• #Real Estate 101 – Investment in Real Estate

    A landlord who owns 10 properties says there are 2 types of people who should invest in real estate

    Liz Knueven  

    Becky nova
    Becky Nova, a real estate investor and landlord. 

    Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

    People tend to think that real estate investing is passive. But that couldn’t be further from the truth, according to landlord Becky Nova.

    In her experience, being a landlord is best suited for certain types of people. “I think it’s important for people to always invest in things that they understand. If you are going to invest in real estate, you need to know your numbers, and you need to understand people,” says Nova, a real estate investor who owns 10 properties.

    Based on her experience, Nova says there are two types of people who should invest in real estate.

    People who want to own tangible investments

    Compared to stock market investing, investing in real estate is much more tangible. Sometimes, it even involves hands-on work in a way stock investing never could. Nova says that this could be a big plus for anyone who’s motivated by the idea of more tangible investments. 

    For her, investing is better when she can see what she’s investing in. “I can see when I get paid on a monthly basis as a landlord. Those numbers are much more tangible than money sitting in an investment account that I can’t look at for another 25 years,” she says. https://www.myfinance.com/r/4fdd3a65-b66e-48dd-a799-11f867bc6b20?utm_campaign=bi-refi-multi&utm_medium=embed&selector=%23piano-inline-content-wrapper+%3E+div%3Anth-of-type%281%29+%3E+div&placement=74e7b5bb24&mf_referrer=https%3A%2F%2Fwww.businessinsider.com%2Fpersonal-finance%2Fpeople-who-should-invest-real-estate-2020-11&_mfuuid_=ae39f246-fa8a-44fd-b961-6327d92d07c3

    People who are good with customer service and research

    In some ways, being a landlord is more akin to working in customer service than it is to being an investor. 

    “It is a people management position when you’re dealing with tenants,” she says. Dealing with tenants and clients at all hours of the day is routine for landlords. 

    And it requires a lot of organization and research. “You have to be educated, and you have to understand the legalities involved,” she says. Many cities have laws in place to protect tenants, and as a landlord, it’s your responsibility to know them.

    In her experience helping other landlords, she finds that a lot of successes and failures come down to the amount of research and forward planning done.

    “One question that I get all the time is, ‘There’s a problem with this tenant and I don’t know what to do.’ Usually, the answer should be addressed in your lease, but I feel like a lot of people skip those steps,” she says.”They don’t have a process put in place, which makes it very confusing and very stressful for both the landlord and the renters.”

    Knowing the laws and how to work with people are both critical qualities for anyone who wants to invest in real estate. 

    “You have to understand the ins and outs,” she says. MORE PERSONAL FINANCE COVERAGEWhy open a high-yield savings now when interest rates are downWho has the best CD rates right now?The best rewards credit cards7 reasons you may need life insurance, even if you think you don’tWho has the best online high-yield savings accounts right now?

    Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

  • 6 Simple Steps to Assess the Real Cost of a Fixer-Upper House

    Large red brick home with American flag and green grass

    6 Simple Steps to Assess the Real Cost of a Fixer-Upper House

    This will help you figure out how much to offer for a fixer-upper.

    Image: Susan Law Cain/Shutterstock

    Trying to decide whether to buy a fixer-upper house?

    Follow these seven steps, and you’ll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.

    #1 Decide What You Can DIY

    TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house.

    Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.

    Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

    #2 Price the Cost of Renovations Before You Make an Offer

    Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.

    If you’re doing the work yourself, price the supplies.

    Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

    #3 Check Permit Costs

    Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home.

    Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.

    Factor the time and aggravation of permits into your plans.

    #4 Double-Check Pricing on Structural Work

    If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems.

    Get written estimates for repairs before you commit to buying a home with structural issues.

    Don’t purchase a home that needs major structural work unless:

    • You’re getting it at a steep discount
    • You’re sure you’ve uncovered the extent of the problem
    • You know the problem can be fixed
    • You have a binding written estimate for the repairs

    #5 Check the Cost of Financing

    Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

    If you’re planning to fund the repairs with a home equity or home improvement loan, get yourself pre-approved for both loans before you make an offer.

    Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.

    Consider the Federal Housing Administration’s Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation.

    The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans.

    A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It’s a simpler process than obtaining the standard 203(k).

    #6 Calculate Your Fair Purchase Offer

    Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

    For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

    Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

    The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

    Ask your real estate agent if it’s a good idea to share your cost estimates with the sellers, to prove your offer is fair.

    #7 Include Inspection Contingencies

    Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

    • Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.
    • Radon, mold, lead-based paint
    • Septic and well
    • Pest

    Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.

    If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

    Related:

  • 5 Back-to-School Tips When Moving into a New Neighborhood

    5 Back-to-School Tips When Moving into a New Neighborhood

    Selling a house, buying a new home, getting a new job, adjusting to a new place-moving is hard! It’s even harder moving as a family with small children during back-to-school season. With a new school year gearing up, RE/MAX has five tips to make the transition of moving to a new place and meeting new people a bit easier on your little ones.

    1. Know your neighborhood

    Before the first day of school, walk around the neighborhood as a family to meet the neighbors. Finding nearby families that also have kids will prove to be helpful on the first day of classes – a child starting school will be a lot less scared if they recognize a familiar face or two!

    1. Do your research

    Visiting the new school together before the first day will bring comfort to both children and parents. Knowing where the entrances, lockers or cubbies, classrooms and lunchroom are located will help a child start at a new school with confidence. It can help mom and dad too, easing your mind about your kids getting lost or embarrassed.

    1. Keep in contact

    One of the toughest parts about moving is the fear that kids have of losing their friends. Parents should promote a merging of two worlds: old and new. After the first day of school, encourage your kids to video call their old friends. Sharing stories helps them talk about their new experiences and gives them something to look forward to after a long day of firsts.

    1. Get involved

    Adjustment doesn’t happen all in one day. The first few weeks will likely be tough for a new kid. As parents, getting involved at your child’s new school will help both of you. You can familiarize yourself with the community and put your best foot forward. As for your child, catching sight of a familiar face at school in the first few weeks is comforting, even if that face belongs to mom or dad.

    1. Find an ally

    Summer is the peak moving season and the chances of you being the only family newly enrolled at school are slim. Take advantage of this commonality – seek out other new families and make new friends. You can use one another for advice (and some complaining) as everyone gets settled into their new community.

    Finding the perfect RE/MAX agent can make sure you find the perfect home in the right neighborhood for your family. Find one to work with on remax.com.

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