Ya sea que compre una casa por primera vez o haya comprado innumerables casas, el proceso de encontrar una casa puede ser una tarea abrumadora. Si se siente abrumado por el proceso de búsqueda, entonces es hora de que alguien esté de su lado para aligerar la carga. Con todo en línea en estos días, es posible que se pregunte si realmente necesita un agente de bienes raíces que lo ayude a comprar una casa. Después de todo, ¿no puedes encontrar la misma información en Google? ¿Y no es más caro usar un agente? La verdad es que un agente de bienes raíces tiene acceso a más información de la que puede encontrar por su cuenta y usar uno no cambia el precio en absoluto. Deshagámonos de esos mitos y hablemos de algunas razones para usar un agente de bienes raíces al comprar una casa. 

1. It’s Free

If you have never bought a home before you might be considering skipping finding a real estate agent in favor of saving money. Doing this is a mistake for a number of reasons but the first is that it will not actually save you any money at all. Generally, the money for paying the realtors comes from the seller. Both the selling and buying agent split the commission at no cost to you as the buyer. Either way you will be paying the same amount for your home. If you bring your own agent then you have a person with your best interest at heart sitting down at the negotiation table. Otherwise you are left to handle it all on your own.

2. They’re on Your Side

Purchasing a home is a major decision that requires a great deal of background research. It would be very easy to fall down the rabbit hole and spend hours and hours looking at homes online. Luckily, you don’t have to do this. It is literally your realtor’s job to be up to date on your local housing market. Bringing in an expert will save you from wasting time trying to search on your own. 

When I say that the realtor is on your side I mean it. Real estate agents are bound by a fiduciary duty. This is a legally mandated obligation wherein they must act in your best interest. If your realtor is a member of the National Association of Realtors they are also bound by that code of ethics which has a foundation in professionalism, serving the client and protecting the public.  If we take away all the legal jargon, what this is really saying is that your agent will respect your confidentiality and negotiate for you when it really counts.

If that is not convincing enough then you should know that having a professional by your side in negotiations makes a significant difference. For instance, it was reported in 2019 that 38% of buyers stated their agent negotiated a lower price for their home. Moreover, 47% of buyers say their agent helped negotiate better sales contract terms. 

3. Access to Everything

Furthermore, real estate agents might have access to information about houses that you or I could not find on our own. You may have heard the acronym MLS thrown around but not really known what it was. MLS stands for multiple listing service. This is a private database of houses that are available in a local area. It is a cooperative database put together by realtors which provides them with updates about the newest houses on the market as soon as they become available 

4. Schedule Showings

Imagine a beautiful house in your price range just popped up on the MLS. You know about it and are already scheduled for a viewing this afternoon because of your agent. It’s almost like having a personal assistant. As long as you clearly communicate your desires with your agent they will work hard to find the right house for you. This means scheduling showings and finding open houses that work with your life. 

5. They Know the Area

Maybe you are looking for a home in a town that you have lived in for years. Maybe you are moving across the country and have no idea what you are getting yourself into. No matter what your familiarity with an area, it always helps to have an extra set of eyes. You might be intimately familiar with a neighborhood but by working with a real estate agent you will probably learn something that you never knew about it. As of 2019, approximately 44% of buyers agree that their realtor improved their knowledge of the neighborhood during their housing hunt. What’s more, it is the realtor’s job to know about the investment potential of your neighborhood.  Your agent can help you steer clear of areas like flood or wildfire zones or areas where the property value is not rising like it should. Your realtor is there to provide as much information as possible for you to make the best decision in buying the right home for you.

6. Voice of Reason

It can be an incredibly emotional experience to purchase a home. For many people this is the largest purchase they will ever make. It is entirely understandable to be swept up in everything and forget to be sound and logical. Afterall, how many of us can look past some horrible wallpaper right away and see the beautiful construction? Or even worse, consider how easily you could be pulled in by some fancy looking remodeling then left with a weird floor plan or poor foundation. Your real estate agent is there to be the objective third party that points these things out to you. They are going to be practical and give you advice about things like when a simple remodel within your budget is the closest fit to your needs and best investment for your money.

7. Home Inspection

Have you ever seen how long a home inspection report is? Let me tell you, they are long and full of words that the average person has no idea how to interpret. Luckily, you have an expert on your side who knows exactly what questions to ask. Your real estate agent will be there to help you navigate the potential issue and determine if there are any serious red flags. I could give you a laundry list of things to look out for like pests, mold, roofing issues, leaks, air conditioning and furnace age and more. But remembering all of that in the moment is a nightmare for a novice. Especially when you consider that 52% of home buyers spend less than 2 hours in a home before they make an offer. Once your realtor has explained the severity of any issues to you in layman’s terms they can then proceed to negotiate any repairs or concessions on closing costs that could be appropriate. 

