DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE – REAL ESTATE FEED BY DEAN GRAZIOSI

Shopping for an Ideal Location

When looking for a new home, it’s essential to decide on certain priorities for the new house. These priorities do not only include the house itself, but also the neighborhood, the community, various nearby amenities, schools and shopping locations in the area. In addition, you’ll want to bear in mind any other features that can make you love or hate the home you purchase.

One way to positively narrow down your search is only looking at homes in the kind of good neighborhood where you would want to live.  Although a home can be remodeled to your liking, the neighborhood around you can’t be so easily transformed. When looking at purchasing a particular home, keep the surrounding areas in mind.

What is the crime rate in the area? What are the schools like and how do they rank on a state or national level? Is there a grocery store, mall, gym facilities or any other business you’d like located nearby? How close is the house from your job or other places you frequent? It is located on a busy street? Consider whether you’d mind being caught in traffic as soon as you get out of your driveway or would prefer a quieter area. It’s a good idea to find a neighborhood that meets your criteria before you invest your time and interest in an inconveniently located home.

Once you’ve found a home in a safe, convenient and peaceful area, it’s wise to decide on your priorities for the house itself. Would you prefer an older home, or would you like to buy a new house? Keep in mind, older homes may be majestic and less expensive to purchase, but may cost more to heat, repair and maintain. A new home may initially cost more, but you should be able to save in the winter with well-insulated walls and windows that don’t let in cold air.

If your family is growing, try to find a home large enough for your eventual needs. Are your kids growing up and leaving for college or a career? While a five-bedroom would be perfect for a family of six, empty nesters may feel the need to downsize from a large home. How much space does the new home allow? Do you require a lot of storage? How important is parking, noise level and privacy to you? These are all important factors when deciding on priorities in a new home.

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That may seem to be an understatement but in today’s economic hard times, and until the economy gets back on track, it has never been truer. It is a buyer’s market like no other ever before, but it is still possible to sell a home.

Know Your Market

In the past, you may have been able to accurately gauge your home’s value as it increased or decreased.  However, today’s real estate industry has shown a marked decline that makes it very difficult to have a firm grip of a home’s value, based on preconceived earlier notions.

Not All Locations Are Equal

Location, location, location has always been the real estate chant and it is still true. Even more so, it is now true in the respect that declines in real estate value are not equal. In fact, what once was prized property for one reason is now in faster decline for the same reasons—rural areas that were once the getaway from the rat race and prized in the past are now in sharper decline than more urban plots because of the gas guzzling commutes as well as inconvenience to stores.

Not All Doom and Gloom

Even though it is true that real estate is a suffering market and some areas are especially difficult selling areas, there is a ray of light. If you owe less than what the current value of your home is in its ‘depressed’ state, selling is much easier because you can afford to accept less for a sales price than if you were maxed or upside down in your mortgage. As in the past, real estate is still one of the most valuable possessions for one simple reason—everybody needs someplace to live. The American dream is still alive as well, and people still yearn for their own home.

Get Accurate Appraisals

Don’t guess at the value of your home. It isn’t reasonable to go only by the selling price of homes in your area if they were sold more than six months prior to yours either. Seek reliable advice from an experienced home appraiser to know what the true value of your home is now and price it accordingly.

A well priced home will still sell. It may take a few months longer than it would have in any past era of history, but if the price is right, the buyers will come.

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First-time homebuyers have a severe disadvantage in the loan market. With the recent credit crisis and the resultant problems it has caused with financial institutions, even more potential borrowers have been denied loans. Lenders have developed more stringent lending policies in an effort to decrease their potential risk. However, limited credit and small down payments don’t have to prevent you from purchasing a home.

A first homeowner’s loan is one that specifically targets people who have never owned homes before. Namely, someone who has not just sold a home will likely not have the 20% down payment required for many loans. First-time homeowner’s loans often require little or no down payment, though many require that the property not be used for investment purposes. They may also require that the buyer pay into an Escrow account to cover insurance and other expenses. Additionally, institutions that offer these loans often also offer grant-finding services that will further ease the financial burden of purchasing a house. These grants are used to help pay for closing costs, down payments and improvements that the lender may require.

