If you are a homeowner then you should make building equity in your home one of your number one priorities. The reason for this is that equity in your home is like having cash in your bank account because you are able to borrow against it for a variety of different purposes. Also, when you build equity in your home it means you are that many dollars closer to owning your home outright. There are quite a few things you can do in order to build equity in your home that include making a higher down payment, additional principal payments, shorter mortgage, as well as focusing on home improvements.
Making a large down payment helps you build equity in your home because every dollar you pay in your down payment goes directly to your equity. Because of this, saving money in order to make large down payments has several benefits. First, it automatically increases your equity as means that you will require a lower loan amount which means you will pay less money in interest. So, if there is any way you can make a large down payment make every effort to do so.
Another way to build equity in your home it makes more payments on principal than is required. This is important because every dollar paid on principal means another dollar built in equity and less money that will accrue interest. So, even if you can only make small extra payments on principal now still go ahead and get in the practice of doing so. It will really pay off in the long run.
Also, sacrifice in the short run and have a short mortgage term rather than a long one. By doing this you do several things. First, you pay more money per month on your loan, but you will have less money accrued in interest and build equity significantly faster. Also, if you have a short loan period you will save a considerable amount of money that would be accrued in interest otherwise and the peace of mind of knowing that you own your home much faster.
Investing in home improvements is another way you can build your equity. The reason this builds equity is because when you make home improvements you increase the value of your home, which means you will be able to build more equity. However, there are some things to keep in mind when considering home improvements. For example, home improvements to kitchens and bathrooms always increase the value of your home more so than external improvements like swimming pools or fences.
If you are interested in building home equity then make a plan that includes the following tips and make sure you follow it diligently. By doing this you will build equity in your home quickly and efficiently.
After a solid five year run of record home sales, the market is readjusting itself to a more normal level. Most of those who wanted to move have moved. Interest rates are rising again, lowering the upper end ceiling for buyers overall. With buyers qualifying for a lower mortgage today than they might have a year or two ago, the buyer pool for higher priced homes is shrinking. The large inventory of homes currently for sale is resulting in an overall downward trend of housing prices. With increased choices, buyers can be more choosy and take longer to make their decisions. As a result, longer market times may caution a buyer away from a property.
There are three important factors for selling your home in today’s market: condition, price, and time.
Condition reigns supreme over anything else.
Buyers have so many choices right now that anything that looks like it needs work can be enough to kill your chances of selling. People prefer move-in condition, so if your property isn’t, you probably need to do what it takes to make it that way. It is worth the money to remove old wallpaper, paint, replace carpet, and replace the roof if it’s almost at the end of its life. Offering an allowance doesn’t work in these market conditions because buyers tend to overinflate the costs of these improvements, anticipating double or triple what it will actually cost you. Plus, with the number of homes for sale, if yours is the one that needs to be painted, chances are it’s also the one that won’t sell. There are exceptions, such as homes that need a complete overhaul, so it’s a good idea to discuss your home and your plans with your listing agent before getting started.
A word about home improvements – consider improvements as solidifying your home’s value rather than increasing it when deciding on a price range. The kitchen you recently renovated or the room you added may help your home sell more quickly than the one down the street because it’s in better condition, but it won’t necessarily increase your home’s value. If you’re not looking to sell your home right now, spending the money on upkeep and maintenance now can help you avoid needing to spend a lot all at once when it is time to sell.
The second factor is price.
You want to have the best price on the market. That doesn’t necessarily mean the lowest price, it means value. It’s a good idea to price your home aggressively because there are so many options available. If there are 40 homes for sale in your price range, you want your home to stand out as the best home for the money.
Misperception or misunderstanding of the current market conditions can lead to improper pricing which in turn can lead to excessive market time or even no sale at all. What you paid for your home or what your neighbors sold their home for last year are irrelevant when deciding on your asking price. Factors you and your Realtor should consider are your home’s current condition, the condition of other homes for sale in your price range, the asking price of homes similar to yours, and which homes are selling and which are not. Accurate pricing from the outset increases the likelihood that your home will find the right buyer quickly. The first three weeks on the market are the most important – that’s when people are excited to see the new kid on the block. A strategy of starting on the high end and then lowering it over time is rarely successful in a normalizing market. By the time the house is where it should be, interest has peaked and buyers have moved on.
