Real Estate Articles:
Tips For Doing Your Own Home Improvements added 1-24-2012
You can completely revamp your house or fix existing problems with the magic of home improvement. There are many simple jobs that don't require much expertise and can be completed without spending a lot of money. Follow these suggestions to help you boost your efforts and get ideas. This should make it clear what you can do.
Think about whether or not you want your security alarm set while you are showing your home. If the home is located in a sketchy neighborhood and the property is vacant, then it should be turned on.
This causes the bristles to bend and makes them wear out more quickly. Invert your broom and hang it, when not in use. You can also avoid mildew on your mops by hanging them so that the head of the mop can dry throughly.
Keep your asphalt driveway from cracking and crumbling by applying an asphalt sealer. Sun and rain can damage the driveway. Water that seeps into cracks and freezes, expands and increases the size of the crack. Sealants provide a protective layer that extends the life of your driveway by preventing damage from the elements.
One way to save money on home improvement projects is to borrow tools from your neighbors. Borrow and loan the more specialized tools you need for certain projects so that you and your neighbors split up the costs of acquiring them. Even better, you two can share tips.
You can avoid damage to your house's foundation by directing rainwater away from the house. To keep run off water from damaging your house, create a gradual slope falling away from it, so that water doesn't accumulate near your foundation. Another good idea is to add an extension to the downspout that carries water from the roof gutters. This will carry the water further from your foundation; again, avoiding water pooling beside your house.
Rely on your creativity and unique personality to design original projects. Include personal touches to any home improvement project.
Keep the balance in your house. Improve the quality of your sound at home. A loud, unbalanced fan blade usually just needs some minor adjustments. Check the fan blade screws, the screws on the blade arms, the motor frame screws, and the ceiling mounts. At the same time you work on the screws, take a moment to make sure the blades are clean, since even a little dust may throw off the fan's calibration.
As you read the article, you should have seen what sort of home improvements can be accomplished. If you have the right equipment, you can really personalize your home. Save money and adopt home improvement as your new hobby for hours of fun and useful work.
Real Estate Strategies To Follow When Buying A Home-added 12-14-11
Anyone who has ever purchased a home before can tell you that it's not always an easy process. From dealing with closing fees and inspections to stubborn delays and last-minute seller disputes, it can be tricky business. Read these tips below to find out how to simplify the real estate-buying process.
In the beginning stages of home buying, you will want to get pre-qualified for a home mortgage loan.
This is really a simple, but valuable process. To obtain this pre-approval, a mortgage lender will review your personal income, savings, and monthly out-of-pocket expenses. By reviewing these numbers, the lender can calculate how much you can finance and how much the monthly payments will be for the loan. The surrounding neighborhood is an important consideration when choosing property to buy, especially if you are looking for a place to raise a family. The neighborhood will affect both your enjoyment of the property for the length of time you live there and also have a significant impact on the resale value of the property.
When searching for a new home, try to find one that has an attached garage. This is especially important for winter months.
You do not have to walk through a blizzard in order to get out of your car and into your house. This is also convenient for when you have many packages to carry indoors. Once you've learned these tips, you can implement them where necessary in order to get the best possible deal on a home or to make the entire process go over smoothly. Above all, though, you need to apply this advice so that no one takes advantage of you. Educated buyers always prevail in the market.
Easy Ways You Can Improve Your Home-added 12-14-11
Do you see yourself as a home improvement guru like the ones on TV? What kind of jobs can you accomplish? Consider these tips to learn more!
Putting padding on sharp ends of furniture will help prevent any accidents that your children may have. Corner protectors are available for this purpose at any home improvement center, or you can purchase foam tape to cushion corners. Another thing that you should do is tape down loose wiring that can strangle your child.
You CAN Stay In Control Of Your Personal Finances added 12-14-11
It's important for all of us to learn personal financial skills, but many of us aren't taught about money as children. If you were never educated on how to manage money, or if you want to brush up on your skills, pay close attention! You can always learn more about personal finances. You are about to learn some ways that you can do this.
The most important factor in successful personal finance is effective money management. You must invest your capital and protect your profits. If you are planning for growth it's okay to put profits into capital, but you have to manage the profits wisely. Decide on a plan ahead of time regarding your profits and capital.
Older incandescent bulbs should be replaced with newer CFL bulbs, which are much more energy-efficient. Not only will you be lowering your electric bill as a result, but you will also be doing something good for the environment. CFLs also last longer than traditional light bulbs. You will end up purchasing fewer bulbs and therefore saving money.
