3 Things You Should Never Assume When Buying a House in Rural America

By Dlee Smith

I define rural America as any location that does not have city water or a sewage disposal system. My wife and I are now living in a house we purchased just a very few months ago. I want to spare you the problems we have dealt with because we made assumptions, taking certain things for granted, and thus did not make sufficient inquiry. That is a thing we all think we are too smart to do but by the same token it is easily done.

Here are 3 things you should never assume.

1. Never assume because a person or family has lived in a home for a long extended period of time that that means the water is fit to drink. We made the assumption and found out after the fact that we had sulfur water. The prior owner had never purchased bottled water and had always used the water she had and she had lived here for decades. I was aware of that and thus I made an assumption.

Never ever buy a home out away from city water without tasting the water. I cannot emphasize that too much. If you fail to do it you may end up with a water quality far from what is desirable.

2. Never assume that just because the family that lived in the home before you had plenty of water that you will too. If they say they have plenty of water that may be simply a function of how many people are living in the home and/or the amount of water they use. Your needs may be greater than theirs.

We ended up with water we could not drink and an inadequate supply because we made assumptions. We ended up drilling a deep well that cost us $7,500. How would you like to tack that onto the cost of your home, onto your purchase price after the fact?

3. A third assumption I made was that the drainage was okay. Never assume that. I just got through digging down to the septic tank and having it cleaned ($250) and have discovered that while it did need cleaning that the real problem is back flow into the septic from the drainage system. When we closed the lid to the septic tank, after about an hour of pumping, we still had a continuous back flow coming in.

The drainage issue is one that is very easily overlooked. It does not come into your mind when you go look at a house. It is not something you see when you take the tour. Try your very best to find out about it before buying. It is too easy to assume all is well.

These issues are not minor but as major as you can get. A lot of people have had to deal with sorrow and a lot of problems and expense because they too did what we did. In fact, the man who drilled my deep well told me about a man who they had dug a well for. He had built a brand new home and then after the house was built he drilled the well. Guess what? There was no water to be had. It was an empty hole. He ended up with a brand new home he could not live in and could not sell.

To hear the rest of my story, go to my blog where I will also give you another two or three tips from things we learned the hard way and so you can avoid them. My blog.

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Why Real Estate Is Bubble Proof

Several years ago, economists began using the term “bubble” to describe the incredible yearly increases in the price of an average home in many U.S. markets. Inevitably, when those increases tapered off and home prices glided back to more normal levels, they said the bubble had “burst.”

I firmly believe that the housing market (as well as commercial real estate) will continue to expand and that young, first-time homebuyers have the most to gain from it. I see nothing on the horizon to change my outlook either-not today or 10 years from today. As long as the United States experiences steady population growth, there will be constant demand for homes. Growth guarantees an ongoing appreciation of residential property values for years to come.

In my book, Bubble Proof, I go to explain two very important things: call them the “macro” and “micro” concepts of “bubble proofing.” I’ll share some of that insight here.

First, the macro: Real estate is bubble proof over the long term because it has always shown itself to be resilient and rewarding. Real estate is always in demand. Someone is always buying, selling or investing in property, so there’s always a market for it. Its major segments-residential, rental, commercial-don’t move in lockstep, so that a diversified “real estate portfolio” can be built and adjusted for performance.

It is also important to note that, unlike the stock market, real estate trends are foreseeable from a distance. Prior to any up or down movement in the business as a whole, we have reliable predictors: interest rates, home sale figures, building permits and the like, issued monthly and debated endlessly by economists, business reporters and experts.

Contrast that with a normal week on the stock exchange. Some days, market losses can amount to 2 or 3 percent due to some upsetting event: an overseas terrorist attack, an OPEC announcement or a poor blue-chip earnings report. Unless your last name is Buffet or Kerkorian, normal investors can’t divine the stock market’s next move. But I can tell you where my real estate holdings are headed-and that kind of predictability helps make them, and me, “bubble proof.”

Now for the “micro” explanation of “bubble proof.”

I advocate the purchase of houses, duplexes, condos, apartment buildings or even office or storefront space only if they meet certain requirements, and therefore are “bubble proof.” In other words, applying my methods, homebuyers and investors can bubble proof their investments.