Loans intended for first-time homeowners take into account that the people applying for loans may have little or no established credit. Young buyers who have not had credit cards and may or may not have had vehicle loans run into many borrowing difficulties related to the lack of credit. First-time homebuyers should look for a good, fixed-rate mortgage if possible; variable-rate mortgages can cause severe financial difficulties in the long-term as interest rates fluctuate.

The dream of owning a home is not reserved for upper-class individuals who can afford all of the related expenses out-of-pocket, and first-time homeowner’s loans are an excellent route if you have limited available finances. Many states have government programs for “community development” that specialize in finding loans for higher-risk borrowers.

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In today’s real estate market, there are good deals around every corner.  However, there is a very fine line between a good deal and a bad one.  You can avoid the pitfalls of a poor real estate deal by doing your homework ahead of time.  You should always be proactive, and by knowing what to look for when you are scouting potential properties, you put yourself in a position to make much smarter decisions. 

There are four key areas of all homes that you should pay particular attention to when shopping for real estate.  Neglecting to get the true condition of any of these areas could cost you a fortune, literally.  Real estate professionals such as Dean Graziosi understand the importance of sound investments, and they no when to say no.  Just because a property is cheap, doesn’t mean you should buy it, especially if you have not gotten a thorough inspection. 

The Foundation

A home with a poor foundation is usually a bad deal.  While some foundations can be fixed easier than others if the problem is caught early enough, the associated costs are usually substantial.  Some signs that point to a poor foundation include trees in close proximity to the home (there should never be plants or trees within 12 inches of the home), large cracks in the walls and problems with doors and windows.  Keep in mind that it is common to see cracks in the walls of older homes and it does not necessarily mean there is a foundation problem.  In any case, it is best to get it inspected if you are truly interested in the property. 

Plumbing

Plumbing is often an overlooked area because the problems tend to be well hidden.  If you are seriously considering purchasing a property, make certain that sinks, dishwashers, toilets and all other plumbing fixtures are properly inspected.  Minor cracks can lead to big problems under sinks and toilets.  Concealed mold can cause serious health problems to occupants of the home as well. 

Electrical

When you are browsing a home, what may not be apparent are electrical problems.  Electrical problems are common in older homes, but have even been spotted in newly built homes so don’t assume you are safe because you are purchasing a two or three year old home.  Some signs that the electrical system may be outdated or in need of repair include an old fuse panel and lack of electrical outlets. 

Attic Space

If the home you are considering purchasing has an attic, make certain you pay close attention to it.  The attic can tell a lot about a home, and both its past and present condition.  Rotting wood is a sign that there is a leak somewhere in the roof.  Likewise, if you see new insulation in a very old home, find out why it was replaced.

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A mortgage is the exchange of property or another form of real estate to a lender for security of a debt, usually a loan for a borrower and most often referring to home or commercial loans. The mortgage itself is not a debt, more like an agreement for an exchange of funds between the lender and borrower for the purchase of the aforementioned real estate; the mortgage acts as a security for the loan to help protect the lender in the event that the borrower cannot repay their loan in accordance with the agreed-upon terms.

A mortgage is the standard method for businesses and individuals to purchase real estate, both commercial and residential, without paying the full amount immediately. The costs accrued to the borrower vary and can be measured by the Annual Percentage Rate (APR) — or the amount of interest that will be charged to the borrower per year — as well as any loan origination and document fees and/or appraisal services. Since very few individuals have enough savings or resources to buy real estate outright, it is quite normal for most homes to be purchased using a mortgage.

The mortgage is set up between two main parties — the mortgage lender (or mortgagee) and the borrower. Since the main function of the mortgage is to provide financial security for the lender, the mortgage will provide a claim that will guarantee precedence over all other creditors. The lender also maintains the title or deed for the real estate and has the ability to repossess or foreclose in the event that the borrower is not able to pay, meaning the property will default to the mortgage holder.

The borrower, legally known as the mortgagor, is required to meet the conditions of the loan in order to prevent a foreclosure of the mortgage by the mortgagee. Providing all the requirements are met and the loan is paid back to the lender in full, the borrower becomes a home-owner. Real estate is almost always purchased with borrowed funds because of the large financial impact these kinds of major purchases can have. While a property is mortgaged it is almost always required to have the appropriate insurance to help protect the mortgage.

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Foreclosures, falling home prices and extremely low interest rates may make purchasing a home in 2009 particularly appealing.  While it is true that it is definitely a buyers market, and there are deals in every neighborhood, there are also numerous dangers associated with real estate investing in a slow economy.