Losing the family home can be devastating. That said, if your mortgage is killing your finances, it's probably time to look into a cheaper place. You do not want to be evicted after failing at repayment efforts. Some wise people choose to act preemptively.
If you have a flexible spending account, use it. Flexible spending accounts are perfect for people with medical deductibles, daycare expenses and who purchase over-the-counter medication. This type of account makes it easy to set aside pretax income for different expenses. You should talk to someone who does taxes to find out what all is involved.
Patience can save you a lot of money when considering your personal finances. When electronics are first introduced onto the market, there is a mad rush by consumers to purchase them. You will see prices drop significantly if you wait for the novelty to wear off. Money you save by forgoing cutting-edge technology can be profitably employed elsewhere.
Bring a small envelope whenever you leave your home. Use this to store all of your receipts and business cards. It's a great way to capture these items in a safe place to record them later on. It is always a wise idea to compare your receipts to the bills that you receive to rule out any errors or overcharges.
In order to become a mature, responsible individual, you need to be good at managing money. It is easy to develop this trait in yourself. Anyone can develop and improve their personal finance skills with just a little effort. The advice in this article can help you to significantly increase your proficiency in monetary matters.
Florida Real Estate information – Buying versus
Renting added 8-30-11
When other things are kept constant, buying a house is extremely
more beneficial than renting it. It is obvious that when one buys
a home, he or she can build more equity. However, buying or renting
decisions greatly depend on place.
When talking of Florida real
estate, there has been a large decrease in the figure of home sales.
The reasons include high prices and high taxes. Another reason
for such a decrease is the availability of rented houses.
Currently, property prices in Florida have started balancing.
Looking
through Florida real estate information and MLS listing, one can
find out that listings of pre-foreclosures, expired listings, new
listings and short sales are increasing at a faster pace. It has
turned out to be a market for buyers.
An important point influencing the decision of renting and buying
Florida real estate is the economy. As new and new developments and
inventory are being built, rents are also decreasing. An individual
can easily rent out a domicile, which he or she cannot even think
of buying. Renting a home offers some additional advantages also.
Firstly, people can shift to other areas as and when required. Leases
are available for 1 month or a 2, up to 1 year. Owning a home, on
the other hand, limits an individual to a particular area. Home resale
depends upon the overall demand and competitive sales; whereas renting
and leasing do not depend on these factors.
In addition to some limitations of buying Florida real estate, it
also offers some advantages. First of all, an individual gets an
emotional satisfaction that he or she owns a domicile. Moreover,
there are probable tax free capital benefits and other tax advantages.
However, property taxes and repairs & maintenance come along.
All things set aside, now it is a good time to purchase a domicile
in Florida. Market is experiencing lower prices, lower rates of interest
and a tax shelter.
To get real benefits of investing in Florida real estate, it is good
if an individual consults an experienced Florida realtor. The realtors
are aware of all trends, prices and tax rates prevailing in any area.
They will help the investors in making the best possible deals. So,
best of luck for investing in Florida real estate!
2nd Home mortgages In addition to Collateral Funding-added 7-21-11
Whenever talking about home-mortgage funding, people will usually
notice the actual phrases "1st" as well as "2nd" house
loans. The first home loan typically means the primary home loan
for the property or home, which frequently symbolizes as much as
80 % of the worth. A 2nd home loan is generally extra funding, which
may be set up for a number of good reasons
.
Usually, there's a handful of kinds of 2nd home loans: house collateral
lines of credit, and also the more common property collateral mortgage
loan. Picking in between these types of mortgage loans depends upon
the needs of the property proprietor or perhaps purchaser.
A property collateral personal credit line (HELOC) generally features a shorter-term letting it often be utilized in comparable to any charge card. Bank checks are usually created towards a property collateral line of credit so that you can cover unanticipated expenses. Interest rates are created month-to-month if there is an outstanding balance. 2nd home loan rates with regard to collateral lines of credit tend to be based on short-term charges, and so are typically below what the 1st interest rate.
The risk having a property collateral line of credit is always that the entire balance is due with maturation. Accumulating a large balance due with an collateral line of credit for your property enhances the risk associated with substantially greater charges on home refinance, or even the possibility that your credit line will not be restored whatsoever. There is certainly substantial competition amongst financial institutions of those home loans, which usually reduces this kind of danger to some extent.
