The Jobless Recovery is Complete

News Source: http://www.applymortgageonline.ca

 It has been several years of watching millions of people chase the few jobs out there but that is changing in a hurry and permanently. Early November numbers indicate that 321,000 jobs were added to the U.S. economy. Revisions for September and October show that 44,000 more jobs than had been estimated were actually added. 2014 is turning out to be the biggest employment growth year since 1999. Unemployment Will Remain Low Within the next couple of years, the concern will shift from unemployment to labor shortages. Baby boomers continue retiring at an unprecedented rate. More than a quarter million Americans turn 65 every month. Many remained in the workforce during the recession because they saw their Wall Street invested retirement accounts shrink. Wall Street has recovered and these seniors are now feeling more confident about leaving the workforce. Only about 17% of baby boomers have retired to date, meaning a lot of jobs will become available in the near term future. The peak hiring of the millennial generation has passed meaning fewer people will be entering the workforce. As soon as next year, those born between 1981 and the early 2000s will become the majority of the workforce. They will soon be earning more money and have increased purchasing power across the entire economic spectrum, including homes. What This Means for Real Estate The shrinking workforce and millennials becoming dominate in the economy creates two significant changes in the residential real estate market. First, wages for these first time homebuyers are going up. Although the millennial generation has shown a preference for inner city apartment renting, this should change as their wages increase and they become more family orientated. In the early 2020s, many more first time buyers are expected to enter the market. However, not in the numbers that baby boomers once bought at. In addition, as baby boomer age, many will move out of the family home and into some type of senior housing. This will create an abundant market of existing houses. The second major change coming is that interest rates are going to start going up. The Federal Reserve has been artificially holding interest rates down to stimulate the economy. With unemployment down and wages heading up this artificial stimulation is about to end. Most experts now expect the Federal Reserve to raise interest rates beginning the summer of 2015. Exactly how this will affect real estate isn’t completely clear. While the raising income of millenials will absorb some of this increase in interest rates the increase will certainly lock some of the younger generation out of the marketplace. The banks have also been easing access to mortgages lately. If this continues, it’s likely to add more fuel to the real estate market. 2015 very likely will be a year of strong growth. The Real Estate Future With optimism comes a tendency for many to over react. A building and investing cycle is on the horizon. If investors and builders are overly optimistic, this could lead to another cycle of boom and bust. Real estate is always a market of supply and demand. Hopefully, we’ve learned from the past and will keep supply and demand in balance to create a stable market going forward. The real estate market also has several moving influences pushing it in several different directions. Currently there are some major forces at work. While another major event like another recession could change everything, right now the future of real estate is promising.

Thoughts on Real Estate Investing

News Source: http://firstmortgagerates.ca

Whether you’re a seasoned professional or a novice investor there are fundamentals that you should always be paying attention to when investing in real estate. The fundamentals for beginners may be second nature to experienced investors but they aren’t to the beginner. The beginner needs to keep these in mind every step in the process of making his or her first purchase and sale.

Money can be made in any type of real estate market but it takes different strategies that change on a regular basis. There are two basic investment strategies. One is to buy and hold as rentals and the other buy and flip as quickly as possible. Within those two basic strategies are many other options. Today, one of the better buy and hold strategies is the lease option where you hold for a few years but have a plan to sell to the renter at a future date. For those wanting to flip houses, being able to owner finance them (even using other people’s money) is a great strategy. Both of these strategies are working well today because of the tough lending qualifications and because so many people have damaged credit scores coming out of the recession.

Real Estate Investing for Beginners

First and foremost, have an exist strategy. Never buy a house just because you can get it at a good discount. Know exactly what you are going to do with it once you own it. It’s also preferable to have a plan “B” and a plan “C”. Once you have an exit strategy, join an investment club if you haven’t already. Decide on a couple of experienced members that you trust and possibly use the exit strategy you’ve decided on. Invite them to lunch. Explain your strategy to them and ask them to punch as many holes in it as they can. Use the information you learn to improve your plan.