Finally, accept that it still takes time.
There are only so many buyers out there and they have a lot of choices. Average market times have been three to four months, so your goal is to reduce the selling time by carefully preparing your home and improving its condition plus adopting an aggressive pricing strategy. Then you just need patience and faith that the right buyer will see your home and decide that’s the home for them.
Everyone’s situation is different, so be sure to discuss your situation with your Realtor and decide on the best strategy for your needs. Today it takes twice as much work to be the best value in your neighborhood. Hard work and diligence can pay off.
Today it takes twice as much work to be the best value in your neighborhood. Hard work and diligence can pay off.
Many people think appraisals and assessments are the same thing or at least that they should be for the same amount. The truth is they can vary greatly. Let’s look at each of them.
Appraisals
An appraisal is an estimate of market value. An appraiser can use many methods for coming up with this estimate. For income producing property, the appraiser may capitalize the value of the income stream. (It would take “x” dollars of capital invested at a “y” rate of return to produce an income equal to the rental income generated by this property.) For other properties, an appraiser may use “replacement value.” (It would cost “x” dollars to build this structure if it were being built today.)
Appraisers usually use “comparable sales” when evaluating the market value of a home. They look at nearby properties with similar characteristics, which have sold in the recent past to see at what price they sold. They typically give the most weight to the property they deem to be most like the property they are appraising.
Buyers and sellers generally encounter appraisals when the buyer’s lender has an appraiser make an evaluation of the market value of the property being sold. The lender wants to be sure of the value of the collateral for the loan. An interesting feature that comes into play in this situation is that one indication of value is at what price two unrelated parties will agree to buy and sell the same property. In other words, what is the contract price the seller and buyer of this property agreed on (if they are not relatives).
Assessments
An assessment is the value your local government puts on your property for the purpose of taxing it. How this value is derived varies from jurisdiction to jurisdiction. Some communities say the value is the same as market value. Some say the value is a percentage of market value. Some appear to actually do what they say they do, and some do not.
I was once a partner in an investment property that we were offering for sale at the time the county re-assessed it. Imagine my annoyance when the assessment came in at one hundred and forty percent of the offer price. We weren’t dummies. The partners were real estate professionals. I appealed the re-assessment, but my appeal was turned down. I offered to sell the property at the assessed price to the appraiser the county had hired to handle the appeals when he was telling me why he could not reduce our assessment. He did not take me up on my offer. Our property sold at the listed price months later. We had paid six months’ taxes on the property at a higher than market value.
On another occasion I helped some elderly people sell a farm they’d lived in all their adult lives. The farm sold for a price a great deal higher than the value at which it had been assessed.
I believe the two examples are fairly typical. Many jurisdictions will “puff up” assessments for businesses and investors and “low ball” assessments for people who have lived in their homes for a long time. Sometimes there are formulas for doing this. “Land use” is one such concept, i.e., the property is taxed at its value as a farm and the fact that it is ripe for dense residential and commercial development is ignored or deferred. Sometimes there are no formulas. It is just done.
For these reasons, it is usually not a good idea to put too much credence in the assessed value of a property when you are trying to figure out market value. They may be the same. They may be vastly different.
Investing in real estate is a highly lucrative venture that has helped scads of people to rake in loads of money. Though the profession may seem delectably easy, it’s certainly not for everyone. Real estate business also fosters several unscrupulous swindlers who make their living by duping newbie investors. Therefore, fresh entrants into the field of real estate must learn how to discern a genuine opportunity from a fake one.
Investing in real estate involves an awful lot of work, especially at the outset. So, it’s only for the serious few who are prepared to face the challenge and the uncertainty of the market. Wannabe investors must have access to the following when they embark into real estate investing:
• Investors must have a significant working capital. It’s true that there are several finance firms that can lend you money for property investment, but you sure won’t wish to be in too much debt to start with.
