With interest rates so low, people are looking for different ways to invest their money. Housing prices are at an all time low, consider investing in rental homes. Let the low interest rates work to your advantage as you purchase homes to rent with only 20% down.
Location, location, location is key to finding good investment property. Become knowledge about the community. Do research, if necessary. People want to rent in areas that are convenient to schools, shopping and an easy commute to work. You will find cheaper houses in outlying areas but with gas prices so expensive, these are becoming unattractive to tenants. A recommended real estate professional can give great advice on where to invest.
You may want to look at foreclosures when looking for a good buy. You are not the only one looking for a bargain, many investors know to look at these properties. If a property has been on the foreclosure list for very long time, be cautious, there may be some sort of problem with it.
The disadvantage of all the foreclosures is that now banks are not willing to approve mortgages with low down payments for new investors. Typically, you need 20-30 per cent down payment for rental real estate. You want to be sure that your monthly payments leave room for profit for the amount of rent you’ll be able to ask for the area.
Make sure you calculate all of your expenses when determining if a particular property will be profitable. Besides your mortgage, if you decide to use a property management company expect fees of $75 to $100 per month. You also need to plan on other maintenance costs for up keep. There needs to be enough profit margin that you can handle these expenses as well.
Rental Properties Offer Owners Tax Advantages
Basic tax advantages landlords receive from their investment in real estate properties are like to those of homeowners. You are able to deduct property tax expenses and mortgage interest costs from your federal tax return.
In addition to these deductions, the landlord has other tax incentives. If you, the landlord, provide utility services such as water, heat and/or electricity at no cost to tenants, tax laws allow you to deduct these costs from the income on the property. Furthermore, all operating expenses for your rental property are tax deductible. This includes maintenance and repair costs, like repainting or replacing windows, gutters and floors. Fees for liability, property and rent loss insurance are also tax deductible.
Thanks to depreciation deductions, landlords are offered tax advantages by the IRSfor improving their rental properties. Improvements include installation of a security system, a swimming pool, new furnace or air conditioner, any new appliances or upgrades to the kitchen. Or maybe you want to add on another room or a porch to the rental home. These also would be considered an improvement, not an operating expense. These expenses may not be written off as operating expenses, they are written off as depreciation of improvement deductions.
Depreciation Tax Advantages without Improvements
Depreciation costs are those accumulated by the normal use of any residential property including rented buildings. The IRS acknowledges the fact that a building wears out over time and permits landlords to deduct some of the cost of depreciation every year for up to 27.5 years. These deductions do not require you to spend anything in order to use the deduction on your tax return. Just calculate the value of the building and the allowable depreciation on that amount. The only time you will spend money for a depreciation deduction is when you make improvements to the property. Realize that you will have to make some of these improvements to keep the home livable.
Other Tax Deductible Expenses
If you don’t already have an accountant, you may want to use one now. An accountant specializing in rental properties will make sure that you get all the deductions offered to landlords; their fees are a deductible expense. Other possible expenses are the wages of employees hired keep books, deal with tenants or make repairs. If you engage a property management company to take care of those things; their charges would be a tax deductible expense. Items like office supplies, phone bills, and even stamps can be deducted as costs of doing business.
Buying investment property now when prices are low is a wise move. Later as the housing market recovers, you can sell at a profit, if you wish. Enjoy all the tax advantages of being a landlord and the extra income from a rental property. You may find a better return on your investment than other options open to you.
The common reasons foreclosures occur are because of loss of employment, death, separation or divorce and the economy. When one or two or more of this do occur, it is more likely that the property will end up in foreclosure. Whether it is foreclosures bank owned or other type of financial institution lender, it will be foreclosed if you missed up on payments. Reasons foreclosures occur may also come from other factors.
Foreclosures are lenders action to recuperate their investments and or interest on a defaulted mortgage. On the brighter side, foreclosures bank owned can be turned into investments.
A lot of us think that the reasons foreclosures occur is because of personal mismanagement. For the most part it is true. But there are other reasons and factors that may lead you to foreclose on your home mortgage. Knowing the other reasons why foreclosures occur can arm you with the most needed information in order to avoid it. Avoiding it can lead to better financial management and better financial outlook.
One big reason is a deteriorating and poor national and local economy. With poor national and local economy, jobs will be lost or outsource to other countries with cheaper labor market. Homeowners then will not be able to pay their mortgages and loans. And if you have a variable rate mortgage, your lending institution may raise the interest rate on your mortgage. And before you knew it you are no longer able pay your monthly bills and mortgage payments.
So as the saying goes, read what is painted on the walls. What I mean is try to read, listen to the news and what is going on in your local communities and the country as a whole. This way you will know when something is not going the way it should. It will give you the advantage of preparing yourself on what you can do before it hits you and your community.
Preparedness is key to avoiding any financial trouble and disasters.
Personal problems like separation and divorce or death of a spouse who is the sole provider for the family can be a factor. In the US health insurance and medical bills can be overwhelming and thus diminish you ability to pay your mortgage and other bills. In Canada, medical bills are not that big of a deal because of the health care system which is better than the United States. Personal problems can also lead you into financial problems. Protecting yourself from any of these eventualities can give you the upper hand when things get out of hand.
Getting prepared and informed about the reasons foreclosures occur can give you the advantage you may otherwise unable to have. On the investment side of things foreclosures bank owned can lead you to a better deal on a home property.