Expert advice for beginners is invaluable. An example of a big mistake one beginner was advised not to make involved a double lot. The beginner had found a double lot at a deep discount in a lower to middle income subdivision. He saw a huge opportunity to buy the lot and then go through the permit process to subdivide it with the intention of more than doubling his investment by selling two individual lots at retail. When he discussed his plan with an expert, the expert suggested that before making the purchase he first look into his ability to subdivide the property. When the beginner did, he learned that it could not be subdivided because of a wildlife habitat issue. The only use the property was suitable for was building a small mansion in the middle of low-end neighborhood. Obviously not a good investment strategy.

Real Estate Investing for the Experienced

If you’re at the top of your game, the best thing you can do to stay there is remain humble. Lack of humility is the biggest problem any businessperson can cause for them self. People simply don’t like doing business with someone that is arrogant. The best deals won’t be made available to you. When you do find a decent deal, negotiations won’t go in your favor when you portray yourself as always coming out on top. Stay humble and you’ll do much better.

Being humble includes offering your experience and knowledge to beginners and others less experienced than yourself. Don’t think of them as competitors and blow off their requests for help. There are plenty of deals for everyone. Occasionally, taking the time to thoroughly think through the strategic basics will also help keep you at the top of your game.

Is Real Estate The Right Business For You?

News Source: http://www.consolidatemydebts.ca/

No matter what your politics, you must be aware of the ever-growing pile of regulations that confront anyone who wants to start a new business.

I knew a smart entrepreneur who once wanted to start a small business printing pricing books for contractors using a database and laser printers.He was in a large city in a state on the east coast, and thought it would be easy to get rolling, as he only needed to rent a few hundred square feet in a building dedicated to rental offices, and use two desks, a computer, and a couple of off-the-shelf laser printers.

Starting a business can be simple or very difficult depending on the business.

In jumping through the business licensing hoops at the county level, our entrepreneur found that they wanted plans of the building and a full report of all activities of those using the office. This was in spite of the fact that this building had been housing small business offices as rentals for many years. Then because he used the words “printing books,” he was tasked to report the chemical composition of the inks he would be using in printing and their possible hazards and remediation he would be doing. He finally managed to convince them that laser printer cartridges were safe and presented no hazard. Even so, his business license fee was hundreds of dollars each year because that’s what “printing businesses” pay.

The point of this little story is that these type of hurdles, valid concerns or not, jump up in the path of just about any new business that requires lease space, warehousing, employees, personal contact, food preparation, or customer traffic. A real estate investment business can, and most do, start at the kitchen table, requires no employees, and has no customer traffic. It’s the perfect business for the sole entrepreneur wanting to do something profitable without a lot of bureaucracy, licenses, and special insurance costs in the way.

A quote attributed to Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” Of course that’s not the clinical definition, but it certainly pegs the reason so many people who want to change their financial futures are unsuccessful. Though they want to increase their income and build a retirement nest egg, they can’t seem to get out of their current rut. They are almost always confronted early on with the question from friends and relatives: “Are you insane? You can lose a lot of money in real estate; just look at the crash in 2007!” Or “Remember when Uncle Harold lost his rear on that piece of land he bought back in 1987?”.

If they let these questions and comments into their head, they’re going to keep going to work every day, getting the same paycheck, and they’re never going to take that step toward financial security. They keep doing the same things over and over again, but they just keep hoping that the results will change at some point. If they ignore the doubt and fear and concentrate on the reasons real estate investment is almost the perfect new business, they can get out of their rut.

Real estate is flexible in terms of strategies and time and money requirements.

Learning the right way to invest in real estate, and adapting the many ways in which profits are earned, there is little risk and start-up costs are almost nothing. Whether it’s locating deals for others for a fee, wholesaling, flipping houses, or rental property investing, there will be one or more strategies perfect for just about everyone.

All I’m selling here is the idea that many people can improve your financial future, and do so without a lot of money and time invested on the front end. It’s not for everyone, but it could be for you. You won’t be jumping through bureaucratic hoops for an office space, nor will you need a real estate license. All you need is the desire and a commitment to be sane. Insanity is going out tomorrow and doing what you did today and yesterday, but expecting different financial results.