8. Paperwork

Speaking of negotiations, another benefit of using a real estate agent when buying a home is that they handle the paperwork. Paperwork of any kind can be difficult but housing contracts can be especially painful. The documents can be long and full of jargon  consequently, leaving them difficult to understand. That is why having an expert there to catch any oversights can be a godsend. I know I would not be able to stop kicking myself if I missed a costly repair credit or home warranty coverage in my contracts. With all the legal and financial contracts it provides great peace of mind to know that there is someone there to help you avoid delays and costly mistakes.

9. Keep Things Moving

How long do you think it takes to buy a home? Interestingly, it takes on average 4 and a half months of looking before you find the right home. After that it can take another month to a month and a half once you are under contract.That is almost six months on average of navigating the housing market. Of course this timeline is affected by a myriad of factors like time of year, financing, the housing market itself and so on. Yet, it is in a realtor’s best interest to keep you from getting stuck in any part of the home buying process. Having a talented agent can speed up the home buying process at crucial moments. 

10. Have Resources

Finally, real estate agents have access to resources that are necessary for the home buying process. Weird things come up all the time and having a real estate agent on your team can help you to sidestep any costly or time consuming anomalies simply by virtue of their job. 

Final Thoughts

At this point it would be silly not to use a real estate agent when buying a home. Who would not want a free expert to help them navigate the housing market? Using a talented agent can save you time and money on an already time consuming and expensive project. Not to mention, they will go to bat for you in all negotiations getting you the best possible deal. As long as you are using an agent that you trust you really can’t go wrong in using a realtor to buy a home. 

Invertir en propiedades puede ser un gran paso hacia la seguridad y la libertad financiera. La mayoría de la gente le dirá que invertir en propiedades es una opción inteligente a largo plazo. Hoy examinaremos algunos de los principales beneficios y desventajas de invertir en propiedades y veremos si es una buena elección para usted. También echaremos un vistazo a algunos de los tipos de inversión inmobiliaria.

1. Is Investing In Property Right for Me? 

As you probably know, owning real estate is one of the best investments for your money. Investing in real estate comes with many benefits including, the potential for passive income, tax advantages, building your portfolio, and creating equity. However, there are also drawbacks to investing in property such as the initial investment, the time and money required to maintain the property, and the liquidity of the asset. So how do you know if investing in property is the right move for you right now?

Asking the right questions

Financially Ready?

Truthfully, it all comes down to where you are in your life. The first question to ask yourself is if you are financially ready to make a down payment on an investment property. Real estate investment is a great way to make passive income and the property value will only rise over time. However, it does come at the cost of a large initial down payment. Interestingly, this downpayment is larger than if you were purchasing a home for yourself. But don’t worry we will talk about that in another article when we cover getting started. 

Investing More Than Money

Next, do you have the time and energy to spend fixing or maintaining the property? Property ownership is a serious investment not just financially but also with your time. For instance, if you were looking to flip a house it might require large chunks of your time to fix any issues and get it ready for the market. However, if you want to keep the property as a rental you will have a long term commitment to the property and the tenants who live there. This means being on call for any issue with the property like if a pipe were to burst. Of course you could always hire a property manager but that comes with its own set of advantages and drawbacks. 

Prior to investing in property it is important that you seriously consider all the benefits and drawbacks to see if it is the right choice for you. Investing in property requires a large commitment but can be well-worth it if you are prepared for the responsibility. If you do decide that property investment is the right choice then the next step is to decide how you want to do it. Let’s take a look at two of the ways that you can earn income from property investment. 

2. What Type of Property Should I Invest In?

When people think about investing in property there are generally two ways in which they envision making income: renting the property or flipping it. If you are new to the property investment world you might have questions about what is included in both of these types of investments. Here we will cover some of the basics.

Rental Income

When you purchase a property with the intention of earning rental income that means that you will be renting the property out to tenants. This is one of the most common ways of  earning passive income from your investment. This is a great long term strategy because your property will increase (appreciate) in value over time which will both add to your net worth and increase your cash flow from rental income. 

