctuations which can be a big risk.

6. Procedure Costs for Negotiation

All the steps from an escrow account to real estate attorney have some entities costs and service costs. Many agents take advantage of consumers' ignorance and charge high fees. If you know about the junk fees and other administrative fees, you can negotiate or eliminate the procedure cost.

7. Complete the Home Examination

A complete and thorough examination of the home is compulsory. Inspect the condition of the building. If you find any problem in the house, you can back out of the deal. So, it is a very important point.

8. Complete the Pest Examination

A pest examination is a different inspection. This inspection involves a specialist in making sure that your home does not have any wood-destroying insects, like termites or carpenter ants. The pest problem is a devastating for properties. So, make sure your new home is pest free.

9. Renegotiate the Offer

When you inspect the home and it shows any problem regarding condition or pest. You can re-negotiate after making an offer. You can lower down the cost of the home after the inspection.

10. Remove Contingencies

If your agent helped you to crack a good purchase offer, it should be contingent on different things which include:

• Interest rate.
• Home inspection.
• Agreement to repair.
• Pest inspection.

As a part of active approval, such contingencies must be mitigated in writing.

11. Funding Requirements

You have to deposit earnest money when you signed the purchase agreement. In order to complete your purchase, you will have to deposit funds in the escrow account.

12. Final Scrutiny

One of the final step, you should walk through the property one last time. Final scrutiny of the property and documents are important, before signing the papers.

13. Understand the Documents

Paperwork is critical. So, understand the all clauses of the agreements. Before signing, you should understand all the documents 

Should You Buy or Build a Home?

A biggest dream of everyone is building or buying his/her own home. For buying or building your own home needs biggest investment. Most of the people who want to buy the home, spends their lots of energy and time in search of finding the best designed home. Every buyer wants to buy a home according to their demand like which type of interior, location, designing they like. “A perfect dream home”. For finding homes to buy, you have to go through Home Owner Fee, property tax, and market trends. All these requirements need time and energy. Every buyer wants to fulfill all his/her wish list, which he/she has made for his/her home.

In order to buy a home, the dilemma for every buyer has whether to buy an existing home or build a home. This would be an important decision. Here we’ll tell you some pros and cons of each path. By reading this article you will be ready with the answer whether you should buy a home or build a home.

Buying a Home

There are some pros and cons of buying and existing home. First, we will talk about two primary pros of buying an existing home.

• Convenience
• Cost

Once you have planned for buying an existing home. You have to go to real estate agent. He will throw some offers and deals to you like fee charges and discount rates. After that, when you are approved by your real estate agent, you can go and shop around. He will show you some homes, you can pick out according to your choice and make an offer in order to buy a home. Your real estate agent will help you in finding an appropriate home, making negotiation, and in all legal formalities. Once you select the home and fulfill all the requirements of the seller and your agent, you will be able to move into your new home within one or two months.

Buying an existing home requires some steps like financing, searching homes, making an offer, negotiation, home inspections, legal formalities and closing.

Convenience. 

Some of the people have a tight schedule and they cannot pick their time out for building a new home. So, buying an existing home is the most convenient way for the people who does not have sufficient time. It would be convenient for you if you are particular about neighborhood, location, like near your work or near your kid’s school. Buying an existing home will save your time and headache.

On the flip side, the major con of buying an existing home may be that you would not get exactly what you want.

Cost.

The other primary advantage of buying an existing home is the cost factor. In many of the cases. Buying an existing home is cheaper. While in a few cases I could be expensive. According to National Association of Home Builders, once you found a prospective, existing home, use a mortgage calculator and estimate the total cost of purchasing that home based on today's interest rates. The price will still favorable in the aftermath of the financial crises.

Building a Home

Building your own home is not an easy assignment. You have to go through from numerous steps. The major pro of building your own home is you would get what you exactly want. New built home will be more efficient and energetic. The life of the new built house is more than an existing home. You can choose your ventilation, heating, cooling, insulation and filtration system in the home you build.

Some of the cons I would like to discuss are: first you have to find a land at an appropriate location and in your budget. Then, you will have to find an architect and you have to choose every element and design. It is time consuming and hectic. You have to worry about the system like municipal water and sewage. It will be costly to build your own home. You cannot move instantly. It requires lots of time.