• You must have a good grasp of the real estate market and the legal procedures pertinent to the trade. In addition, possessing knowledge about the region in which you wish to purchase property is equally crucial.
• Smart asset management and superlative negotiation skills are pivotal for investing in real estate. You would have to convince the homeowner to sell the property.
• Access to a work force that can quickly spruce up a fixer-upper or another property that might have suffered some damage. Be it any trade or discipline, a quick turnaround is a plus.
• A professional property inspector is always helpful when a distressed property needs to be inspected so as to ensure that it’s a viable deal.
As a newbie, you are most likely to follow the old-fashioned technique of buy-and-hold. In such a scenario, you would serve as the landlord for the property. The property would normally experience appreciation over time, and you may sell it after it has risen to a certain preferable value. During the time you hold the property, you may rent it to a tenant, thereby generating another monthly source of positive cash flow.
Having gained experience investing in real estate by following the above technique, you can move over to more lucrative deals, such as fixer-uppers and foreclosures. Finding these can be tough, and hence you would invariably require the services of a professional bird-dog (one who finds lucrative property deals for investors).
On the whole, investing in real estate can lead to ample gains. But it is imperative that you have the above outlined real estate tools in your arsenal.
Believe it or not there is a group of architects that have developed some very stylish residences out of the humble shipping container. Not only residences, there have also been hundreds of metal shipping containers used for museums, restaurants and weekend houses. You would not even realize that these beautiful and creative structures were once hauling supplies across the country.
The shipping containers are stacked, painted and customized to form the outer structure of the houses. Glass ceilings, walls and windows add light and give the structures a very bright and airy look.
The Shelburne Museum, located in Vermont, features a Collectors House designed by interior designer Albert Hadley and architect Adam Kalkin. It was created by using 3 overseas shipping crates that make a very striking house. The building features glass garage doors, a large patio area, living space, bedrooms and a full sized kitchen.
Adam Kalkin has designed houses out of shipping containers before, but his last one is actually a luxury dwelling for the rich. He unveiled his creation at the Art Basel Miami Beach art show in December 2005 and the attendants were surprised to see lavish furnishings and a beautifully designed interior inside a shipping container. The project has the interesting title of “Push-Button House” because it can be loaded in the back of a truck to be moved and it opens up like a Murphy bed to expose the interior.
Jennifer Seigal is another architect that uses shipping containers to create beautiful living spaces. One example is the Seatrain house she built for real estate developer Richard Carlson, equipped with all utilities and featuring an indoor fountain. She indicates that these houses are much less costly to build than the traditional ones, and that they are very modern looking and can be customized to the individual needs of the buyer.
While the use of shipping containers for shelter is not new, the thought of making architectural statements and unique creations is. Architects strive to create a feeling of openness, light and beauty using the prefab shipping containers as the foundation.
Although his Push-Button house is only an experimental project, Mr. Kalkin has built houses that he intends to make available to the public, like his Quik House. He currently has orders for ten. These modern prefab houses are made from five shipping containers and are then loaded on a truck and delivered to the buyer. It takes less than a week to reassemble them on location. The Quik House sells for between 150 to 175 thousand dollars, depending on the distance to deliver the house and the options that the client chooses. There are many different options, including mahogany sliding doors and a full stainless steel kitchen.
In addition to this deluxe version of a prefab home Mr. Kalkin is also planning on selling a single shipping container living space called an A-Pod. This will be equivalent to a studio apartment, and will sell for under $100,000.00.
Humanitarian issues
Most architects have noted that the prefab shipping container habitat is ideal for setting up in emergency situations and for humanitarian needs. These very structurally sound and durable homes can be moved easily on the back of trucks and can be loaded and unloaded numerous times with no damage or need for repairs. They can be moved virtually anywhere there is a road and it is easy to hook up plumbing and electrical connections to the outside of the shipping container.
They are very dry, leak resistant and easy to care for. They can be insulated to keep out the cold and, despite being metal, are reported to be easy to cool even in hot climates. The shipping container homes are virtually fire resistant and can be easily cleaned or painted if necessary.