The more traditional 2nd home loan will be the home equity loan. Property equity home loans tend to be fixed-rate loans spanning a much more lengthy time period as compared to collateral lines of credit. Because the rates are established, the cost of interest is typically greater than that of a 1st mortgage loan. The main advantage of a collateral home loan would be the fact this amortizes into a zero balance across the lifetime of the actual property finance loan. Consequently, there isn't any refinancing danger.
Is buying a Property a realistic Possibility for you? added 6-24-11
Maybe you have finally made a decision to buy your own property and you are in the action of contemplating exactly what your finances can pay for. Before you consider real estate property you will need to realistically examine your financial situation To be able to discover what you really can afford, you'll need to get in contact with a home mortgage company.
The simplest way to go about this, is to pay attention to the procedure prior ti getting a pre- qualification letter. This will also let you know plus a owner that you'll be qualified to acquire.
As soon as you receive the home mortgage in your hands, does that truly mean here is the selling price within your budget? This can be botha yes and a no answer. Your pre- qualification letter depends on numerous things. For example your income along with your credit rating.
The most detrimental scenario to find yourself getting in, is purchasing a property and finding surprises that make it extremely hard to make your loan repayments. This could easily take place in the event you depend strictly on the pre- qualification letter and don't actually investigate your position in financial terms.
Whenever taking into consideration anything you might manage to pay out when purchasing a home, you must take into account the complete image of your individual financial situation. What will be any future bills you'll need to fulfill. For example are there any youngsters coming or school tuitions. In case you are an worker for an firm, are you currently really for sure their business is doing well or perhaps have you been fearful of checking out the results? In case your household has only just one salary earner, precisely what possibilities might be set up in the event the primary salary earner is just not capable of carrying out work for several months due to a physical disease?
These are all things you will have to take into account and factor into your monetary picture.
What is the best way to go for a mortgage? Banks or a Mortgage Broker added 5-25-11
In regards to attempting to find the correct style of home finance
loan to satisfy the needs you have, you'll likely come across a determination
about who you should borrow from: Do mortgage brokers or banks make
better loan product providers?
A house loan broker can be a arbitrator that makes it possible for
the entire process of acquiring a mortgage for individuals along
with enterprises. Basically, they're like home loan supermarkets.
Their broad accessibility to lenders as well as their wide offering
of assorted programs makes them a clear cut source of help for many
credit seekers. If you've less-than-perfect credit ratings or have
been in unusual problems, mortgage brokers can nevertheless find
you the style of financing you will need. Mortgage brokers charge
you a brokerage fee, which you should ask about and consider when
working out your primary obligations.
Mortgage brokers will typically develop, approach, and pass the
loan onto a loan provider who is going to eventually sell it off
to an opportunist. They get fee and can have greater closing fees.
Beware of gouging, as companies have full discernment regarding how
much they would like to ask for the buyer for handling the documents
necessary for the mortgage loan.
Today, about 20,000 mortgage brokerage operations account for around
80% of mortgages are issued by mortgage brokers in the U.S. The convenience
and methods the key to their attractiveness.
The term ìmortgage banker refers either to a private loan officer
who works at the bank as well as to the financial institution itself.
They specialize in originating home loans and trading them all to
traders and continue to servicing them. Both the origination and
maintenance processes need fees, what are 2 primary reasons for source
of income for mortgage financial institutions.
An important distinction between home finance loan banks and mortgage
brokers is that banks have more of a standardized and set method
of putting fees. Bankers are told what payments to cost and so are
told not to stray away from them. This allows for more balance and
prevents the consumer from being surprised when it comes to finding
what are the fees for the mortgage loan might be.
Now the question is which is the better option? The answer is quite simple: Whoever gets the better deal. It should really be listed that although some credit seekers appreciate the comfort and assistance of with a mortgage banker see them over the lifetime of their finance (though not all do), while some really don't care in either case. This discernment, including a thorough assessment of deals that you can get from mortgage brokers and bankers, should give you a fairly clear idea of which way to take.
Good reasons to take into consideration buying a 2nd home in the Keys added 4-29-11
Finding a wonderful getaway location in the Unites States You have to take into consideration the Florida Keys Stretching from close to 15 miles south of Miami to lower than one hundred miles from Cuba, the Florida Florida Keys provide a multicultural lifestyle and holiday encounter to suit each and every price range.
Financing an exotic Dream
One Time reserved for the affluent and the famed, a second home can now be a part of a good investment decision portfolio. Funding a Keys home has never been better. Also, unlike the wealthy and the famous, the typical person will probably rent his vacation home out to visitors when he isn't using it himself.