What constitutes “bubble proof” real estate? Obviously, not all real estate qualifies. I certainly wouldn’t advise a client to buy land on a decaying waterfront, or in a bad neighborhood, where only a Herculean government program could possibly turn its fortunes around. But I do recommend that prospective buyers seek out the countless quality opportunities to acquire and profit from real estate using the bubble proof approach.

In my book, I provide an in-depth examination of the components that go into bubble proof purchasing, starting with your first home and then branching into investment properties. For the purposes of this article, I will keep it brief and just touch on the basics that every deal needs:

* Affordability. Without a doubt this is the most important factor to consider, whether it is your first home or your twenty-fifth condo. This may sound obvious at first, but it is amazing how many people stretch too far and get trapped when their low interest adjustable mortgage shoots skyward.

* Favorable conditions. It doesn’t matter what has happened elsewhere; focus on where you want to buy. Look for markets that are appreciating, and where homes are selling and not sitting. Be sure the nearby area is prospering, not struggling. (Here’s how to tell: Find the towns with the best schools, and then go house hunting.) You may have to research newspaper archives, business journals and the Internet for some of this information, but it will keep you from committing a major blunder later on.

* Location. Here’s where Realtors earn their stripes. They know the local market, inside and out-and about opportunities that you would never unearth on your own. Remember: Your goal is equity growth, not looks, so forget about buying the nicest house on the block. Instead, buy a house that needs work, in the best neighborhood you can find.

* Realism. Buy for today and trust that the future will take care of itself. No market is immune to bumps and dips in the road; but smart buying can overcome nearly every obstacle. Real estate using the Bubble Proof tools will not make you rich overnight, but it will over time.

* Common Sense. Make sure that any real estate deal you strike makes sense today. If the property is affordable, in a good market, fundamentally sound and has real potential to appreciate, then -and only then-you should pounce. Buying in an area that’s only projected to boom is a fool’s errand. Let speculators lose everything instead.

By meeting each of these requirements, a home or property acquisition meets my criteria for being “bubble proof.” It’s easy to see how these basic standards mesh into a bulletproof vest, if you will, that protects my investment before I’ve even placed my down payment. With these safeguards in place, buying your first house should be almost anticlimactic, because you’ve eliminated the negative factors that can result in disaster.

Author Tonja DeMoff is a best-selling author and one of the highest producing and best-paid realtors in the United States. Her latest book, Bubble Proof is available now. Visit Tonja on the web at http://www.tonjademoff.com. (isnare.com)

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The Time To Buy A Home Could Be Now

Waiting for prices to fall before buying the home you want is risky. Market conditions are currently slow but that can change at any moment.

“Homeownership offers immediate benefits and long-term value,” said Lawrence Yun, chief economist with the National Association of Realtors (NAR). “If timing the market is the only thing standing between you and the home of your dreams, perhaps the time is now.”

While it’s never good to rush into anything, the best choices and deals may not last. In most markets, home prices have already stabilized, said Yun, and inventory is abundant, meaning home buyers can now benefit from:

• Lots of choices–Increased inventory means buyers can negotiate better prices and terms.

• Available credit–In addition, President Bush in late July signed the Housing and Economic Recovery Act of 2008 into law. The measure will give first-time homebuyers a tax credit of up to $7,500 and increase loan limits in some areas.

• Low interest rates–Mortgage interest rates remain historically low, making borrowing more affordable for potential homeowners.

Waiting for the market to hit bottom could cause buyers to miss out on the best deals.

“Unfortunately, no bell will sound signaling the end of the downturn and rise of home prices,” said Yun. “By the time you recognize that prices have hit bottom, they are already going up. Getting in the game sooner rather than later raises the odds of finding the home you want.”

Local housing markets may experience temporary price declines in the short term, but over a typical six-year period of homeownership, home values usually rise at a normal, gradual pace.

“Owning a home involves commitment and responsibility, but it’s the best long-term investment consumers can make, for their finances and their future,” said Yun.

A Realtor can explain market conditions and help you take advantage of real estate opportunities. For more information, to search home listings or find a Realtor in your area, visit Realtor.com now.  (NAPSI)

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Choosing a House to Buy: What Can You Afford?

By: Arthur York

Before you start the process of purchasing a house, some serious thinking should be done. In order to avoid holes in your budget in future, you should first of all evaluate how much mortgage you can actually afford, which means that you should reconcile your personal needs and wants with your actual financial status. To put it simpler, there are four main questions you should answer to yourself in this regard.

