Sell Your Income Property For More Budget For Closing Costs Loan Origination Fees And Pmi Yachts Rescue Monaco Real Estate Budget For Closing Costs Home Inspection And Title Fees Fsbo Sellers The Real Estate Agent Is Not Your Enemy
Selling income property isn’t like selling a house. You can paint a house, and get a little more because it looks nice. Rental property is different, because it’s bought by investors, who look at income more than new paint.Raise income, and you increase value.
Let’s assume investors in your area expect a capitalization rate of .08. That means that they want a net return (before loan payments and taxes) of 8% on the purchase price. If your three-plex generates $12,000 net income annually, they’ll value it around $150,000 ($12,000 divided by .08). Make it generate $16,000, and you make it worth $200,000.
Get More Income From Your Income Property
Higher rents is the obvious way to boost income, if you can justify it. Find out what similar units are renting for. If you’re $60 below the going rate, you can raise rents and not lose your renters. Raising the rent $60 for three apartments means $2160 more net income annually. At a .08 cap rate, you just added $27,000 to the value of your property.
Consider other ways to raise rents. Your tenants may agree to $30 more per month if you have a carport built. That’s $1080 more net income annually, meaning roughly $13,500 more value added to your property. ($30 x 3 units x 12 months = $1080 divided by a .08 cap rate = $13,500) Build that carport for $4,000, and that’s a good return on investment right? What else do they want?
Consider other ways to get more income. Rent storage sheds to tenants or put in a coin-operated washer and dryer. If you own a larger income property, you could install pop machines.
Reduce Rental Property Expenses
Can you add insulation to reduce the heating costs? If you’re paying $80/month for lawn care, will one of the tenants do it for $40? Can you get cheaper insurance? Look for any ways you can reduce expenses. A new $4,000 furnace that saves $800/year on heating costs means you just turned $4,000 into a $10,000 higher sales price.
These things are never an exact science, and of course appearance and other factors matter. Increasing that net, though, is the surest way to get more for your income property. Just make the changes at least several months before you try to sell the property. Also, learn how do the math – it really does matter.
Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for closing costs.
Budget for Closing Costs – Loan Origination Fees and PMI
Closing costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections. Even if you are purchasing a home for the first time, you are probably aware there are closing costs that have to be paid. Rarely, however, are you aware of just home much and how fast the can accumulate. If you have not budgeted for them, they can put a kink in the closing or even cause you to lose the home.
A couple of closing costs to keep in mind are origination fees for home loans and private mortgage insurance. The mortgage related costs are only a small part of the overall closing costs you can face, but deserve a closer look.
Origination fees for home loans can be a shock to first time buyers. Few realize they are going to have to pay such things. Origination fees are costs charged by a lender for services used to determine if the lender should give you a loan in the first place. For example, a lender will charge you fees for obtaining a copy of your credit report, having an appraisal done for the property. Infuriatingly, the lender will also charge you fees for processing the loan and preparing the loan documents. You may also have to pay points, which represent a percentage of the total loan, often one or two percent. On a $300,000 loan, the origination fees can quickly add up to thousands of dollars.
Private mortgage insurance, often called PMI, can also be a nasty little surprise. The magic number when considering PMI is 20 percent. If you make a down payment on the home that is less than this amount, you are almost certainly going to have to pay PMI. PMI is simply insurance that protects the lender should you default on the loan. The cost can add up to hundreds of dollars, so make sure you know what is expected of you.
Closing costs are aggravating, particularly when you feel like you are being nickel and dimed to death. Budget for them up front, and you will feel less aggravation.
Monaco’s annual yacht show which ran Wednesday 21 September to Saturday 24 September attracted over ninety of the world’s finest yachts and five hundred of the world’s best yachting companies.
The show has grown in popularity over the fifteen years since it began, and this year attracted over twenty thousand visitors to the Principality.
The luxury yachting market has tripled in the last eight years, and helped along by orders from Russia’s ‘nouveau riche’, the industry has seen an increase in orders of over a quarter in the last year alone.
But while luxury and Monaco are often associated, poor sales and a possible drop in property prices haven’t been seen in the Prinicpality’s real estate sector for over a decade.
Monaco Real Estate
In contrast to the highly successful Yacht Show, property sales in Monaco have been unusually slow in 2005. Although only a square mile in size there are over a hundred estate agencies battling for buyers to choose their services, and at times it seems that every third or fourth retail unit has been commandeered by a property company in Monte Carlo, the best known and most sought after area of Monaco.
According to Monte Carlo property specialist Henri Boulanger some estate agents are being squeezed, and viewed the yacht show as the last opportunity to turn a dismal year into a good one.
‘The yacht show attracts a wealthy clientele in considerable numbers, and the type of person who might be buying a luxury yacht might well be thinking about buying a property in Monaco as well.
While it wouldn’t have been etiquette to actively pursue buyers, many estate agents in Monaco were desperately hoping to see their doors open and for one or two potential buyers to call into their offices.