While a shipping container home may not have been an option you had previously considered, it might be something to ponder in the future. The sky is the limit to using your imagination in designing your very own low cost prefab home.
As far as home improvements go, landscaping is a solid investment – in fact, a well designed outdoor project can offer a better return than most of those inside the house. Good landscaping can add between seven and 15 per cent value to your home and has a recovery value of 100 to 200 percent, so shell out now and get it back when you sell.
Many realtors will tell you that a well designed landscape will help you sell your house faster. With today’s explosion of subdivisions, where many of the homes look similar from the outside, landscaping can set your home apart from a neighborhood of clones.
But the key to a profitable landscape is the design, so start with a plan. A poorly designed layout could end up costing you more time and money: without proper planning, that lovely deck you’ve laid may crack in next winter’s frost. So before you go running into the yard with your pick and shovel, get out your paper and pencil.
First consider what you want to use the area for. If you want to have an outdoor kitchen area or pool then your design will look quite different from someone looking for a vegetable garden or a private refuge. There are plenty of garden magazines on the market; study them to get a good idea of what you like and don’t like. Even if you aren’t planning on doing the whole yard now, plan what you’d like to see eventually. Otherwise you may find yourself ripping up this year’s hard work because it interferes with next year’s project.
Plan for your level of maintenance. Think about whether you want a garden that requires a lot of work or something a little easier to deal with. After you put all this work into the design you don’t want to watch it go to waste. If you don’t have time to maintain it yourself you might want to hire someone to take care of it for you, but look into those costs before you start planting.
Which brings us to the ever popular topic of budgets – it’s important to start out with an idea of how much you have to spend, because it’s easy to get carried away out there and there’s no shortage of lovely plants, features and furniture to sink your hard-earned cash into. Be realistic: you might not be able to put in both the pool and the outdoor kitchen this year, but you’ve got your plan. You know it’s coming.
The next step is to sketch out your yard. Divide it into sections and map out what you would like where. Call your utility company and map areas with underground wires and pipes. Identify areas that have special needs (drainage issues, acidic soil, shade and full sun). Next, add the feature that need to “hardscaped”, like patios, fences, fountains, pools and walkways. Depending on the complexity of your design you may want to consider involving a professional, at least to look at your design. If you are undertaking any structural projects it might be wise to have the plans vetted by an engineer. In any case, consult local building codes and do your research. You want to ensure that your hardscaping is appropriate for your particular location and climate concerns.
When deciding on plants, refer back to your sketch to match your greenery with its preferred light and soil conditions. Use marking paint or chalk to mark out planned features and bedding areas in your yard. This will give you a basic idea of whether your design works spatially. You may need to play with the width of the beds or paths to make the plan more visually appealing.
Before you plant, lay your plants out in their place and take a good look. Does the layout look crowded? Try to visualize the final size of the plant. Make sure you leave them enough room, even if your garden feels a little sparse to begin with. It’s better to have a little room between them now rather than ending up with some plants being overpowered by others when they are full-grown.
And now you’re ready to go! It may seem like a lot of work to get started, but a well planned design will ensure that you maximize your investment and create a beautiful space that you (or the next owners) will enjoy for years to come.
At one time in my life I was buying 7-8 Houses a month, fixing them up and then reselling them. Then I got the bright Idea that if I can buy and sell 7-8 a month, I can buy and sell 80. This was a choice that eventually led me to bankruptcy. This has not been that long ago. Twice in my life I have made a lot of money and then took on a large growth spurt and got a large learning experience in business failure. The last one resulted in bankruptcy.
It is hard when things are going well to not be seduced by more is better. When you have something working for you, it is easy to become overconfident and start to think of multiplying it. As with most things in life, you want to be sure when you take on something, that you complete it. Pumping up the volume puts you at risk of not having the structures and being set up to deliver on what you are committed to. You naturally encounter problems that were not present on a smaller scale. It is hard when things are going well to not be seduced by more is better. I had to learn personally that pride Goethe before the fall. The bottom line is that there are always good deals in Real Estate! I say measure your success one house at a time. Buy investor property, fix it up, resell it, rent, do a lease-option, but do it one house at a time.
