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7 Simple Steps To Real Estate Investing
Whether you are BRAND NEW to real estate investing or an expert in the game, it’s critical that you understand these 7 Simple Steps to real estate investing.
First things first…
• Real Estate is NOT a get rich quick scheme. However, if you...
Home Loan Pre-qualification vs. Pre-approval
Once you’ve decided to buy a property, the first step is not to go house hunting. Instead, you should find out what you can borrow. In doing so, it is important to understand the difference between loan qualification and approval.
Pre-Qualified
...
More Home For The Buck - Buy A Foreclosure And Save Big
Owning a home is something every hard working American wants. Many first time buyers discover the only home they can afford may not be all that they were hoping for. There's not many things more discouraging than calling a real estate agent, giving...
Negotiating The Purchase Of Your Home
Negotiating a successful real estate contract requires communication skills and the ability to create a environment of cooperation. Many of our real estate clients have been very experienced negotiators, and from them we have learned that the goal...
Pump Up The Value Of Your Rehab Real Estate Investment
There are two legal ways to increase your wealth.
1. Keep more of what you have (e.g., tax strategies, rehab efficiencies, cost savings)
2. Add value to something (e.g., a real estate investment, stocks, bonds)
Let's focus on adding value to...
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Property Investment – How To Calculate Rental Returns
Before purchasing an investment property for rental purposes it’s always a good idea to calculate whether it will be cash flow positive or cash flow negative. That is, will the property generate an income (positive) or will it require a monthly cash injection (negative)?
This article will outline and briefly describe many of the main Purchasing and Annual Holding Costs incurred when buying a rental property. Please keep in mind that these items will vary from country to country and they do not take into account personal tax implications.
- Purchasing Costs
Purchase price – the agreed price for which the property will exchange hands.
Renovation Costs – money budgeted for renovations prior to the property been made available for rental.
Agents Fees – in some countries it is common practice for the buyer to pay some or all of the real estate agent’s selling fees/commission. However, in most cases these fees are paid by the vendor.
Stamp duty – a duty placed on the purchase of a property charged by the local government for the registration of the property into the new owner’s name.
Mortgage Application Fees – charged by lenders upon application to secure a loan to buy the property.
Travel Expenses – flights, car hire, and hotel costs incurred when travelling to personally inspect a property.
Solicitors Fees – payable to the solicitor for all of the relevant legal work for the transfer of the property.
Research – books, local suburban reports purchased to research a suburb.
Accountants Fees – the property may be purchased in the name of a Trust or Company. There may also be a crossover here with the solicitor’s fees.
Council Rates Cutover – A vendor may have paid rates up to a time after the transfer of the property. The amount is then split between the buyer and vendor on a pro-rata basis.
Independent valuation / Engineers Report – a vendor may choose to pay for their own independent valuation or engineers report to highlight areas of concern.
Miscellaneous – this will include postage, telephone calls etc. It’s also worthwhile to include a contingency should some of the above costs be more than anticipated.
- Annual Holding Costs
Mortgage Repayment – payable to the mortgage lender to repay the loan used to purchase the property.
Property Management Fees – if a
professional property manager is appointed they will either charge a percentage of rent or a monthly flat fee.
Council/Municipal Rates – charged for collection of waste and upkeep of local services. Sometimes these are paid by the tenant.
Maintenance – costs for repairs and maintenance on the property and it’s fixtures and fittings.
Bank Fees – account keeping fees charged by the bank.
Landlord Insurance – protection against theft, damage, non-payment of rent, legal costs.
Letting Fees – some property managers may charge a letting fee for finding new tenants.
Pest Control – protection against pests and termites.
Cleaning – the property may require a thorough professional clean in preparation for new tenants.
Travel Expenses – incurred when visiting the property at times such as showing it to potential tenants or collecting rent.
Local Income Tax – may be charged by some local governments for the rental profits after any allowable deductions.
Land Tax – an annual tax on the value of the land on which the rental property is built.
Accountants Fees – payable for the administration of legal structures if a property is owned by a Trusts or Company.
Miscellaneous – again, this will include a contingency should some of the above costs be more than anticipated.
Once all of these costs have been factored into your calculations you will be able to determine whether a property will be cash flow positive or not.
Visit http://www.bulgarianpropertybuyer.co.uk/freetrial.htm to download your free “Estimated Returns Calculator” which allows you to quickly calculate the net return on a potential investment property.
In closing, it is imperative that you seek professional legal advice before you make any investment. This will clarify the process according to your own personal situation and the county you are investing in.
Happy investing!
About the Author: Tim Wright is an international property investor and regular article contributor. He is the author of "Bulgarian Property - The Overseas Buyers' Kit” available at http://www.bulgarianpropertybuyer.co.uk
Source: www.isnare.com
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