The first question is how much housing expenses you can afford. Housing expenses are the sum of mortgage principal, mortgage interest, property tax, homeowner’s insurance and private mortgage insurance. Second, you should ask yourself how much overall mortgage payments you can afford. To answer this question, you should consider all other monthly financial obligations your have, including personal loans, like student loans and any other, auto loans and credit card debts. Third, you should estimate how much down payment you will be able to save by the time escrow rolls around. And finally, you are to decide how much money you will be comfortable to spend on a house.

Let’s look at the above matters in more detail and start with the housing expenses. The amount of money a person is ready and can afford to spend on housing expenses varies depending on the personal budget. On the average, a typical American homeowner allocates about 28%-33% of his/her monthly income towards housing expenses, which roughly makes one third of the income monthly. This seems to be a very significant amount, but don’t forget that it covers various homeownership costs, including mortgage principal and interest, property taxes and homeowners’ insurance.

As for the mortgage payments, your total debt expenditure, as has already been stated above, consists of home mortgage payments, other housing expenses, credit card bills, car loan payments and payments for any other kinds of loans you have accumulated over the years. Most lenders recommend that your total monthly debt expenditure should not exceed 36%-38% of your monthly income.

Down payment is a matter of great importance as well. Most lenders require a mortgage applicant to put down at least 20% of the total loan cost. It is possible o find a lender that will require less than 20% down payment for a mortgage, but it strongly depends on the factors like your salary, credit score, credit history and house/debt ratio. Most likely, prepare to pay 20%.

Finally, let’s look into the matter of comfort level. This is a very personal value and it strongly varies from person to person – there are no absolute criteria of “right” and “wrong” here. Ask yourself, how much a house is worth to you and how much of your income you are ready to invest in it compared to entertainment, travel, higher education, health care and other matters important to you.

Arthur York is a home loan expert working for NorthAmericanLoans.net. To get aid in buying a home of your dreams and finding the right loan to save you thousands of dollars each year, visit the North American Homes Website.  (Source)

 

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Secrets of the Home Sale

With the inventory of unsold homes at continued high levels, homeowners are going to great lengths to differentiate and distinguish their home. According to experts, there are a few simple tricks that can help create a more appealing space and a more attractive listing in today’s increasingly competitive market.

* Listing: What’s in a word?

When putting your home on the market, the right phrasing in your listing can be the key to attracting potential buyers. According to the 2008 MSN article, “What’s ‘beautiful’ worth? About $12,500” researchers have found that listings with the words “beautiful” or “gorgeous” sold homes 15 percent faster, while “landscaping” bumped sales 20 percent faster and “move-in condition” expedited the sale by 12 percent.

Contrary to popular belief, sellers should steer clear of words that highlight desperation such as “motivated” and “must sell.” The study found the inclusion of those words in the listing slowed sales by up to 30 percent.

* Branding: If you’ve got it, flaunt it.

Brand names create a point of differentiation and should be used as selling points for your home. There is no doubt that buyers will put more weight in brands they trust. If choosing to make upgrades before listing your home, consider quality, recognizable products because they will ultimately provide the best return.

“Our premier lines of hardwood flooring are appearing in listings along with top name appliances,” says Tom Sullivan, chairman and founder of Lumber Liquidators. “The inclusion of these trusted brands in the listing conveys quality and, in the case of Bellawood and its 50-year warranty, it also provides peace of mind.”

* Staging: The ultimate showcase showdown. [More About Staging]

When getting your home tidied up for potential buyers, there are some specific tips that will help your home appeal to a wider range of buyers.

* Cleaning: The number one rule of staging is to get rid of unwanted and unused items. Whether packed away until the sale or permanently donated, de-cluttering allows buyers to see more of the home. This also includes moving furniture out of rooms that may seem overcrowded. Less is always more.

* Neutralizing: When getting your home ready to sell, going neutral is the best way to go to appeal to the most buyers. Painting is one of the most cost-effective ways to transform a room back to its natural state. Warm neutral colors tend to be a stager’s preference because it keeps walls inviting while adding a touch of color in the room. Buyers can better imagine themselves living in a home when it is neutral.

* Landscaping: Although the inside of the home can create atmosphere, the first impression can be a lasting impression. The outside of the house will set the tone for what a buyer perceives is inside. Create a pleasant yard that is well-kept and full of life. Plants and flowers also should be brought inside the home to help accessorize and accent high traffic areas such as the kitchen and living room.