Visa Changes Should Help Chinese Buy US Property

News Source: http://www.consolidatemydebts.ca

Investment in US real estate from overseas buyers could increase dramatically next year due to changes to the reciprocal US/China visa agreement. Students can be issued with five year multiple entry visas, while business travelers and tourists can be issued with ten year multiple entry visas.

These changes took effect earlier this month, and should make it easier for Chinese who wish to invest in US property. Often Chinese parents will purchase a home for children studying abroad, and the five year visa will also help students on a four year degree course.  Chinese investors who are currently undecided about purchasing US property should find these new changes encouraging.

According to the article in RisMedia, these changes could bring about a 15% increase in Chinese investment next year. Data from the NAR 2013 Profile of International Home Buying Activity shows the fastest-growing source of International clients has been from China and Canada. Real estate purchases by Chinese buyers have accounted for 12% of international transactions, and many of these are paid for in cash. Apparently Chinese buyers tend to look for property in the highest average price range and will pay cash around 70% of the time. Buyers have an average budget of $3 million and the median property purchase price is $425,000. This is much higher than the US median of $199,500. Popular areas for real estate investment by Chinese purchasers include Houston, Detroit, Philadelphia, Los Angeles and New York City.

Experts also point out that these recent changes to visas provide an opportunity for real estate agents as international buyers tend to greatly appreciate the knowledge and assistance conveyed by real estate agents. It’s not always necessary to be fluent in the overseas buyer’s native language. Home sellers may also prefer to find a real estate agent who markets their listings in China, as this is the fastest growing group of overseas buyers and could mean a quicker or better transaction for the seller. Real estate agents are also being advised to make international marketing part of their weekly business plan.

It’s thought that the extension of the student visa could have more impact on the US housing market than the changes to the business traveler and tourist visas, as a considerable number of Chinese students are educated in American schools. Even though every Chinese investor is in a slightly different situation, most will have an underlying belief in the US real estate market.

Rent to Own Comes With Many Options

News Source: http://firstmortgagerates.ca

There are many ways for both the seller and buyer to both benefit from rent to own homes. Rent to own contracts are not standard purchase contracts. The seller and buyer can write almost any clauses into the contract that meet their needs. Today’s real estate market is showing signs of recovery but it would be even stronger if more buyers could qualify for loans.

Back on January 10, 2014, new mortgage underwriting criteria went into affect requiring a debt-to-income ratio of less than 43 percent for most qualified mortgages. The result is fewer potential buyers qualifying for a loan. Under the right conditions, rent to own homes become a good option for both the buyer and the seller.

Structuring the Contract

Rules vary from state to state but you can create a contract allowing lease options that benefit both the seller and the buyer. Typically, a lease option agreement allows the renter to buy the house within a set amount of time but doesn’t require him or her to make the purchase. Often the down payment and debt to income ratio are the major obstacles preventing the want-to-be buyer from qualifying for a traditional mortgage.

The lease option agreement can be written so that the renter qualifies for a loan some time in the not to distant future. The lease option can help the tenant/buyer over come the common mortgage stumbling blocks by helping the buyer earn equity in the house. This can be done by charging a higher than market rate of rent and applying a portion of the rent towards the down payment.

If the house is selling for $125,000 and $400 of the rent is applied towards the down payment, it will take about 5 years for the renter to accumulate a 20% down payment. If the lease option fee is applied towards the down payment, needed equity will be in place sooner.

Another option for lease option can include a version of seller financing. This is when the seller carries the mortgage instead of having the buyer qualify with a bank. Since the seller is going to want all of their money sooner rather than later, a balloon payment is included in the contract. The buyer then finances the balloon payment with a traditional mortgage at a future date.

The seller can help the buyer qualify for a traditional loan by reporting timely payments to the credit bureaus. Of course, the buyer needs to stay current with the payments or the seller will foreclose on the house in a seller financing arrangement or evict the tenant in a lease option arrangement that hasn’t been converted into a sale.