Beachfront property is especially fashionable as a holiday location. The Keys offer equallya laid back existence as well as supplying up outstanding outdoor recreation The earnings from these rentals often handles the whole mortgage loan, permitting the owner to enjoy a complimentary getaway in the Keys whenever he chooses.
Beachfront property also tends to appreciate in value in the long run because of its long lasting attractiveness. The savvy property owner of a Florida Keys waterfront vacation home can be creating equity while he vacations there and rents it outñ equity that can either be exchanged for money at retirement or lived in on a full -time schedule.
The Florida Keys Art and Culture Scene -
added 3-28-11
Although best known as a destination centered around diving and other water sports, the Florida Keys is also a surprising hub of art and cultural expression. Certainly, the history of the Keys dating to the 16th Century is quite colorful, but during the 1930s up to the present, the Keys have been home to countless writers, artists, actors and naturalists. As a for instance, Ernest Hemingway, lived in Key West during the 30s and wrote of his several books while a resident. Jimmy Buffet, famous for Margaritaville also has called The Florida Keys his home.
Other famous writes such as Tennessee Williams and Robert Frost
both lived and frequently
visited Key West. What about Art? The Keys are also home to numerous
art festivals, such as the Pigeon Key Art Festival, the Key West
Craft Show and the Old Island Days Art Festival. Formal art galleries
of all types abound from Key Largo all the way to Key West. Key West
also offers, another gem, The Tropic Cinema, South Florida's only
independent film multiplex.
If it’s history, then there’s the Audubon House & Tropical Gardens and the Key West Art & History Museum located at the Customs House. If you love the theatre, then there are numerous performing arts venues featuring local thespian talent as well as actors from New York and California enjoying the Keys while performing at various theaters throughout the islands. The string of pearls called the Keys has art and culture in abundance with the best weather in the country. Come join us!
Great deals on Foreclosed Homes, But the Buyer Better Be Aware! added 1-19-2011
Getting the deal of a lifetime on a foreclosed home or condominium could be the answer to your prayers. However, sometimes the process is fraught with difficulties…if you try to go it alone. There are problems aplenty when buying a foreclosure and an experienced real estate agent will be very inexpensive insurance policy against making a huge and costly real estate blunder. What we’ll be dealing with here is the process of buying bank owned or foreclosed properties, the ‘how-tos’ with an emphasis on what to avoid and ultimately who should be part of your team.
Foreclosure Sales vs. REOs
Before getting into the process, we’ll need to cover some basics.
The bank will typically and initially offer the home as a “foreclosure
sale” in an auction. The sale assumes that the mortgage is still
in place. In a foreclosure sale the price is set at a minimum to
include the following: the loan balance, any accrued interest,
plus any other associated costs. The successful bidder must have
a cashier’s check in his possession at the time of the auction.
In today’s market, this type of sale almost never occurs. If there
was enough equity in the property to cover the mortgage and the
market was more stable, the owner could have potentially sold his
property himself and avoid the obvious negatives associated with
this transaction. Nowadays, this scenario is probably unlikely
If the bank resells the property in a REO (Real Estate Owned) sale, as the alternative, the mortgage then ceases to exist and the bank owns the property 100%. This article will consider only the process from an REO perspective which would also include Veteran Administration mortgages, as well. VA mortgage repossessions are handled by real estate agents in much the same way that REOs through a commercial bank are handled.
Basic Buyer Preparations in Purchasing a REO
In all cases, REO repossession is not free of potential issues. In
fact, there are often more problems. Obviously, a bank or the VA
that is saddled with an inventory of repossessed homes actively
tries to get the asset off of their books. However, they certainly
strive to not lose additional monies on the transaction. After
all, they probably have already lost a significant amount in the
repossession process. In many cases there are issues that will
need to be addressed upfront with respect to the ultimate contract
that will be signed, assuming that your purchase bid is accepted.
Whether you are buying a home in this manner to personally occupy it or it is purchased as an investment, it will require you to perform additional ‘due diligence’ in order to avoid some of the potential ‘got-chas’ that are not usually associated with straight real estate purchases. Therefore, the two most important people to help guide you through the procedure will be an experienced real estate realtor and a seasoned real estate attorney. Additionally, you’ll need to fully understand the process and the potential problems that can befall you.
Physical Problems with Repossession
Many homes that are repossessed have reached this situation because
of family problems, loss of employment, death, etc. In the end,
if a short sale or standard foreclosure sale is not possible, as
is the case in the current market, the home sold under a REO repossession
often is vacant for a period of time and the following problems
are often encountered:
1. Vandalism and Break-ins. When a home is left vacant for any period
of time, often appliances or anything of value may be stolen or vandalized.