The Risks

There are some inherent risks in purchasing a property with the intent to rent it out. First and foremost, there is the possibility that you might not rent your property out right away. It is recommended by experts to have a financial cushion just in case this happens. Next, there are the potential issues that could arise from renting the property out. As a landlord you are responsible for maintaining the property. This means you need to have a wide variety of skills in case anything should go wrong. Additionally, you need to have enough knowledge of tenant laws in your region to make sure that you are able to handle any situation that pops up.

How to Be Successful

The best defense is a good offense. Anything can go wrong in property investment but taking the time to do things right at the start can help you to avoid some of the risks we mentioned above. 

Location Location Location

One way to make sure that your property never stays vacant for long is to invest in a good location. A few of the key aspects that you should be looking for are a good school district, low crime rates, access to public transit, and plenty of amenities like parks and malls. It also helps to invest in a place with a growing job market. This will allow for a greater amount of interest from those looking to rent. Finally, a location with low property taxes might not help rent out your property sooner, but it will help to make your property more profitable. A great real estate agent can help with this part.

Plan Ahead

It is important that you have clear expectations for the income that you will make from your property and plan accordingly. For instance, the average return might be 10% for a property that someone has owned and maintained for a while. However, in the first year there might be start-up costs which need to be considered. Interestingly, a 6% return in the first year is considered healthy and is expected to increase over time. Furthermore it is recommended that you budget approximately 1% of your return of the property value for maintenance. You might also want to consider additional hidden costs, such as property taxes, and homeowners’ association fees.  

Flipping a House

Another common practice for property investment is called flipping a house (also known as wholesale real estate investing). This is when you purchase a property, make any necessary updates and improvements then quickly sell the property. Just like purchasing a property for rental income, when you purchase with the intention to flip a house there are some details that you need to consider.

Common Errors

Just like any other business venture, investing in a property to flip requires knowledge, and planning in order to be successful. One of the common traps that first time investors fall into is underestimating. First time property investors will often underestimate the time or money required for a project. This can lead to at least frustration if not worse consequences for the investor. 

Moreover, a novice investor might underestimate the skills and knowledge required to complete a job. Is it better to get the job done by hiring a professional or to try to do it yourself? Simple tasks like cleaning or door knob handle replacement are fairly easy and require less skill and labor than refinishing a floor or repairing a wall. It is important to have an understanding of the limits to your skill base. This will save you a lot of time and frustration in the long run. Overall, patience and good judgement are two crucial aspects to flipping houses. 

3. Is Financing The Property Realistic and Profitable?

Getting A Loan

Getting a mortgage is probably the first thing you thought about when you heard “property financing.” Whether a mortgage makes sense for an investment property mostly comes down to costs and profitability. Is the interest rate low enough so you can make a profit off your property or is the interest rate going to eat up all of your margins? Typically a loan on a property that is not owner occupied is going to be at a higher interest rate. And then what do you do if you aren’t able to qualify for a loan? 

Another avenue to explore is private money lenders. Usually a private money lender will charge a higher rate and the loan will be for a shorter period of time. This may be ideal for a property that you are going to fix and flip. It is something you should carefully consider in your costs. How long are you expecting to have a loan on the property? What will the cost of the financing be? What happens if your project goes for a longer period of time than expected? 

Paying With Cash

Of course, if you have the cash sitting around in your bank, you may want to consider using it for your investment property; however, most of us don’t necessarily have that amount of cash just lying around. You will want to consider the purchase price, closing costs, and set your budget for renovations.  You also want to consider the opportunity cost of paying with cash. The main benefit is that you won’t pay interest on a loan, but you may be missing out on other investment opportunities. You may want to consider buying multiple properties and use your cash on hand for multiple down payments on several properties. This way you leverage the cash you have.  On the other hand, paying with cash might be better if you want a short term investment where you fix and flip.

Paying for Renovations

  It might take some creativity in figuring out how you are going to pay for your renovation. Don’t be afraid to explore all of the options available to you. If you figure your project is going to be complete quickly you may consider putting some of the expenses on a credit card, planning that you will pay off the debt as soon as you sell the property. Look for a lender that is willing to give you added cash for improvements. It may take some time to look at all the options, but it will be well worth it. 

Key Takeaways

Investing in property is a great way to make passive income, increase your net worth, and diversify your portfolio. All you need to do is make sure you are ready for the responsibility and commitment. Do lots of research and come in with a plan on exactly what you are looking to accomplish. Be sure to set realistic goals for those accomplishments. Use your resources (like a great real estate agent) to make sure you are investing in the best possible property. Finally, have patience. Property investment is something that pays off in the long term so relax and enjoy the ride. Check out this article about reasons to invest in real estate if you are curious about learning more.