Guide For First Time Homebuyers

Being a first-time homebuyer can be challenging to say the least, but realtors help demystify the process and help make sure you get the house that best fits your needs.

Determine Your Long-Term Goals

The first thing that most realtors would recommend you do is to determine your long-term goals and how owning a home will fit into those plans. You may be tired of spending your earnings on rent and would rather put your money toward something that could actually turn a profit down the road. Or, you may simply want to be your own landlord for a change. Whatever your goals may be, get a clear idea of them before you start shopping around.

Finding the Home You Want

Once you have committed yourself to becoming a homeowner, you can expect the process to be a bit chaotic. More than likely, you’ll make a lot of offers and get a great many counter-offers in return. But don’t be intimidated or allow yourself to get frustrated. A professional can walk you through each and every step so that you’re not overwhelmed.

Financing

You will more than likely have a wide range of financing options, even if you don’t have the best credit. You may be able to find a loan backed by the federal government or get financing that doesn’t require the standard 20 percent down payment. In addition, the state you live in may provide special incentives for first-time buyers. Realtors can provide you with easy-to-understand information on all your options so you can feel confident while shopping around.

Making the Offer

Once you have honed in on the house that meets your needs, your real estate agent can help you decide how much you should offer, as well as any conditions you should request before signing on the bottom line. For example, you could ask the seller to pay your closing costs. Your agent will then take your offer to the seller’s agent, who will then either accept your terms or reject them and make a counter-offer. This back-and-forth will continue until you reach a deal or decide to move on to another option.

When you reach an agreement with a seller, you may be asked to put down a good-faith deposit. The transaction will then move into escrow, which is a period of time (about 30 days, typically) that the seller takes the house off the market. He or she will do so with the expectation that you will buy the home – provided that an inspection does not uncover any serious problems.

Realtors can help you find homes in the neighborhoods you prefer at prices that fit your budget. Once you’ve made your decision, they can help you through the entire purchasing process, from making an offer to getting a loan and wading through the seemingly never-ending paperwork. Realtors can provide invaluable assistance through a trying time.

Understanding Tiny Home Movement

The high cost of real estate has left many in search of alternatives to conventional homes that come at a more affordable price. The tiny home movement continues to grow in popularity, especially for those who are seeking to enjoy all the benefits of owning a house without the high costs and expenses usually associated with such an asset. Homes that have been specifically designed to be as small as possible without sacrificing comfort or utility have much to offer. These homes are designed to be highly mobile and offer the perfect solution for professionals whose career does not tie them to one specific location.

Unlike campers, trailers and conventional mobile homes that are often designed for either short term use or that offer limited quality and comfort, tine homes are designed for maximum efficiency. Houses that are rarely larger than a few hundred square feet can provide many of the environments and amenities that property owners would expect to find in a much larger structure. Eliminating any space that is not being utilized and making every effort to create the most efficient environment possible offers a way to pack a great deal of value into a very small package. Small homes are often designed to be as mobile as possible in order to better suit the needs of owners who lead a more nomadic lifestyle.

Owning a conventional home is often a more expensive undertaking than many first time property owners may realize. Landscaping, foundations and the utility costs associated with a larger interior environment can quickly become very expensive. Smaller structures and those that require less resources and effort to maintain can make the dream of owning a house far more attainable. Spending more to maintain areas and environments that property owners may be able to do without can make maintaining a property far more expensive. Houses that have been created to be as efficient as possible can often be owned and maintained for a price that few existing property owners may have believed possible.

Internet technologies and mobile devices have given rise to a workforce that is more mobile than ever before. Professionals who are not tethered to a single location are increasingly interested in any opportunities that may allow them to more easily travel. Homes that can be easily transported from one location to the next provide the perfect solution for professionals who are seeking to see more of the world. The ability to enjoy all the comforts of home when on the road or to more easily move to different regions and enjoy a wider range of short term living opportunities and arrangements.

While the first small homes were designed and build by their owners, the growing popularity of these structures means that those who are interested in owning one have far more options at their disposal. Professionally designed and built homes make ownership much easier, especially for those who lack the means or inclination to do the construction themselves. Working with a professional designer can provide plenty of benefits.

Online communities and forums offer owners and those interested in the advantages that smaller homes are able to offer the chance to discuss their situations. Learning all you can about any homes that may fit your budget and lifestyle may be easier than you would have expected. Making smarter and more informed decisions will allow you to avoid many of the common issues and pitfalls that first time owners may be likely to experience. Conducting a little research will ensure that you are able to make the best decisions possible and will help to ensure that you do not overlook any opportunities that may provide you with greater satisfaction or value.