2. Deliberate Vandalism by Previous Owner. When a homeowner is forced
out, there is a tendency for those to take out and sell any of the
appliances and in many cases, vandalize and destroy the home in retaliation
against the mortgage holder for the repossession. However, to prevent
the situation from occurring, some mortgage companies are now making
a cash payout to the homeowner to prevent that situation from occurring.
3. Wild Life. If a home is left vacant and the lawn and foliage are
unattended, various animals may seize this as an opportunity to move
in. This might include raccoon, opossum, snakes, rats, mice, etc.
After all, nature abhors a vacuum.
4. Maintenance not Performed. Many homeowners under the threat of
foreclosure, neglect maintenance because funds are scarce and basic
survival may not include painting or other cosmetic improvements.
Often important preventive maintenance is not performed, as well.
5. Mold Damage. A home that is sitting vacant for any period of time,
particularly in places like Florida or other locales in warm, humid
climates are prone to develop mold. If left without proper air conditioning
or dehumidification, the walls may develop this fungus and mold,
particularly if the home has had water or plumbing leaks. Some mold
damage may even occur on the inside of dry wall. Once mold takes
hold on a wall, often the only recourse is to replace the entire
dry wall.
6. Lead paint. Normally this is not much of a problem in newer homes,
but in older homes, it is likely that lead based paints have been
used in the interior. If this is the case, it’s a safety hazard for
a homeowner, his family or even workmen brought in to perform repairs.
There are two approaches, cover it completely with paneling or use
any one of a number of products designed to bond with the lead paint.
In any event, removal or surface repair of lead paint on the interior
of a REO home will certainly add cost to the potentials purchase
Professional Home Inspection
Most homebuyers may not be aware of the potential problems attendant
in the purchase of a REO home. Therefore, it is almost mandatory
that a homebuyer use the services of a reputable, licensed home
inspector. Further, use an inspector that has previous experience
inspecting REO homes. Money invested at the front end of this transaction,
will save both headaches and dollars after the home has been purchased.
Certainly, when and if any of these problems are discovered, they can be used to negotiate allowances in the price of the property. There are however, potential buyers of such properties that look for homes in need of repair. For the most part, they are savvy and well experienced in this type of transaction. For the average homeowner, it’s always best to avoid homes that appear to be problematic, upfront.
REO Contractual Issues
After dealing with and allowing for problems with respect to the
condition of a property, the next hurtle is working with the bank
that now owns the property. When you buy a REO, you start with
a standard contract. The bank then attaches a normally non-negotiable "bank
addendum” to the standard contract. There is a major ‘got-cha’
in this: a bank owned contract addendum means, "Everything
in the main contract is nullified”, if the addendum addresses it.
For instance, if the main contract allows you make a final walk
through inspection, but the addendum says "As-is," the
addendum wins. While addendums typically specify no negotiation,
in home purchases as in life, there is always room for negotiation.
The following are a couple of issues that you may need to be aware
of:
1. Some standard addendums may be written nationwide and actually
ignore local laws. Local statutes supersede these contracts, therefore
in some cases, there are points in addendums that are not enforceable.
A local attorney can guide you in this.
2. Beware of hidden fees. Sometimes, significant fees, amounting
to thousands of dollars may be shifted from the seller to the buyer,
as directed in the provisions of a contract addendum.
3. Most addendums typically allow the bank to cancel the contract
up to the sale date and sometimes with no penalty to the bank. For
instance, if the bank receives a higher offer, they may have the
right to break the contract.
4. Be wary of termite provisions. Normally it’s the seller’s responsibility
to pay if there is termite damage. The addendum typically shifts
the risk back to the buyer.
5. If the bank is trying to unload a REO property, normally they
will not provide financing. However, it never hurts to ask.
6. Always have a title search performed. You would expect that in
a bank REO sale this would have been covered, however you can never
really be sure. Therefore, make sure that the title is 100% clear
through a proper title search. You can perform a preliminary check
of title on RealtyTrac.com and then hire a title company to run a
full, insured title search before closing on a deal.
A VA REO has some Real Advantages
While most of the homes that are now for sale as REOs are available
from banks, VA repossessed homes and to an extent, FHA repossessed
homes offer certain benefits to a homeowner over and above conventional
banks. They are sold the same way through a local realtor and you
as a potential buyer can place a bid on a property. If your bid
is highest, you have the right to purchase the home. A VA home
REO sale has the following advantages:
• The VA may provide financing (VA Vendee Financing) available to
both veterans and non-veterans, alike.