For more information about installing hardwood flooring, call (800) FLOORING or visit the Lumber Liquidators Website. ( ARAcontent)

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Real Estate Investing Resources: CNY Property Listing, Homes Going Green , FSBO Property Listing, Investor Real Estate PDF Magazine, CNY Property

 

Anger, Frustration, Fear and Insomnia Great Teachers For Investors

By W. Casey McDonald

In the past two months, I have purchased 7 houses with no money down. All seven are now occupied. I have increased my positive cash flow by about $500 per month plus I have pocketed another $4000 cash into HIP National Trust, also known as my wallet.

Do you want to do what I do? Before you answer, let me tell you about my four teachers that visit me anytime they feel like it. They don’t call to make an appointment. They just appear at all hours of the day or night ready to tirelessly pound away on my happiness.

Please meet anger, frustration, fear and insomnia. What I have learned in my two years of fulltime investing experience is to greet these teachers with the phrase, “Oh Boy!” instead of shouting “Oh Shiitake Mushrooms!!”

If I can learn from my teachers, they won’t eat me up for lunch. If I choose not to learn from my four friends, they will become my four fickle fiends.

Most times these teachers show up one at a time. Like Anger dropping in when I checked the mail today and saw that 25% of my portfolio still has not paid rent. Anger showed up to remind me that I have a company policy to send out three day notices on the sixth of each month.

With the July 4th Holiday and the weekend, I opted to extend that deadline to July 9th. That decision set me up for Anger’s arrival. Next month, and every month thereafter, 3 days will go out on the sixth. That way I won’t have to calculate or adjust my company policy.

Thank you Anger for teaching me that valuable lesson!

But what happens when all four teachers arrive at the same time? Can I still shout, “Oh Boy”? If I don’t look for the lesson, I will be consumed with the horror. Therefore, I choose to learn rather than squirm.

See if this makes you squirm…

Three weeks ago, I began the eviction process on a tenant who, with the help of a public assistance attorney, decided to hold $200 of my rent in escrow. The demand for repairs was generic and rather than let a month or two of confusion devour my profits, I calmly decided to act, via serving a 3 day notice.

Three days later, I get a certified letter from another attorney representing this same tenant who is now suing me for falling down the stairs back in February.

Enter the four teachers.

It took me awhile to learn the lesson from the four teachers while they all were shouting at me at the same time, “You’re ruined!!” “There goes your portfolio!!” “Welcome to hell!” They each took turns whispering and shouting exactly what would get the biggest reaction from me. It was not fun.

This torment lasted well into the night. Then, the lessons became clear. If I was willing to be fair and teachable, and the fact that I was insured, there may be an excellent outcome to this perceived crisis. What if my tenant gets a cash settlement from my insurance company that allows her to buy my house? I may see a windfall as a result of a slip and fall!

In short, I should worry about the stuff I have control over and don’t worry about the things I can do nothing about. If I can make friends with my four teachers and apply their lessons to my business routine, I will increase my ability to see opportunity in the midst of apparent crisis.

Copyright 2008. Contact Casey McDonald – Casey is President of REICNY

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Successful Home Sale in Slow Economy

How long have you had your home for sale? Have you listed your home with a number of agents, but still haven’t found the right buyer? There are a few things that are of the utmost importance if you want any chance of selling your home in this slowing economy.

First of all, price is still driving the market. If you have gone a month without any showings your price needs adjustments. Buyers today are very educated and know the market much better than they ever have before, and when they see a home that is overpriced, they are not going to look at it. Location, Location, Location is a popular saying in real estate, but I believe in this market it should be Price, Price, Price. The homes that are priced right and competitively are going to get showings. Another way to know if your home is priced correctly is to get good feedback from showings. If the agents who are showing your home are telling your agent that the price is too high, this is a sign that something needs to be done.

Secondly, outdated homes rarely sell, and when they do they get beat up on price. So make sure your home is updated and looking great. Old furniture and old carpet needs to go, and if you can get a home stager in the home that is great. There are so many homes currently on the market that one bad feature will send the buyer looking elsewhere. One thing that I have seen a lot of is seller’s offering an allowance to buyer’s for updates on their home. The problem with this is that it is hard for a buyer to imagine what the home would look like with these upgrades. Most buyers will continue searching until they find a home with the updates made, and at a similar price.