Multiple Purchases?
One of the most common mistakes I see in business is where investors come into the business and think they need to do multiple houses at a time. Try this on: Try doubling the cost you think it will take to fix the property, doubling the time you think it will take to rehab the property and figure your holding costs doubled (insurance, mortgage payments, taxes, lights, gas, rehab cost).
Great deals in Real Estate don’t come in houses fixed and ready to sell. The great buys come from houses that need work. If you are just getting started, stick to cosmetic rehabs (paint and carpet), Don’t take on major rehabs. It will take time to develop rehab crew. The most successful people I see in Real Estate do one house at a time. Failures are great; if you look at them and ask what action was missing that would have made a difference?
Hard moneylenders?
One pitfall is using very expensive money. For years I ran a business financed on money from Real Estate Investors who are called hard moneylenders. They look at collateral and loan money based on receiving interest can be 18% or higher when you figure in the closing costs. When you get multiple properties in this condition, you will have interest payments that are going to be double and triple what conventional financing is in Real Estate.
Now combine this with the common lie we tell ourselves that we can repair the house and put it back on the market for sale or rent in a short time. Your overhead will rise because you will need a staff to manage and rehab everything. Can you see this is a recipe for disaster for everyone? Now if you are doing one house at a time, your overhead will probably stay very low, with very little staff. Therefore you have limited your expenditure of time, money and aggravation.
At one time, my overhead was in excess of $50,000.00 per month. I had to depend on other people to do everything, including checking the work. A hundred percent of the monies I was making went paying down my debts and I kept telling myself I would turn it around tomorrow. I found myself with houses that were not finished and houses being lost in foreclosure and for taxes. That left me a very motivated seller and bankruptcy was looming large. With my overhead still there, I attempted to wholesale deals. I decided I would no longer find, repair and resell homes. Instead I would find great buys and sell them to other investors.
Basically, I started my business over. It takes a great amount of time to cultivate a list of investors interested in buying deals. This business is built on the concept you can borrow you way out of debt, but it just does not work. You have family, friends, and business associates that may get hurt or destroyed. I’m not saying this to tell you a sad story, but rather in the hopes that by sharing it, someone else can avoid the pain of my mistakes. Take from this what you can learn for yourself. I am 53 years old and starting over. I now have the knowledge to build a business with the proper foundation. I teach Real Estate Investing class now that look for pitfalls and what is needed to do a successful deal one at a time.
My advice to you on handling real estate transactions is: Use Title Companies What can happen to you when you fail to get title insurance? We had a participant in one of our seminars, who purchased a house to fix it up. He invested over $40,000 into the home in both repairs and purchase price. When he went to refinance, he found out the person he purchased the house from was not in the chain of title. In other words, he did not have a clear title. Whenever you purchase a home, always close through a title company with title insurance on the property. Title insurance is protection that insures the borrower or lender that they get the property with marketable title. They will only insure the property for the purchase price or for the amount of the mortgage.
Use a reputable lender
Interview lenders. Go to Real Estate Investor Clubs to find out from other investors which companies are doing the best job. Are you at risk when you use a lender that wants to cross collateralize loans or wants personal guarantees? One lender I know will get one-two year mortgages and demand a right to lien all the properties you own to procure the loan you are getting. Just beware, if you are buying the property to fix up and resell, there are things that you don’t always plan on like: twice as much rehab cost as you planned for, longer marketing time than you initially thought, resulting in added holding costs, or maybe the market moves the wrong direction and you can’t sell the property, so you rent it. Now one of your other properties or even your personal residence needs to be refinanced. You now have a lien showing against the property. Now what do you do? Think before you jump. If you have purchased the property right, you should be able to borrow money based on the equity of that property – not you’re home and other properties.
This same lender will ask for a personal guarantee signed by you, your wife and your partner. This personal guarantee allows his mortgage company to lien anything the partner and wife own. Not only that, but this particular lender demands that you use a Title Company he owns. Now when you want to sell another one of your houses and this same cross collateral loan will show up on any property you are selling. Now you are faced with using his title company or he won’t release his loan. Beware of putting yourself in a situation where you are using a person who controls the lending, title work, the appraiser and the Real Estate Company.
