How To Tips:
How To Sell Your New Purchased Property
How To Sell Your New Purchase
When investing in real estate there are numerous strategies available to maximize your equity depending on your short and long-term goals. Designing your exit strategy is as important as the purchase itself. Here are some strategies , with the up and down sides of each, that can increase your R.O.I when put into effect.
Buy And Cash Out
Buying to cash out is the simplest and most easily understood form of real estate investment. There are, however, strategies of increasing your return, as illustrated below.
Begin advertising and showing the property the day the contract is ratified.
Strategize the fashions in which you present your offer to the buyer regarding closing costs and mortgage amount.
Understand Hart, Ameridream and other no money down foundations.
Determine your break even point and build in it your profit.
Buy And Rent Option
The difference between rent options and conventional rentals is that with rent options the contract will be contingent upon a sales contract which is conversely contingent upon the rental contract. The sales contract has the purchase price and closing date preset to allow the tenant enough time to repair their credit and or save enough money to get themselves mortgagable.
The four items that differentiate a rent option from a non-rent option are:
A predetermined price with four percent (4%) appreciation per year built in
A non-refundable deposit of as much as you feel secures your investment.
Five percent (5%) of the sales price is a starting figure.
A rental contract and a sales contract are endorsed simultaneously.
The transfer of real estate can be accomplished several different ways. Renting out the property with the option to purchase is a strategy that, of course, allows the owner to maintain ownership of the asset while creating a cash flow simultaneously. The average property owner that rents the property out with the option to purchase realizes a 20% higher return than a conventional rental situation.
Additional reasons why Rent Options can be advantageous:
The Tenant's perception is one of ownership, which translates into taking greater care of the property.
The Tenant is willing to pay more for the right to feel that they have a greater sense of ownership.
The Tenant is willing to put a larger than average deposit down which is generally 5% or greater depending on the credit of the Tenant.
The Tenant is more likely to stay for over three (3 ) years due to the fact that there is perceived ownership.
If the Tenant reneges on the contract there is no need for you to absorb the expense of foreclosing on your tenant.
Determine your monthly break even and build your profit in ahead of time.
Reasons Rent Options can be a disadvantage
The maintenance of the property remains solely the responsibility of the owner until purchase is made.
Tenants can be over extended when attempting to pay both the rental payments and the option payments. +
LIC To Sell
LIC is the common abbreviation for a Land Installment Contract. A Land Installment contract, otherwise referred to as a Land Trust, is a method of transferring property from one party to another without creating a new mortgage. This tool allows an investor to transfer the ownership of a property to a buyer without that buyer being credit worthy of a mortgage. This opens the same doors, as does a Rent Option with one small difference, the seller is required to perform a foreclosure in the place of an eviction. The foreclosure process can cost between $5,000.00 and $10,000.00 while an eviction should cost little more than $500.00.
Reasons why LIC can be advantageous.
For the buyer it is more difficult to be evicted.
In some circumstances the buyer is willing to pay a greater amount in order to initiate the transaction over a rent option.
LIC To Rent
It is possible and has been done for many years. Land install the property from the seller and rent option the property to the buyer. Educational material has been available for years in this regard.
It is a fairly simple process that requires that you read every "For Sale By Owner" also called "Fisbo" newspaper or periodical and call the seller directly. Once contact is made ask the following questions.
Do you need to cash out?
Are you willing to hold a mortgage?
How much are you willing to hold? 100%, 95%?
If the answer to the first question is "yes" then go further. If not get off the phone quickly and call the next Fisbo. What you just read is what most Television Real Estate courses teach. That is it.
LIC To LIC
The mistake many investors make is not understanding the options they have available. One of our favorite ways of making money in real estate is to buy and keep the property.
A final word on LIC's
We are fully convinced that rent optioning the property is far more advantageous than Land Installment Contracts for the seller. Land Installments offer the buyer more control over the property than is required, giving them a sense of ownership and responsibility.