• Under most circumstances, the property can be purchased with no
down payment, whether the buyer is a veteran or not.
• The VA pays all closing costs, which may amount to as much as 6%
of the purchase price.
• Private Mortgage Insurance (PMI) is not required.
• Instant equity may be developed, as VA property discounts may be
as high as 50%.
• There are no mortgage prepayment penalties
Whenever you ultimately submit an offer, if you have found any defects, justify your offer with both photos and inspection reports. No matter what type of REO property and from whom you buy it, you will need to:
1. Work with a good realtor, experienced in this type of transaction.
2. Make sure that you secure the services of a real estate attorney,
prior to any payments being made or documents being signed.
3. Use a qualified home inspector.
Certainly, by taking precautions and by assuming the worst about the condition of a property, you can avoid overpaying for a home and underestimating the amount and number of repairs and amount of renovation that will have to be undertaken on your purchase.
Evaluating Real Estate
Investments Like a Pro: Present Value added 12-2010
When you consider that there are many real estate opportunities where
you think you could make a killing, how can you really be sure that
one investment is better than another? Many would-be investors jump
into real estate without a good way of determining whether a particular
piece of property, a single family home, resort condo or a multi
family dwelling is really and truly a good investment. The end result
is often disappointing. Maybe you should have bought investment B
instead of investment A. And so it goes…What is the best way of evaluating
real estate? The following approach is the way large companies utilize
a very important, yet relatively simple evaluation tool for comparing
competing investments.
A Couple Fundamentals, First
Obviously, if you are a real estate investor, you probably have decided
on a minimum rate of return or minimum amount of money that you would
expect yearly on a real estate investment. Of course, there are some
investments that you can immediately jump into without doing very
much evaluation. Suppose you can snap up a home that is selling for
60% less than its current value and you’re very sure that without
upfront repair/refurbishment expenditures, you can immediately sell
it, realizing an attractive profit. The answer is obvious upfront.
Most times, these opportunities are hard to find and often the listing
real estate agent is in the best position to takes advantage of these
situations. Also, we’ll need to assume that there are no legal barriers,
potential zoning regulations or other problems that would immediately
preclude one investment over the other. Moreover, you as an investor
will need to assume that all of your information is imperfect and
the future is almost always unclear about investment choices you
make. Thus, the following approach to evaluating competing real estate
investments is based purely on financial returns. Let the numbers
do the talking!
Present Value Overview
The basic approach to present value boils down to an obvious fact:
a dollar today is worth more than a dollar that will be received
at some time in the future. For instance, what would you rather have:
a $100 return now or $100 return in 2 years? Obviously now, but when
you start making that future $100 grow, there will be some point
at which you will decide in favor of the latter. Assuming the worst
is always a safer strategy. In present value, it is more reasonable
for you to assume that any rents, receivables, rates of return, rate
of appreciation and occupancy rates will typically be less than you
want and expect. As you assemble the facts for your analysis or business
plan, be very conservative and this is especially the case if you’re
seeking funding from a bank, venture capital source or investment
group.
Present Value Internal Rate of Return MethodologyAs mentioned above,
money has a time value. Albert Einstein was quoted as saying, “The
most powerful force in the universe is compound interest”. The so
called internal rate of return analysis is all about that. The Microsoft
product, Excel allows a relative financial neophyte to analyze side-by-side
alternative investment cash flows in terms of its compound interest
time valueA Basic ExampleLet us say that you have two properties
that you’re might considering. The first is a home that you can purchase
for $100,000 with $25,000 down. The second is a condominium that
has a price of $75,000, but can be purchased directly from the builder
with only $7,500 as the down payment. Let’s assume that both will
appreciate at 5% per year and by the end of three years, you would
be able to sell either for a 15% profit over your initial cost. Let
is assume that you can rent these properties resulting in the following:
1. You receive a net $100 per month profit after your mortgage payment
on the single-family home.2. You can realize $50 per month net profit
on the condo.
The image on left shows what the Excel format would look like.
In the basic financial terms, without even considering individual
any federal or state income tax rates that apply, the best investment
would obviously be the condo’s rate of return which is more than
double the rate of the investment on the home.Now extending the
investment horizon to 6 years, with the same sales price and the
same rents, the condo is still the best investment, but the rates
of return falls drastically. The home has a rate of return of 12.2%
and the condo has a return of 22.3%.