Do you think, if you had your title work placed with a company the Lender had ownership in, you might run into a problem getting the documents released or have a clean closing at the same title company? Why risk letting human emotions drives a stake into your deals? Keep an arms length distance within your dealings. If you are selling homes or wholesaling property, let the buyer find his own lender and make sure you get an independent title company. Make sure there is not a conflict of interest in the Title Company, Mortgage Company, and real estate company. Keep the integrity in the deal. I am sure there are title companies, real estate companies, and mortgage companies, where there is common ownership that run very good businesses and can separate the conflicts of interests and profit centers. However, to protect yourself, make sure you receive proper disclosure of common ownership. You can always look at the volume of business they are doing in each business and check with the state Licensing Dept. for any complaints against the firm.
For a long time heritage properties suffered from a bum rap. Investors were reluctant to purchase a piece of the past because of the cost of dragging it into the present. Fortunately, in the last few decades, older properties have been rightfully recognized for their beauty and historical value and have become a hot commodity. Yes, there is often work to be done on heritage buildings, but there are also financial incentives for restoring these properties to their former glory. After all, restorations create employment and the finished product is culturally significant, making it a draw for tourism and improving the quality of a neighborhood over all.
In fact, property owners in Maryland can benefit from potential federal, state and local tax credits for improvements and renovations. Maryland is serious about encouraging people to restore historic homes or income-producing buildings. If you don’t live in Maryland don’t worry – the state credits have no residency requirements, making it an equal opportunity investment opportunity. If you have a heritage property outside of Maryland you may still be eligible for the federal program. With all of these incentives, be sure to check the program requirements before starting any work.
Whether you are a home owner or a long-term lease holder of an income producing certified heritage structure, you can apply for a Federal Rehabilitation Tax Credit of up to 20 per cent of a restoration. If your property has not been certified, you can apply to have it certified or take advantage of the 10 percent credit for non-historic, non-residential buildings put in service before 1936. These credits have been used to revitalize buildings that were seriously dilapidated. They can be applied to all kinds of work on the building including, “architectural and engineering fees, site survey fees, legal expenses, development fees, and other construction-related costs”.
In a further effort to encourage folks to restore heritage properties, the Maryland Historical Trust administers the state Heritage Preservation Tax Credit program, which offers Maryland income tax credits for 20 per cent of the qualified capital costs. These credits can be used towards interior and exterior rehabilitation, certain landscaping projects, plumbing and electrical upgrades, architectural fees and more.
In addition, the Maryland Historical Trust offers low-interest rehabilitation loans to people who use the Heritage Preservation Tax Credit Program. This loan can be used to acquire, restore or rehabilitate property making it easier for you to do more with less.
Within Maryland, many counties and municipalities also offer property tax credits and/or a freeze on tax assessments (for up to ten years) to encourage people to rehabilitate historic buildings. Again, these programs apply to homes and income-producing buildings designated as historic buildings.
Although some (but not all) of these incentives require you to maintain ownership of your property for a time in order to enjoy the full tax benefits, you are significantly increasing both the appeal and the value of your home. When it does come time to sell, you will see the fruits of your labor. In the meantime you can enjoy the beauty of your heritage property, knowing that you have helped preserve a piece of history for future generations to enjoy.
When evaluating a home you are considering buying, it is easy to get caught up in the visual aspects of the home. Water pipes are just one unseen area you remember to inspect.
Water Pipes – Drip, Drip, Drip
Alright, I’ll admit right away water pipes are not exactly the most glamorous aspect of a home. In fact, water piping in most homes is more than adequate to keep you in hot showers while you live there and take care of all your water needs. If there is a problem with the interior water pipes, however, you are in for a very costly and disruptive experience.
The main issue with water pipes on the interior of a home is their location. It is easy to forget about them because they are primarily hidden behind the walls of the house. While this is good from a visual perspective, it quickly becomes a negative if a pipe starts leaking or, god forbid, actually bursts inside a wall. Leaks lead to rot and mold problems that can effect the health of you family. A burst pipe leads to flooding, new carpets, rebuilt walls and large bills.