With good two bedroom apartments starting at over a million Euros, and penthouses with Mediterranean views often over five million and some of them over ten million, it can take just one sale to turn a bad year into a good one.’
Monaco’s property price inflation has often risen by over ten per cent a year in the last decade, but a combination of events have conspired this year with a possible stagnation in prices for 2005, and potentially even a fall.
The passing earlier this year of the popular Prince Rainier, Europe’s longest reigning monarch, cast a cloud over the area which it is just emerging from, but economic factors have also played a significant role in the downturn of the real estate market.
‘The strength of the Euro against the American dollar has led many of our potential buyers from the US to delay their viewing visit from this year to next, and earlier this year another source of important buyers from the UK held back until after the election to see what the outcome would be’, explains Henri, adding ‘and now with the uncertainty of the economy after the recent US hurricanes it is quite possible that some US buyers will delay their visit even more, or possibly to cancel buying in Monaco altogether’.
Monaco Grand Prix
No surprise then that while the tourists were in Monaco in increased numbers than last year, the prospect of several dozen potential property buyers descending upon Monaco and staying in her best hotels over a few days was seen as an opportunity not to be missed by the realtors.
But what is surprising perhaps is that the Yacht Show is viewed as a better opportunity than the Monaco Grand Prix for her realtors.
‘The Grand Prix attracts tens of thousands of people to Monaco every May’, explains Henri, ‘And every April we get a lot of new enquiries for property in Monaco, with the buyers asking to view apartments in Monte Carlo with views of the race circuit during the Monaco Grand Prix weekend. But what they don’t realise is that many of the apartments for sale have been rented out for the weekend, and viewing is impossible.
Even if an apartment hasn’t been rented out for corporate hospitality it would take all day to get from one apartment to another. The Grand Prix is a great tourist event for Monaco, and some of the estate agents go away for a few days. They weren’t doing that during the Yacht Show!’
Purchasing a home is a euphoric event. Once escrow begins, the euphoria can change to frustration, particularly if you are not ready for the closing costs that quickly accumulate.
Budget for Closing Costs – Home Inspection and Title Fees
Closing costs simply refer to the fees associated with various things associated with the escrow process in a real estate transaction. In the excitement of having an offer accepted for your dream home, you can easily lose track of the fact you are going to need to have some serious cash on hand to pay them. Many people make the mistake of only assuming they need the down payment money, and have to rush around town trying to come up with money for the closing fees.
If you are buying a home, you need to get a professional home inspection. Doing so can reveal potential problems with the home that you wouldn’t otherwise notice. Problems can include things such as rot, termites, water leaks and a bevy of other issues. The time to do this is during escrow. Of course, that means you are also going to have to pay for the inspection. Depending on the size of the property, home inspections can run a few hundred dollars up to a few thousand. Make sure you have money set aside for the fees.
Title insurance is something you absolutely must purchase when you buy any real property, a home, building, land or whatever. Title insurance protects both you and your lender. Title insurance is just what it sounds like. A title company will research the title of the home and essentially guarantee that the title is good. This means the seller actually owns the title and has the right to sell it to you. The title company will also make sure there aren’t any liens on the homes or other things that will cause you problems. Depending on the price of the home, title insurance can run you a couple of hundred dollars or up into the thousands. Again, it is important to find out the cost and budget for it.
Title insurance and a home inspection are two things you should absolutely have when purchasing a home. Just make sure you budget for them.
If you are selling your home without a real estate agent, you need to realize the agents in your area are not your enemy. In fact, they may prove very useful in moving your property.
FSBO Sellers – The Real Estate Agent Is Not Your Enemy
A common mistake made when people decide to list their home for sale by owner is to assume real estate agents are to be avoided. This is a mistake for a number of reasons and can significantly hinder your efforts to sell the property. Consider the following.
A majority of buyers will use a real estate agent to locate and make offers on real estate. I am sure this is hardly a shocking revelation to you. Given this fact, many FSBO sellers make the mistake of treating real estate agents rudely. If you receive a call from an agent, you need to realize the person offering their services may be the same person that calls a week later with an interested buyer. If you burn bridges by being rude or hanging up on real estate agents, you run the risk of missing out on potential buyers.
Even if a real estate agent does not bring a buyer, they can still be of assistance to a FSBO seller. Put bluntly, the real estate agents contacting you expect you to eventually give up trying to sell your property on your own. Although incorrect, this assumption leads them to view you as a potential client down the road. The negative aspect of this is they will continually contact you. Ah, but there is a positive aspect as well.
A real estate agent that sniffs a potential client can be very helpful. To generate credibility with you, they will give you an astounding amount of help for free. Many realtors, for instance, will provide you with all the contract documentation you need for the sale and purchase transaction for the property including a purchase agreement, escrow instructions, deeds, disclosures and a list of documents you will need. Some will even go so far as to provide you with free brochures for your home. Now, does that sound like an enemy?
Make no mistake, a real estate agent will help you because they believe you will eventually become a client. You probably will not, but there is little reason to view them as an enemy in your efforts..
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