How do you know if it is a steal or a deal? Find a nice real estate agent who specializes in finding deals.

A lot of real estate agents are lazy and they do not want to do their homework, so they will offer you anything and everything. But you have to be smart. Ask the real estate agent to bring you comparisons in that area. Ask them to show the old inventory of the property which he is trying to sell you.

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Let us say if he is trying to sell you a condo in Miami, then ask him to bring you comparison sales in that building. Assuming there are condos which are 1,000 square feet in the building and which sell for $400,000, now you can get a similar condo with the same view for $280,000, then it is not a bad deal. When you are buying in any neighborhood, compare square-foot prices. If homes are sold for $150 per square foot, then it is a 1,000 square foot house, which means you can buy it. You can buy a similar house for $100 per square foot and the same footage for $110,000. But when you went to see the house, the grass had not been cut for the last 4 months but had some nice trees which could use a lot of pruning. Inside, the kitchen plumbing had been broken and all the carpets were flooded and so mold on those carpets smells bad, which means 600 square feet of carpet needs to be replaced. The walls have some holes and marks all over. Now you need to spend $3,000 on the landscaping to make it look like one of the best homes on the block, because you can plant some new shrubbery and dig out or trim down the trees which have overgrown. You can do paint and patch up the walls for only maybe $1,000 at the most. Get a carpet person or replace it with laminate wood and install it yourself for only $2 a square foot with a total cost of $1,200. Change some of the old moldings for another $300 and some old light fixtures for another $200, and if you noticed that the outside air conditioning unit looks old but is still cooling, it may still last you for a few years, just keep it in mind that a new one would cost about $1,500. Roughly, with a total renovation cost of $100,000, the home can start looking real good. Now the home will cost you a total of $100,000 plus $100,000 or more. It is still $300,000 below the market value in the depressed market. Similar houses at the peak were sold for $180,000.

Small homes are not easy to find at very depressed prices because there are a lot of buyers even in the depressed markets, because people, instead of paying $1,000 in rent and raising their kids prefer to buy a home and maybe pay $1,200 in mortgage and other expenses, and it is theirs. Once you buy the house, just remember again, you are paying the rent to yourself and it is savings which will eventually make you rich and you will say that this is the best investment that you ever did.

The most important thing to remember while you are buying a house is not to get emotional. You will like some houses and you will fall in love with that, but that will also make a good investment. Are you making a good deal while you are buying this house? Remember, the most important thing in buying a house is that you never buy the house if it is not a good deal. You should try to find a house which is at least 20% to 30% below other houses in the same area. You should never pay the fair market value of the property.

I have seen times in real estate when people put a deposit of $50,000 and they bought it in the pre-construction stage, and by the time the house was finished and ready for purchase, the price went up by $100,000 more. This is a time when there is a lot of speculation going on the houses and the real estate is really inflated.

I have also seen people overpaying the asking price because there are four other people bidding on the same house. This happens every few years for a short period of time. It is called the seller’s market. Real estate sometimes has a double digit growth for years.

My advice will be to stay away from buying the house at that time. Keep on saving money and when the market settles down and prices go down, and then buy it.

I have been investing for the last 30 years. I only buy if I can find a deal at least 20% to 30% below its real value, not the inflated value.

It is hard to find those properties but they are always there. A lot of people buy real estate for speculation purposes and then cannot carry it. To save their credit, they have to sell so they get rid of them a lot below their value. A lot of builders also get stuck with their inventory and then they sell it at a much lower price.

I have seen in the Miami condo market, some people had paid $350,000 for a condo in the year 2005. Now, the same condo sold for $220,000. Sometimes, there are absolute auctions, and I have seen properties that sold at $0.50 to a dollar by the individuals, bankers, or sellers.

Death, divorce, estate settlements, job transfers, and all these cases will also make people sell their property a lot below the value. Sometimes people live out of state or the country. These people were either living in these properties and they had to move out or people had bought these properties for speculation. These people try to rent their properties and sometimes they get stuck with real bad tenants who don’t pay the rent as well as have ripped apart the property. Finally owners end up selling properties and take a loss just to get whatever they can get out of it before losing the whole thing.

Auction of properties at the doorsteps of the courthouse— again, these are the properties which banks had to repossess because people did not pay the mortgage and ended up foreclosing on them. Sometimes banks are willing to take losses on their mortgages and then sell properties a lot below their market value. Banks do not want to keep properties on their portfolios.

Short sales: when people owe money on mortgages and they are behind, a lot of times, banks do not want to foreclose on those properties. Sometimes banks will accept a lot less than what you owe on the mortgage. Sometimes it takes a lot of time to negotiate with the banks for taking those losses, but it is worth trying it because you can buy those properties much lower than their value.

Don’t buy a fixer-upper unless you steal it. Be aware of those odd handyman specials. If you buy a home for $220,000 and it needs $50,000 in renovations and then you can sell it for $300,000Then this is not a good deal. You have to calculate the time it will take to fix it, as well as the time you will lose before you can occupy it. During that time, you still have to pay your mortgage and other expenses. If you can steal this house for $12,000 then it is worth it to put in all the work. Sometimes you can buy homes real inexpensive because they look rundown, like old paint, ugly carpet, and bad landscaping. Those kinds of cosmetic touch up jobs can be done in no time and if you got a good deal, then get it!

Find a home where you can live as well as get some extra income. Sometimes it can be a duplex or a house the way it is made. Some portion of it has a separate unit it can be leased out and can be an excellent source of income and can cover a lot of expenses of rent. These kinds of houses are like buying 2 houses in one shot, so eventually, if you will sell them, your profits will double or they can be an excellent source of income. People who had “teaser” loans or ARMs (adjustable rate mortgage) with only a 6-month or 1-year fixed interest rate and negative amortization loans started defaulting on their mortgages when these teaser and introductory low rates and negative amortization loans and interest rates became due for renewal.

By Ashok of http://becomerichinfiveyears.blogspot.com



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