Perhaps the most important thing to keep in mind if you are thinking of purchasing real estate this year is that now is not the time to attempt quick real estate flips.  While it can be done, unless you are a professional investor with years of experience, you could find yourself in a big mess very quickly.  If you are going to invest in real estate to make money this year, it may be wiser to invest in rental properties.  Buyers should plan on holding onto their property for a number of years.  It is the safest way to invest in real estate in a down market. 

Secondly, it is imperative that you don’t just buy a property because it is cheap.  There are millions of cheap homes all over the country, however, only a portion of them are good buys.  You should treat foreclosures like any other real estate transaction.  Research the neighborhood, the current market value of the homes in the area, and definitely the home itself.   Many people make the mistake of purchasing a foreclosure blindly, in other words, without seeing it in person.  Unfortunately, thousands of homeowners find that once they purchase a distressed or foreclosed property, they will have to put thousands of dollars into repairs to make it habitable.  Some buyers even find that they are financially sunk. 

Before you jump into any real estate transaction, make sure you understand your local market.  You can protect your investment by doing your research ahead of time.  Believe it or not, there are many areas of the country that have rising home prices.  The housing outlook as a whole may be grim, but your local market may be doing well so find out the facts. 

Lastly, don’t stretch yourself too thin financially.  The economy is not expected to turn around in 2009, so if you are going to purchase real estate, make sure you can afford it now, while times are tough.  After all, times may actually get tougher before it gets better. 

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Investors cannot approach their rehab properties the same way they could a few years back.  Times have changed, at least in the short-term, and in order to thrive in 2009 you will have to be smart and play your cards right. In other words, forget the luxuries and fix the basics as cheaply as possible.  In today’s real estate market, putting tens of thousands of dollars into renovations will not get you thousands more in your asking price. 

In a market where foreclosures and distressed properties are at an all-time high, investors need to realize that they are competing with very low cost properties.  There are more buyers looking for a great deal than there are buyers looking for luxury homes.  Homes are selling for much less than just a few years ago, so investing a ton of money into a property will not get you a better asking price, at least not this year, or the next.  Granite countertops and stainless steel appliances used to guarantee a great sale.  Unfortunately, those times have changed.  Consumers are overwhelmed with debt and consumer confidence is extremely low.  Buyers are looking for the lowest price, period. 

If you have purchased a rehab property and want to sell it quickly, the key is to improve wisely.  You can give the kitchen a makeover with a new faucet, by staining or painting cabinetry and by changing the cabinet hardware.  A new tile floor can be installed rather cheaply if you don’t overindulge.  When it comes to kitchens, you may want to stay away from properties that need a complete renovation.  But if you must make improvements or start from scratch, just stay away from marble, granite and other luxury materials.  That is of course, unless you get them dirt cheap or free. 

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On October 2^nd of 2008 the Senate approved the largest bailout ever in the history of the world. With more than 25% of lenders in jeopardy the government stepped in to “save” the financial industry and home-buying markets.  On December 1^st, 2008, the foreclosure rates hit an all-time high and many homeowners were already too far behind on their payments to stop proceedings. 

The question on everyone’s mind is, “Where did all the bailout money go?”. Out of all the banks and lenders receiving aid from the bailout package, only 5% are passing the money on to the consumers directly. With the amount of money the government has injected into the big banks we could easily pay the next 4 months of delinquent home loans and allow the people to loosen their spending to stimulate the economy.

The Bush administration would be hard-pressed to find anyone not affected by the current home-buying market. With so many people losing their homes and having to regress to renting, the demand for rental properties has increased. Renters have noticed the change too. For example, in San Diego county, California, the average cost of renting a two-bedroom apartment has increased over $200 per month since the bailout was approved.  People who previously thought they wouldn’t have to pay for the home-buying market crash are now having to foot the bill with the people who could not keep up with their home loan payments.

With the 2008 holiday buying season over and no end in sight we must ask ourselves a few questions. Have we seen any ease of the foreclosure rates?  Has home-buying taken a turn for the better? Will the banks ever pass down the bailout to the consumers in any way? Would it have been better to let the market crash completely? How can we finally restore confidence in the banks and government that have been throwing our money at the problem to no avail?