How the Seller Benefits

There are several ways the seller benefits from a rent to own home contract. The first way is that typically the selling price of the homes is about 10% higher than the current market rate. The buyer should accept the higher selling price for a couple of reasons. First, a lease option allows the renter to buy the home but doesn’t require him or her to. This means the seller has more risk than in a traditional sale. Second, the house is most likely to be worth more money when the renter converts to a buyer at a future date.

However, rent to own home contracts need to have some built in protections for the renter as well. For instance, the current owner should not be allowed to take out a new mortgage on the property. The renter should also have the title checked to be sure the owner is fully entitled to sell the home.

While rent to own homes contracts are a good tool for both sellers and buyers in today’s credit strapped economy, they are not without risk. Both parties to the transaction are best served by having a real estate attorney draw up the rent to own homes contract.

Buy A Property With This Valuable Advice

Article Source: http://firstmortgagerates.ca

There is so much to learn when it comes to purchasing real estate. This is why it is helpful to learn as much as you can about buying real estate before you make your decision. Here are some helpful tips you can use when thinking about the type of real estate you want to purchase.

Finding the right neighborhood for first- time buyers can be hard. Many people struggle with this. A great way to find the perfect neighborhood for you is by doing your research online and touching base with some local real estate agents. Many websites online deal with statistics of what kind of people live in an area and how high or low a crime rate is. Calling a real estate agent in a local area can be of big help too; they can give their personal opinions of a given neighborhood. These are some tips to help you find the right place to live.

To avoid bad surprises, find out everything you can about a neighborhood before you move in. Find out what kind of people lives there, and ask yourself if you could fit with them. Learn as much as possible about the school your children will be attending. Research the crime rate and how much city taxes you will have to pay.

When considering buying a particular house, take a good look at the immediate neighborhood. If you buy the home, they will be your neighbors. Getting a good look at who these people might be is a good idea when deciding where you are going to live for the next few decades of your life.

As stated in the beginning of the article there is much to learn when it comes to purchasing real estate. These were but just some helpful tips that could help you make your decisions. Make sure you always seek more knowledge about real estate as well as remember everything you learn, including tips from this article. The more you learn the better decisions you are most likely to make when you purchase real estate.

Things to Think About When Purchasing a Home

News Source: http://firstmortgagerates.ca

Purchasing a home is the largest financial decision most of us will make so it’s important to do your due diligence. Things to take into consideration include the type of property you can afford, and which neighborhood will be best for you.

It’s important to consider every point very carefully and to resist making an emotional decision that you may regret later on down the line. One thing that does need to be addressed is what will happen if you lose your job, as if you believe it may be at risk in the foreseeable future, it might not be the right time to purchase a home. You’ll find mortgage lenders are not sympathetic towards missed payments and it’s best to only buy a home when you are confident you will be able to afford the monthly payments for the foreseeable future and feel your job is secure.

When you do purchase a home, it’s best if you plan to stay there for several years to try to recoup the costs, and the article in aol.com has a link to a calculator that can help you determine the breakeven point on your home purchase compared to renting. This will show you whether or not you should continue renting a home for the time being. Buying a property might also not be a good idea if you intend to move cities or think there is a possibility of doing so in the future, perhaps for a job. It can be difficult to sell a home at short notice without incurring large losses.

If you’re thinking about buying a home with a partner then have a good think about the stability of the relationship. If there is the possibility you could split in the future then it might be best to buy on your own, or to delay until you feel surer about the long term prospects with your partner.

Also think about your current level of debt. If you have a high debt ratio it might not be the right time to make such a large financial commitment. As a general rule of thumb, if your expenses come to more than 50% of your monthly income you probably wouldn’t be able to get a mortgage in any case, and even if you could secure a loan it would be at a higher interest rate which may end up costing you thousands of dollars over the entire loan. Instead it’s better to think about paying down your debts before purchasing a home.