Finally, quality pictures are important for marketing. When your Realtor comes to take pictures make sure he shows you what he takes. I find too many listings with dark, blurry, and unappealing pictures. There are still agents who think it is cleaver to take one picture of the outside, and leave what the inside looks to the buyer’s imagination. Too bad the buyer’s are imagining there must be something wrong with the home. Why else aren’t there pictures of the inside? The listings that are being shown the most are the ones with good, clear, and quality pictures.

If you decide to become motivated with your price, are willing to make the changes necessary to update your home, and have a Realtor who will take good pictures, then you have a great chance of selling your home even in this slow economy.

By Luke Bouman -Holland MI Real Estate – – – Source

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Can You Stop Foreclosure?

You have several options when it comes to saving your home from foreclosure. Refinancing, bankruptcy, selling your home, working with your lender’s Loss Mitigation Department; all of these can stop your foreclosure. When trying to keep your home, loss mitigation is the best option to keep your home and minimize damage to your credit.

Loss Mitigation

If your loan balance is relatively high versus the value of your home, your refinance options are very limited. It would be very difficult to try and refinance your home loan because of credit score and “loan to value” issues. However, you may have a case for Loss Mitigation.

What that means is that you have the right to contact your lender, and see if there is a way for you to get caught up with your home loan. If you present your case effectively, you would probably be able to qualify for a home loan workout plan. There is another thing to consider when thinking about Loss Mitigation to keep your home. You have to be able to make the new payments.

If you agree to a lender’s “workout” or “loan modification” solution and then fail to make the agreed-upon payments, you’ll be right back into foreclosure.
This can be a big problem if the financial crisis that caused you to fall behind in the first place isn’t over. If you don’t know where you’re going to get the money to make the payments, trying to work out a solution with your lender will be tough.

Be realistic. Many times people struggle to hang on to a house that they simply can’t afford. That may seem harsh, but sometimes it is the truth. This is especially if you have an Adjustable Rate Mortgage where your monthly payment continues to increase.

If that is the case, you may not be able to work out a plan with your lender’s loss mitigation department. You may want to think about a Short Sale or some other option of selling your home so that you can at least minimize the damage to your credit, put this behind you, and get on with your life.

Many homeowners facing foreclosure simply don’t know what to do. You can learn exactly what you need to do, and even get started for free. Take a minute and give them a look… ForeclosureConsultations.com – – (Source Link)

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Sump Pumps Offer Protection

Many people dealing with water in their basement are still adamantly against installing a sump pump. There’s this national stigma against the sump pump. Thoughts of “water issues”, “flooding”, or “huge problem” tend to start flying and perpetually snow-balling to then turn into people skipping out on buying the home, or friends passing judgment when they come to visit.

New generation sump pumps are still heavy duty and can deal with most water level issues. Some of the newer models of the Pro-Series line are built with stainless steel, a separate switch and run quieter and more cost effectively then their archaic predecessors.

Sump pumps are an intricate part in protecting your basement from future cartographies and moistures issues. When paired with a duel channel drain system, vapor barrier, and an energy efficient dehumidifier like a Santa Fe, a sump pump becomes the heart of an otherwise barren room with moisture issues.

A sump pump can protect your basement during heavy rain fall and exterior land saturation. It removes water that can build up pressure underneath your floor and help to insure that the moisture that is removed from the air by a dehumidifier actually gets out of the house, rather than becoming a source of the moisture in it’s collection bin.

Sump pumps aren’t something to be afraid of. They are a sure sign that someone cares enough to address an issue. If there are signs of water, but no sump pump, then that warrants caution.

Things to look for:
*make sure that the cover of the sump pump is flush with the floor
*make sure that there are little to no openings to the sump pump (cord holes and discharge line are of course necessary)
*Sump liners shouldn’t run deeper than 24″, 19″ deep is optimal.

If looking at a house with a sump pump:
*how deep has the water gotten?
*has it ever flooded? Even with the sump pump installed?
*do you loose power a lot? Do you have a battery back up?
*do you have a waterproofing system installed in the basement?

If you have purchased or are thinking about purchasing a house with a sump pump and have questions, call a local waterproofing company.

Author Jacob Lee-http://www.pioneerbasement.com, http://www.homebasementfinishing.com (EzineArticles.com)

Real Estate Buyer & Investor Resources: CNY Property Listing, FSBO Property Listing, Investor Property PDF Magazine