How to Use the Excel function
Using Excel to set the example up is simple:The Excel formula is
IRR(Cash Flow1, Cash Flow2. Cash Flow3,Guess at Rate). On the Excel
spread sheet it will be expressed as follows: =IRR(-C2:C5,19) where
C2 is the initial investment (down payment with a bracket surrounding
it, designating that it’s a negative flow) and C3, C4, C5, etc.
which are the yearly (or monthly cash flows). The last number,
19 is a ‘guessimate’ of the what the rate might be. I could used
5, 10, etc. Excel uses this as a function, but it really doesn’t
matter whether you’re accurate or not. You can obtain additional
information about IRR directly from Microsoft.Obviously you can
make this as complex as needed. For instance, you might want to
use a factor for federal income taxes, a factor for expected repairs
and even increases in rent and real estate taxes. You may also
assume occupancy rates. It really doesn’t matter as long as the
formula is set up in the correct Excel format. You can make it
as precise as you need. But keep in mind that too much precision
into the future is largely wasted effort. This approach to analysis
only requires you to be reasonable in all your assumptions.
There are numerous ways of performing real estate investment analysis.
While you can’t ever know the future, you can assume typical terms,
conditions and the types of rates that most banks or investor groups
will demand of the real estate investor.
Want an Investment Property? How About a Florida Vacation Home?
With the mortgage melt down, the last thing on most people’s minds is buying real estate as an investment strategy. Right? Well, no, not right! At least, when it comes to buying the right kind of home or investment home. Right…translates into buying a Florida vacation home.
The Ideal Florida Vacation Home Investment
Certain areas in the Sunshine State are ideal for investment now
in the current real estate market. Those areas are located mostly
on the shorelines of Florida: the south east coast, the Florida
Keys and the west coast from Tampa Bay and points south. There
are three good reasons why investing in a vacation home now makes
good economic sense:
1. All Florida home prices are depressed.
2. Short-term rental prices for the most part, have not declined.
3. A Florida vacation home can generate rentals all year round.
One must keep in mind that not all Florida vacation properties are good economic bets. First, the Disney area is not particularly a good investment. It’s a bit over built. Second, areas north of Tampa Bay on the west coast and north of Daytona Beach on the east coast have winters that are a little too cool to attract vacationers the year round. Therefore, the best places for investment in vacation rental homes will usually be further to the south. Also, the vacation real estate investor should only purchase in communities permitting short-term (weekly) rentals. Many of the advantages enumerated below will not materialize, if short-term rentals are prohibited.
The Mortgage Meltdown and Recession Has Created Gold for the Savvy
Investor
While home purchase prices have declined in Florida, the allure of
the weather, beaches and waters continue to attract vacationers.
During the summer almost everywhere in coastal Florida is a good
vacation choice. During the winter, the ‘snow bird’ crowd flies in
for several weeks or months of temperate weather in the more southerly
areas of the Sunshine State. During the rest of the year, short-term
rentals are fewer, but still exist.
In line with the above, a weak economy means that many, who might normally opt for a vacation in Europe, have decided to spend their vacations in Florida. Also nowadays, people employed in corporate America are less apt to take long vacations fearing that they might not have a job after returning from a two-week junket. Further, because of excellent airline service throughout Florida, now almost anyone can easily squeeze in a few days of sun from almost anywhere in the continental U.S.
This translates to opportunity for those looking to purchase vacation properties in Florida for investment. There are some excellent advantages to owning vacation real estate, as well:
• A Florida vacation property doubles as an investment as well as
a vacation escape
• With a fall in prices and rentals remaining at or near their previous
levels, a property on a weekly rental basis can quickly show a net
positive cash flow
• With basic depreciation and other out of pocket expenditures as
deductible expenses, it is likely that an investor can show a “taxable”
loss, thereby reducing federal income tax liabilities.
• Regardless of the future, a typical vacation home with its rentals
can carry itself handily on into the future. This of course, assumes
that the investor purchased the property at a reasonable level.
Assuming that a property can generate short tern rentals and also
assuming that mortgage payments are not excessive, a property as
stated previously will be a net positive investment.
As home prices start to regain their footing, vacation properties
in Florida, obviously will also enjoy the same price increases. If
an investor decides to sell his vacation property at a later date,
history has proven that the net rate of return on his investment,
including rentals should be equal to or greater than other investment
alternatives that could have been undertaken and available at the
same time. When taken in total, vacation properties in Florida in
the right areas at the right price is an investment worthy of serious
consideration.
