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Property Management Blog

Published on Sunday, October 11, 2009

Arrange Finances Before Buying Real Estate

Are you thinking of buying real estate? There are several things that you need to organize when thinking about purchasing any kind of commercial or residential property. In any kind of purchase involving properties, finances are required to be arranged in advance. If you are a first time buyer you need to think about many factors that can affect your finances. It is often seen that existing owners of properties often take the financial aspect easily, as if it is a daily routine activity. Their previous experience provides them the required confidence and this is one of the main reasons for their suffering in the tenure of their loan repayment. Any kind of buying real estate should involve lot of research and planning. Mortgage brokers are the best people who can help you in the entire process, so it is important to make an appointment with a broker first. A financial institution lender can also play a crucial role to know the kind of finance that you may need.

You need to disclose several things while you are making your search for getting the perfect property. The broker or the lender may ask you to disclose several things related to your finances, just to ensure your sound financial health. You may be required to disclose facts related to your annual income, other loans related to automobile or personal necessities and also information that is related to credit card, collateral assets and any kinds of outstanding debts. Be prepared to disclose all facts and figures before setting out on buying real estate. If you are deciding to make any kind of purchase involving huge finances you should be aware of different facts that may have some effect on the spendable income such as tax obligations or insurance.

There are many places such as Canada, where before making any purchase of property the purchaser has to be pre-qualified first. Sellers usually ask for the pre-qualification letter, when an offer is made. If you have the letter it serves as an advantage for you only. It helps to increase your credibility and sellers will be eager to offer you the property. There are several processes that you may be required to go through while buying real estate out of which, this is one of the most easy and straightforward. This can be done with the help of your mortgage broker or even your bank. Any buyer should contact the concerned people who shall be able to guide you with the entire process.

Once the requisite documents are submitted the bank will be able to advice what kind of loan a person qualifies for. Once you know about the finance that you can arrange things become easy. Once budget is decided you can know what kind of home you can purchase. Once the entire finances are arranged things become much easy. Next important aspect is about the duration of loan, the amount of down payment and other such related aspects related to finances. However the amount of initial deposit that is required to be made, is always dependent on the financial institution. So when buying real estate it should be done cautiously and with care so that all hassles can be avoided at a later date, especially if it is related to finances. It is best to make arrangements for finances before buying the property. 

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Author: Web Master

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Landlord Knowledge Base

If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.

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