When evaluating the water pipes in a home, keep in mind the following issues.
1. Copper – The best piping material for water pipes is copper. It will last forever and is resistant to hard deposit build ups which can impact the amount of water flowing through the pipes. Copper pipes are also the sign of a quality construction effort as they tend to be more expensive than alternatives.
2. PVC – If you see PVC water pipes anywhere other than on the sprinkler system or from the main street line to the house, red flags should wave before your eyes. The presence of PVC piping is an indication of an owner doing the piping themselves, as most construction companies will not use PVC. In a majority of locations, such use of PVC is outright illegal. Do not buy a home with PVC piping in the walls! Ever!
3. Iron Piping – For a long time, iron piping was pretty much the standard in home construction. There is nothing particularly wrong with using such piping with one exception. Iron piping is susceptible to water and will rust over time. If you find this grey, metal piping in the home, find out when it was put in and check for rust. Iron piping should last roughly 30 years without any major problems. If replacements must be made, go with copper.
The pipes moving water around the interior of a home may seem uninteresting. Your attitude, however, will change if one of them bursts in the middle of the night.
With the British and American economies in quite a strong position many more Americans are considering putting some of their hard earned cash into buying a vacation home overseas and apparently one in three Britons has their sights set on buying a holiday home in the sun.
If you dream of owning a sunny villa in Italy, a cottage in Scotland or maybe a beachside apartment in the Caribbean, here are five essential tips to consider when looking for real estate overseas.
1) Research Your Location
You may already have a favourite destination in mind and be visualising your life lazing by a swimming pool overlooking the Mediterranean Sea…on the other hand you may be interested in shopping around to find the best countries in which to buy a vacation home and make an investment into property.
It’s wise to do a fair amount of research into any new destination and cover everything from foreign ownership of real estate rules, property taxes, the political and economic stability of a destination and also the investment potential a given country offers. With this information in hand it will be easier to make the right decision about which location suits your lifestyle objectives, budget and long term investment plans.
2) Employ Assistance
Finding a realtor able to assist with your search for the perfect vacation home could save you time, effort and even money in the long run – although most realtors take commission from any sales they make of course! But a local agent will understand the dynamics of their property market and be able to quickly and efficiently track down real estate bargains that match your vision for your vacation home overseas.
Be aware that in some countries real estate agents neither have to be licensed nor qualified however and so take a recommendation if at all possible and tread carefully.
3) Manage your Money
If you need to raise a mortgage to pay for your vacation home you may need to re-mortgage your home or raise finance in your home country to fund the purchase because in many countries it is difficult for non-residents to get a mortgage and in some of the emerging property markets around the world there is no possibility to get a mortgage.
When transferring money overseas beware of fluctuating exchange rates that can devalue your lump sum significantly and make the difference between you affording your dream home and affording a poor second best. There are professional companies available who can help those buying property abroad to deal with fluctuating currencies…look into your options.
4) Title Deeds and Legalities
Legal systems vary from country to country as does the land registry system, and in some countries title deed transfers are not registered at all which can make it difficult to prove who owns property. Make yourself aware of the legal rights that you will have as a property owner in a given country and find out about any assurances you can get that you own the freehold title to the vacation home that you have bought.
Never buy real estate overseas without the aid of a good lawyer, check their credentials and ensure that any contracts or agreements you sign are translated into your mother tongue and that you check the wording carefully before you sign!
5) Protect Your Assets
Once you make the transition from house seeker to vacation home owner you will want to keep your real estate assets well looked after. If you are only going to be vacationing in your home overseas occasionally consider having a management company look after your home when you are away.
Ensure a property that is to be left for periods of time is well secured because even in countries where there is very low crime a beautiful home left standing empty can become a temptation.
Get insurance to cover the value of your home and contents and make sure someone regularly checks that your property is in good order, that the weeds are not growing over your veranda and that your swimming pool is clean and ready for when you next take a holiday in the sun.