Benefits of Owning a 2nd Vacation Home
Looking for a tropical get-away that does not require a passport? Look at the Florida Keys. Stretching from around fifteen miles south of Miami to less than one hundred miles from Cuba, the Florida Keys offer a multicultural living and vacation experience to fit every budget.
Financing a Tropical Dream
Once reserved for the rich and the famous, a second vacation home can now be part of a smart investment portfolio. Mortgage rates are low, making financing a home in the Florida Keys more affordable than ever. Also, unlike the rich and the famous, the average individual is likely to rent his vacation home out to tourists when he is not using it himself.
Waterfront property is especially popular as a vacation spot. It
offers the amenities of the local community – restaurants, attractions,
transportation, security – and the beauty of communing with nature.
The income from these rentals often covers the entire mortgage, enabling
the owner to enjoy a free vacation in the Keys whenever he pleases.
Waterfront property also tends to appreciate in value over the long
term due to its lasting popularity. The savvy homeowner of a Florida
Keys waterfront vacation home is also building equity while he vacations
there and rents it out – equity that can either be cashed in at retirement
or lived in on a full-time basis.
Peace of Mind
Ask any therapist. The soothing sounds of the ocean provide the
perfect background for relaxation. With a vacation home in the Florida
Keys, no tapes or compact discs are needed.
Simply open the windows to enjoy the ocean’s relaxing sounds.
Also, as stress is a significant risk factor in elevated blood pressure,
a vacation home in the Florida Keys benefits the homeowner physically
as well as mentally.
Stress melts away with the ebb and flow of the tide, with the beauty
of the sun rising or setting over the ocean, with the gentle ocean
breeze.
One can almost feel his blood pressure lower with the laid back lifestyle. Or, if the need for some company arises, the Florida Keys offer a variety of restaurants, museums, parks, and attractions to amuse and entertain.
Add to the scenic view, soothing sounds, and peace of mind that comes with knowing that. No matter how stressful life becomes, a little slice of paradise awaits. It is a reward at the end of the summer, or at the end of a career.
A World Away – Vacationing in the Florida Keys
The Florida Keys offer many of the same laid back characteristics as the Caribbean, without ever leaving the United States. Amazing sunsets and a free spirited attitude all contribute to the laid back atmosphere of the Keys.
There are many activities to do, like sport fishing, scuba diving and snorkeling, boating, sailing, kayaking and eco-tours. Each island destination has its own special features. These islands are also rich in culture and history with many galleries, restaurants, festivals, music and theater to visit and check out. Of course, just relaxing is always an option throughout the Keys as well.
The Keys span about 120 miles and are connected by bridges and causeways, running south west from Miami. This area has the only living-coral barrier reef in the United Stares and is approximately 5 miles off shore and runs the entire length of the Keys.
The first island in the Florida Keys is Key Largo. Being close to the Everglades National park, there is much wildlife to be seen here. It is a popular destination for kayakers and bird watchers. There are many amazing scuba diving or snorkeling sites in Key Largo as well, with many sunken wrecks in the area. The John Pennekamp Coral Reef State Park is located here and offers scuba and snorkeling tours, glass bottom boat tours and swimming in the Florida Keys National Marine Sanctuary. In 2002, the navy ship, the USS Spiegel Grove was sunk to provide a reef here and a sunken wreck for divers to explore.
The next island in the chain is Islamorada. It is comprised of six islands including Plantation Key, Windley Key, Upper Matecumbe Key, Lower Matecumbe Key and the offshore islands of Indian Key and Lignumvitae Key. This area is well known for its world class sport fishing. There are many fishing tournaments held here each season.
Marathon Key is in the middle of the Florida keys. It is famous for the Seven Mile Bridge, which links it to the Lower Florida Keys. You will find great shopping and many fine restaurants offering fresh seafood. At Crane Point Museum, there is one of the last untouched tropical hardwood hammocks in the Florida Keys.
Big Pine Key is known for its boating tours and for bird watching and fishing. The diving and snorkeling is great here too. It is a quiet region of small resorts, home-style restaurants, vacation homes and untouched natural areas.
The last of the Florida Keys is Key West. There are many festivals, shopping and restaurants. Boat tours provide a great way to view Key West from the water. The snorkeling and diving are renowned here to see a diverse array of marine life. Wrecks and reefs, both artificial and natural coral, are home to hundreds of species of tropical and game fish. Many visitors rent a bicycle or go on walking tours to explore the history and architecture of Old Town Key West.
So if you are into eco-tourism, scuba diving or snorkeling, shopping and dining, or just want to relax in a tropical paradise, the Florida Keys may be the destination for you.
For more information Contact me
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