The issues and expenses associated with owning conventional homes can pose a real obstacle for many owners. Smaller structures and homes that are designed to provide superior quality and comfort offer a more affordable way to make your dream a reality. Investing in the right opportunity or working with a designer or construction professional who will allow you to more easily meet your needs may allow you to more easily fulfill your dreams.

From mobile professionals to those who lack the resources and finances needed to invest in conventional homes, there are plenty of people who can benefit from a smaller and more affordable alternative. Homes created to provide the most comfort in the smallest amount of space have a great deal to offer, and may allow you to enjoy the lifestyle you have always wanted. Structures and homes that offer a more affordable and mobile lifestyle may provide the solution you have been seeking.

Tips To Securing Your Capital Estate Investment

I previously shared the steps for creating a professional plan for a real estate project; the importance of obtaining third-party validation; advice in how to find the right financing sources; and suggestions on presenting the project professionally, then closing the deal. This approach will enable you to obtain financing term sheets, letters of intent and/or financing commitment letters from lenders if your project is financially feasible and falls within the lending parameters of the financing institutions that you approach. Nevertheless, financing always requires a cash contribution, as 100% financing is not realistic in today’s market.

Lender requirements for cash equity contributions, deposits or down payments, typically fall between 15% and 40% of the total project cost (85% to 60% Loan-To-Value ratio). A portion or all of the equity value in the property can sometimes help reduce the cash deposit requirement, but it is very unlikely for a conventional lender to completely eliminate the cash contribution requirement because lenders want to ensure that the principal(s) are vested in the project, or have “skin in the game”. The cash deposit is necessary to close the loan and obtain financing.

So, where does the cash deposit come from? There are several potential sources:

  1. Your pocket
  2. Your partner’s pocket (if you have one)
  3. Equity from another property you may own (if any)
  4. Private investors

There are many advantages to infusing the cash equity requirement yourself, including the fact that you retain all profit and full control of the project at all times. This can often be the most advantageous funding structure because it maximizes your profit and control. However, there are also advantages to securing equity participation from investors, including:

· Less cash out of pocket enables you to be more liquid, retain more cash reserves and/or diversify your investments to earn profits from other projects or endeavors simultaneously

· Reduces your risk and exposure in the project

· Enhances your financing capabilities

There are 3 basic steps for securing equity capital for your real estate project:

  1. Prepare an investment proposition
  2. Source like-minded investors and private investment organizations
  3. Investment negotiations and agreement

1) Investment Proposition

There are many ways to formulate an investment proposition. I’ve seen an investment proposal written on the back of a napkin… and the deal was funded! (This was a developer seeking an investment from his grandmother). I’ve seen verbal agreements get funded by family members. I’ve also seen very intricate, elaborate and lengthy investment proposals not get funded. How you document your investment proposal is extremely important. The first two examples were appropriately prepared for their intended audiences; the third was not. If your project is financially feasible and can demonstrate reasonable gain for investors, securing investment capital becomes a function of proper documentation, sourcing, presentation and negotiation.

Regardless of whether an investment proposal is intended for a family member or a sophisticated investment organization, proper documentation always enhances your ability to secure funding. Your proposal should be professional, clear and concise. Following are some basic suggestions for documenting your investment proposal:

1. Provide a brief executive summary describing the project and the investment proposition. Within the executive summary, outline the investment amount required, return on investment, time-frame of the investment, and discuss the security, collateral and/or equity value that can help protect the investor.

2. Provide a financial summary of the uses of funds, sources of funds, operating projections and cash flow of the project.

3. Discuss the funding structure and capitalization plan.

4. Attach term sheets, letters of intent, financing proposals, and/or commitment letters from prospective lenders.

5. Attach the project plan.

Source Like-Minded Investors and Investment Organizations

Where do you find investors that would be interested in participating in your project? If your project is financially feasible and you’ve prepared a professional plan and a concise investment proposition, then you’re only steps away from finding your equity investor(s). It takes time and determination, but it can be a worthwhile effort that can last beyond a single project. Here are some suggestions for obtaining sources:

  • Contact local and regional mortgage brokers, real estate brokers, title companies, real estate attorneys, and other real estate professionals. Offer a finder’s fee.
  • Place ads online and in local and regional newspapers.
  • Prepare a project web page where prospective investors can find the project and review/download pertinent documents, including your investment proposition.
  • Hire a consultant or financing broker that specializes in securing equity participation.
  • Review your own contacts and business cards – You’d be surprised at how fruitful this effort may be.
  • Attend networking events and or conferences for private investors in your area and/or region, then collect business cards and make follow up calls and meetings.