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At some point in our life we need to stop…take stock… and really think about what we are doing with our financial future.  Where will you be? Still working 9 to 5, and figuring out your next step, or making wise investments that make you stand out among the rest? If you are smart and start thinking about your future, you will probably come across the Real Estate Investing option.  Now, this is actually a great way to put together your financial future, relatively quickly. In fact, the process you undertake, when you buy and sell houses, can be one of the quickest ways to earn a great deal of money, but its not a process where you are going to become a millionaire overnight.

Real estate investing takes time, it just takes a few years for a property to appreciate in value. Now, that is not to say that you cannot buy property and turn around and sell it quickly and make a profit, but that is not always the case.

Today home prices are on a downward turn and will continue to fall throughout the next year (no real news here). But with the total downward turn in world economy is there any surprise to this news? In 2009 more people will be selling their home and at lower prices. Now, you can look at this news as being bad, or you can look at the positive side of things.  When you go shopping, you always look for that great “sale,” on anything you are looking for, so when do you think that “sale” will be in the real estate market? Now is the “sale!” The time to buy real estate is now, but not to make a quick turnover.

If you are looking for real estate and want to resell it within the next year, then now is probably not the best time to buy…but if you are looking for real estate at a stupendous price, and are willing to hang onto it for say..3 to 5 years,  or longer, then this is the time to do it, just as the big real estate investors like Dean Graziosi are doing.

Even with the downward trend in the market, and the falling prices which will continue through the following year, there are also a lot of changes in the real estate world which can be very interesting in the future.  The internet will become even more important than it already is in its role. Websites will make it easier to find homes and even complete a real estate transaction.  This means there will be less of a need for real estate brokers, and an elimination of their commissions.

In the end it is expected that 2008 will have been the worst year ever for real estate sales, and that prices will continue to drop during the coming year. 2009 will be slow, but is expected to slowly pick up toward the end of the year, which makes it a perfect time to invest.

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Christopher Reeves once said, “Once you choose hope anything is possible.” We can all testify that he lived  by this saying, as we all should, no matter what we choose to do, but especially if we aim higher than most. For instance, if you ask the average person about the current financial situation, or about buying or selling a house in the current real estate market, he will oooh and ahhh, and go on and on about how times are so difficult, and how there is nothing that can be done, and all you will hear is more and more negative speel coming out of his mouth. No matter where you go, you will find people like this. You know these are the boring ones, the people who have gone nowhere and done nothing in their life

But if you ask Dean Graziosi, or any upbeat, optimistic, happy and hopeful person in the real estate industry about how to buy or sell a house, he will tell you that, yes.. the real estate market is in a slump, but there are all kinds of possibilities within this slump.

According to the news and statistics the housing downturn is not over. In  75 of a hundred of the largest cities in the US, prices are thought to continue to fall during the next year. If you want to buy or sell houses in these cities, you will more often than not be told not to do it, but if you are learning from Dean Graziosi, this means you have a great opportunity here. You have the chance to invest a smaller amount in a home, and expect a much larger return on your investment within the next five to ten years.

In fact, you could even choose to purchase homes in cities that will see a quicker upward turn than any other place in the nation, that way you would make a quicker profit, than if you invested in homes in areas with a slower economy. You don’t always have to invest in homes that are in the same city in which you live.

For instance, if you invested in a home in Mcallen, Texas, you would probably pay a median home price of about $100,000 for real estate. You can expect a 2.5% increase in your investment within the next two years and about a 25% increase in value within the next 5 years. That’s a whole lot more than what you would make saving your money with banks.

If you decided to look in Rochester, New York, you would find a median home price of about $121,000, with an increase in price of about 3.4% in a couple of years and a 20% increase within the next five years.

Another great city Dean Graziosi would consider investing in is Birmingham Alabama, where home prices are at about  $156,000 and a projected increase of about 3% in the next three years, with a projected 30% increase in the next five years.

As you can see there are still great real estate investments to be made, just not in what we knew a few years ago as the top cities to invest in (maybe these are changing).  The real estate market is a real buyers market now, but it’s a purchase you want to make and keep for about five years in order to make a profit. In some cases, you can flip and make a profit, but you are better off hanging on to these investments for a while, renting them, or even mortgaging them yourself to make your profit.

Whatever you do and however you decide to make your real estate investments, there is no doubt, that money is to be made in the real estate market, no matter what the world economy looks like. People still need places to live, still need financing, and still buy homes.

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