Real Estate Quotes

When looking for single-family homes, look for ones for which all utilities (including water, sewer, garbage, electricity, and heat) can be paid directly by the tenant. When shopping for multifamily, at least look for ones where heat and electricity can be paid by the tenant, and if you can find properties that can be converted to a "master metered" system to allow tenants to pay for their own water, you've potentially struck gold! [2015] - Brandon Turner

Problems to Look for When Shopping for Rental Properties: 1. The Bigfoot smell; 2. The hidden third bedroom; 3. Ugly countertops and cabinets; 4. The bad roof; 5. Mold; 6. Compartmentalized configuration; 7. Jungle landscaping; 8. Junk. Problems to Avoid When Shopping for a Rental Property: 1. Neighborhood; 2. Foundation (including water leaking) issues; 3. Location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. [2015] - Brandon Turner

There are several places where you can go to get a purchase and sale (P&S) agreement: local title company, online, office supply store or other investors. No matter how you obtain your P&S form, I recommend that you have a local attorney take a glance at it. You want to be sure you are covering all the necessary bases, and a lawyer can help you do that. You can also simply get a P&S agreement from an attorney, though this might be the most expensive option. [2015] - Brandon Turner

If the home has been sitting on the market for a long time, and you have a good indication that the seller is eager to sell, there is no real danger in submitting a lowball offer to see what happens. However, if you are in a competitive market and a new listing hits the MLS at a great price and you know that is't going to sell quickly, you may want to cut out the chase and simply offer your highest amount. Sometimes, you may even need to offer more than the asking price. I would never pay more than asking price just to win a bid if the numbers didn't pencil out, and you shouldn't either, unless you have some dramatic future reason for doing so. [2015] - Brandon Turner

Sometimes, the secret to getting a "yes" is as simple as being the first to offer on a property. Be sure to have automatic alerts set up with your real estate agent. Rather than playing a game with the seller, offer your maximum offer right up front. If they counter and try to make you go higher, just say no! If you want to get your deal accepted, get that person to like you! I think the best way to do this is to include a letter with your offer. Include your family in the photo for added benefit! [2015] - Brandon Turner

If you'll be using bank financing for the purchase, be proactive and include a copy of your pre-approval letter with your offer It's one thing to tell the seller that you can qualify, but it's another for them to physically hold the pre-approval letter in their hands so they know that the sale will go through. [2015] - Brandon Turner

An escalation clause can be included in an offer and is used when a property might have multiple bidders. It essentially says, "If someone else bids higher than me, this offer will automatically increase to $X above theirs, up to a certain point." The danger of an escalation clause, of course, is that it tells the seller exactly how high you will go! Therefore, only use an escalation clause if you know there will be multiple offers, and never make your maximum price higher than what you should pay. [2015] - Brandon Turner

You can negotiate for any of the following: price, close date, closing location, contingencies, financing, closing costs, home warranty, repairs, credits, possession date, items left in the property, etc. [2015] - Brandon Turner

You can help your negotiation by making it a little more uncomfortable by instituting a penalty whenever the other party asks for a concession. A penalty could be as simple as not responding for several days or requiring your lawyer to look over the issue. This will train the other party to stop asking for concessions, because they'll quickly realize it hurts them every time they do. [2015] - Brandon Turner

When negotiating in person with a motivated seller, one tactic that works almost every time is simple: ask the seller what their lowest price is. They'll usually tell you a number, but this is never their real lowest price--this is their starting price! Then, ask them a follow up question like "Okay, but what if I could pay all cash and close next week?" They will almost always go a little lower. If you wanted to push it one more time, you could say something like "So, if I were to offer you $X and get you the cash you need in the next ten days, that would be unreasonable?" No one likes to appear unreasonable, and there is a good chance they'll respond with "Yeah, I could do that." [2015] - Brandon Turner

When investing in real estate, there is a very good chance that someday, someone will try to sue you. When you own a property free and clear, this is typically evident on the public record, because there is no bank lien on the property. Therefore, you are essentially holding up a sign that says, "I have lots of money that you can try to take!!" Lawyers (especially those paid on the outcome of a lawsuit, as most lawyers of this type are) are reluctant to pursue rental owners who have a lot of leverage. [2015] - Brandon Turner

Investment loans are usually .5 to 1 point higher than owner-occupied loans. [2015] - Brandon Turner

Conventional lenders are not very fond of loaning on properties owned by an entity, such as an LLC or corporation, especially for residential loans. You could, as many investors do, buy the property in your personal name and then transfer it to your LLC, but you put yourself at risk of having the "due on sale" clause called by the bank. Be sure to talk to a lawyer and CAP who can help you sort these types of issues out, or speak with your bank and get permission, in writing, to transfer your properties to an LLC after buying them (this is the only way you'll be truly protected from that dreaded "due on sale" clause). [2015] - Brandon Turner

Portfolio loans may be slightly higher in rate and shorter in term, or they may involve a balloon payment (most likely through a refinance). None of the "big banks" will do portfolio lending. Instead, you'll want to focus your search on small, local community banks. Look for banks that have a maximum of 20 different branches. Credit unions might also be a good source of portfolio lending. Portfolio lenders will not be labeled as such. You'll simply need to call them up and find out. Ask to speak with the loan officer, because the teller will likely have no idea how to help you. [2015] - Brandon Turner

Hard money lenders are professionals who lend out their own money, or other peoples' money, for a living. They have a set way of doing things, a predefined interest rate, a predefined set of fees (points), and a very short term (usually less than one year). Private lenders are lending their own money but don't typically do so for a living. The rates, fees, and terms are usually lower and much more negotiable. The most common private money rates I see fall between 6% and 12%, depending on the relationship. [2015] - Brandon Turner

A home equity loan and a home equity line of credit are similar but have a few major differences. The loan is typically taken out all at one time and paid back in installments until it is paid off, much like a typical mortgage or car loan. The interest rate and payment are generally fixed for the life of the loan (but they don't have to be). A home equity line of credit is a revolving account that works much like a credit card. You can borrow as much as you want, up to the limit, pay it back, and then borrow again These lines of credit generally have lower interest rates than home equity loans, but those rates are generally variable and so can rise or fall. [2015] - Brandon Turner

Front-end DTI (Debt-to-Income Ratio) is the relationship between how much your total housing payment will be and how much income you have each month. Back-end DTI is the relationship between how much total debt you have and how much income you make. Typically, you probably want your front-end DTI to be less than 28% and your back-end DTI to be less than 36%. When checking with a lender on their DTI requirements, you will typically see these numbers in the following format: (28,36). [2015] - Brandon Turner

LTV (Loan-to-Value Ratio) = Total Loan Amount(s)/Fair Market Value. Lenders typically have different requirements for maximum LTV based on the property type. For example, for an owner-occupied property with an FHA loan, the lender will go up to 96.5% LTV. However, on a commercial property, a lender may not want to lend above 50% LTV. If you are an investor, you are likely to find 70%-80% LTV the norm for investment properties. [2015] - Brandon Turner

If your credit score is below 600, understand that obtaining any kind of loan could be difficult. To check your credit score, I recommend visiting CreditKarma.com, which allows you to see your score for free. [2015] - Brandon Turner

If you are a property investor, the lender will also look at your rental income and may be able to use that income to offset your debt. However, most lenders will not give you any credit for this rental income unless you have been a landlord for more than two years. In addition, no matter how long you've been a landlord, you likely will never get 100% of the rental income counted toward you. They will likely give you 70%-80% just to be safe on their end. [2015] - Brandon Turner