Dedicate time to making calls, setting up appointments and engaging in meetings to present your project to prospective investors. Become an expert at presenting your project. Prepare a multimedia presentation to help them focus on the points you want to stress. Don’t stop until you get it done. If your project is feasible and profitable, it can get funded with proper determination and effort.

Investment Negotiations and Agreement

How much should you offer an investor? Depending on the nature of a project, perceived risk, profitability, location, your experience, competition, demand, supply and numerous other factors, I’ve seen investors require from 5% to 95% of the project and/or profit. Most investors want to see that you have “skin in the game”, generally 10% to 50% of the amount you ask them to invest in the project. Demonstrating that you have invested in the project or that you will invest into the project is adds value to the deal. You should document this clearly and provide evidence of the time and money you have invested in your project.

Other items that are open to negotiation include the percentage of control in the project, roles of the parties, reporting procedures for the investors, etc. You should provide benefit and value to the investors, but at the same time you don’t want to lose all control or receive minimal gain for your efforts. Finding the right balance is extremely importance. This is accomplished through open dialogue and effective communication between the parties.

There is no global formula for this, so it’s impossible for me to provide accurate advice on what to propose investors for your specific project. I would strongly recommend getting advice from a savvy attorney who can assist in preparing the investment agreement and structuring the investment terms. Meet with your attorney first so that you have an original structure for the deal; then use your attorney when negotiating any modifications with prospective investors.

If you have a history or recently completed real estate projects, document this clearly and share with potential investors during your presentations and meetings. If you don’t have a track record of successfully completed real estate projects, raising your first equity investment can be more challenging, but if you follow the above suggestions and you are determined, the sky is the limit!

Characteristic That Realtor Should Have

When one makes the very significant difference, to attempt to sell his home, a very important, first – step, should be, to interview several potential agents, and hire the one, he believes, will best serve his personal needs, goals, and priorities. While it is obvious, perhaps, for most people, the objectives of a homeowner, are usually, getting the best, possible price, in the least amount of time, with the least degree of hassle/ stress. In order to have a better chance, to achieve one’s objectives, it’s important to realize, these 6 things, a real agent, should provide, to his clients.

1. Responsive: Seek, and hire, someone, who emphasizes and prioritizes, being responsive, in all aspects of his representation. How quickly does the agent, respond to, and reply, to telephone calls (return missed calls)? Play – act, with your prospective agent, to see, how they actually, set appointments, and ask, when the agent arrives (how far in advance). Will you representative, create the inspiring methods and techniques, to garner as many qualified showings, as possible? How quickly will he answer your questions and/ or concerns, and how thoroughly? Will he provide regularly, scheduled, updates, etc?

2. Fiduciary/ serve you: How will each individual, you interview, explain how he will, protect your fiduciary needs, goals, and priorities, as well as respect your privacy? Opt for someone, whose focus, is, consistently, on serving you, and your needs, because you are their client. Hire the right person, for you, and your needs!

3. Marketing system: How will your agent, create, introduce, and implement, the best, customized, marketing system, for your particular house, and your specific needs, and prioritizes? Have each individual, you consider, explain his system, and reasons, and be certain, the system, is customized, and not, merely, the same – old, same – old!

4. Explain fully, and discuss: The individual, you hire, should be ready, willing, able, and eager to fully explain all relevant issues, and discuss them thoroughly, not to his satisfaction, but to yours! No question or concern, should ever be considered minor, if it stresses, you!

5. Bring meeting – of – the – minds: You’ve got to know when to hold them, know when to fold them, are the lyrics of a famous song. Quality representation means focusing on quality negotiating, and the ability to recognize, when one must push, the prospective buyer, to try to raise, the price, and when, it’s time to accept a reasonable offer. No one benefits from greed, or lack of insight!

6. Closing ability; enhance result of transaction: The difference between selling and simply, being, in sales, is the ability to close the deal, effectively, and comprehensively! Every effort must be focused on enhancing the overall results, and entire period of the real estate transaction!

These are not the only 6 things to look for, but are, obviously, important ones. Since for most people, their house represents their single – biggest asset, doesn’t it make sense, to hire the right real estate agent, for you, and your needs and situation?