DENA LAND NEWS A MONTHLY NEWSLETTER BY LINDA LANE-WHITE—KELLER WILLIAMS REALTY SERVING MY HOMETOWN OF ALTADENA/PASADENA AND OUTLYING AREAS November 2008
Elections, Families — and Thankfulness Your picture here
Linda Lane-White “Singing” Realtor ® CA Lic #01091347 Notary Public
As the month (and the year) come to a close, it is time to sit down with our families and remember why we are thankful. At this writing, we don’t know who the new President will be. We don’t know the outcome of many political and economic issues. But whatever the results, I can still see families all over America gathered together for fun, food, football, and, I hope, a moment of thankfulness for what we share as families and as a nation.
If you look at the political polls, you have to expect that half of the people who sit down to dinner this year will be disappointed in the election outcome. Half will be elated. But I hope we can say that all will be Americans just striving to create happy, healthy families and homes. Oh, and speaking of which, if there is a home in your future (and there are so many great deals today!), call me. I’d love to help. Linda Lane-White (626) 786-1231
Investing in Real Estate Now? Why, Yes!
According to the news media, the world has ended. Sorry folks, everything crashed, there’s no more real estate. Banks are no longer issuing home loans and no one is buying anything any more. It’s over. Back here on planet Earth, however, things aren’t as gloomy as in TVLand. Sure, the real estate market isn’t what it was a few years ago, but homes are being bought and sold every day. Banks are still issuing loans believe it or not, and great deals abound for those looking to buy. Buy now? Why, yes. You are no doubt familiar with the most basic rule of investing— “buy low, sell high.” Well, the “buy low” part requires a period of time when prices are low, and that would be right about now. Waiting for the market to improve before jumping in? That’s when the prices will already have increased, and buying then would go against the simple rule we just mentioned. There is no doubt that the market will go up again (because, historically, that’s what the real estate market always does), we just don’t know when that will happen. What we do know is that now is a pretty good time to get started investing in real estate, so for anyone thinking in that direction let’s review the five most important steps in getting started: Have a clear plan. Real estate investing is a business and should be treated as such, not as a hobby. Sit down and make a plan for it then. Will you be investing for the long-term (renting) or short-term (fixing
and flipping)? How much time can you set aside for your business every week? What work can you do yourself and what work will you need help with? What are your overall goals for real estate investing? Remember, despite what late-night infomercials say, getting rich “overnight usually takes years, so having realistic expectations is very important, too. Line up financing. Getting preapproved for a loan before you find a property is a must. Talk to several lenders, talk to your Realtor and ask for recommendations. When you complete this step you will know exactly how much money for the down payment you will need, what the rules for seller-financing are, and what you can expect the loan process will look like. If you plan on purchasing a property to rehab, ask about loan programs that provide money for that, too. Line up your own cash. I have to bring up the late night “real estate gurus” again…”You don’t need any cash to buy an investment property,” they like to exclaim. Yeah right. Even if you can find a property that can be purchased for no money down (not as easy as it sounds), you still need to have cash in the bank for other costs. Like repairs. Or unexpected expenses. Or for
mortgage payments when your tenant suddenly leaves and you are unable to find another one right away. Not having enough cash reserves is perhaps the biggest mistake rookie real estate investors make, and it’s a mistake that can cost you dearly. So how much in cash reserves should you have? There’s no definitive answer to this question; you have to consider the property you plan on buying and try to determine what expenses you may have to deal with (New roof soon? Water heater? Flaky tenants?). Three-to-six months worth of mortgage payments and expenses is a good rule of thumb, but again, your situation may vary. Assemble your team. Once you are ready to get started, you don’t have to (and shouldn’t) go it alone. There are professionals that can help you along the way. First, you will need a good Realtor (and fortunately you already know one! Me!) The Realtor’s job is not only to help you find the right property, but also to answer questions and guide you through the process. You’ll also need a good accountant who can answer tax-related questions. Knowing a good property inspector is also a plus, as well as knowing a few loan officers who are familiar with investment properties. Acquire knowledge. Know the area. Know what type of property you’d like to invest in. Learn everything about it. ie. Taxes, history, etc. Talk to your Realtor, talk to other investors, read a book or two. Talk to your accountant. The more information you have, the better.