Foreclosures are of three types; residential foreclosure, commercial foreclosure and tax foreclosures. The present crisis in USA is home foreclosures. Now what is a foreclosure? When a person borrows money from a lender, by mortgaging his property, he has to pay the lender, the interest along with the principal amount, on time, as mentioned in the mortgage contract. When he defaults payments, the lender then takes possession of the house of the owner. This process is known as foreclosure. The lender then sells the property to get back his dues.
Foreclosed homes are creating a crisis in America. Because of the recession period which America is now experiencing, (if it lasts till April, it will be the longest recession in post war period), many people are unable to repay back the loans and foreclosed homes are on the increase. The state that is hit by increasing foreclosures is Arizona. Previously there used to be a lot of buyers for foreclosed homes. Because it is a distress sale, people who dream of purchasing a good house at a cheap rate, go for such foreclosed loans. But now real estate is stumbling down, so the value of these houses are so much reduced, that it becomes less than the loan amount. So the buyers have no other go than let the owners have the house.
In fact it is the lenders that will be in a fix with foreclosed homes. In today’s situation the lender finds it very difficult to sell the house, as there are many foreclosed homes available for the buyers to choose from. Not only that, since the market value has come down drastically, they are finding it difficult to get a good price for the house, and sometimes the prices are less than the amount due to them.
Another problem with foreclosed homes is the increase of crimes in such vacant houses. This is becoming an increasing headache for the Government. As a result of this, the lenders are now asked to pay a penalty if the don’t maintain the house and leave it ignored. Also there is no flow of revenue for the government.
Home foreclosure has increased by 87 percent in 2008 and nearly 2.3 million house owners had their houses foreclosed in this year. And reports say that nearly six million homes in America are on the edge of foreclosure. Studies have also proved that foreclosed house reduces the prices of neighboring houses too.
Because of the present crises, President Obama plans to stem home foreclosures. He has announced that he will spend $50 billion to prevent foreclosures in America. A lot of Government mortgage companies and major banks are also stopping foreclosures.
Unemployment, high mortgage interest rates and reckless spending are some of the reasons why many house owners are loosing their homes to foreclosure. What is needed is save and spend money carefully. Always make sure that you have set aside sufficient saving to pay for the mortgage. Act wisely and avoid home foreclosures.
One of the biggest cities in the state of Florida is Miami. It is a sprawling metropolis of home deals. Indeed, it is a perfect city for residential homes as well as recreational areas along with the whole city being bordered by the Everglades River, Biscayne Bay and last but not the least, the Atlantic Ocean. There are numerous Miami REO properties that can be found right here and ready to be flipped for a profit. So ask yourself, are you ready to invest in foreclosure properties in Miami?
Yes, there are loads of Miami REO properties in Florida these days and they are gradually becoming popular. For anyone interested in foreclosure Miami Properties, there are scores of choices to opt for. There are lavish condominiums, apartments, attics, buildings lofts, mansions and the like. Aside from that you can also select from commercial properties which include restaurants and hotels and warehouses.
When it comes to Miami REO properties, the choices are certainly good. The only thing you need to do is to conduct some modest research. You can find free lists of foreclosed homes at www.freefirsthomebuyertips.com, www.miamiwholesaledeals.com or www.reospeedselling.com. You will be able to discover some foreclosure properties Miami you can choose from. Just make sure that your chosen foreclosed property is fits your budget. There are various types of Miami REO properties which are available within the city. Who would not like to steal a property in downtown Miami, the much loved Miami Beach along with Coconut Grove, Coral Groves, Surfside, Bal Harbor, Brickell, Aventura, Lincoln Road, Key Biscayne, Fisher Island and other hot spots?
The artistic richness of Miami likewise contributes to the investment value of Miami REO properties. Without a doubt, the city welcomes numerous tourists annually with a bigger number of celebrities calling Miami their home. This is because REO properties in Miami are known to be a firm investment choice by not just surviving the falling real estate market in the United States but by rebounding and making a comeback sustained by the tourism industry. You may be tempted to purchase an REO property in Miami since it is a breathtaking destination for your family’s holiday vacation or your home after your retire from work.
Miami is thought to be the best city for leisure activities and is now becoming the home for numerous retirees. Many of the REO properties in Miami are great investments due to their geographical settings. For instance, the city of Miami is surrounded by the Everglades River, Atlantic Ocean and the Biscayne Bay. When you see the inherent value of the properties it becomes financially prudent to invest in foreclosure properties which are being auctioned for pennies on the dollar.
It is quite clear that foreclosure trends are on the rise, almost across the board in different parts of the country (USA) and this is no laughing matter but as the saying goes, one persons loss is another’s gain which is why the current housing market represents a big opportunity for those first time homebuyers who want to get a once-in-a-lifetime deal on a great house which is projected to appreciate as the economy stabilizes. Those who might have been new home buyers a few years ago are now looking at foreclosure listings because it is a fact that these properties are priced to sell and have a huge potential in terms of appreciation both in short and long term. Lets take a look at some of the facts and ways first time home buyers can take advantage of foreclosures:
FACT – It is a buyers Market!
The market conditions we experienced a few years ago have clearly shifted and what was a sellers market has become a buyers market, this means that a few years ago people were selling homes because of highly inflated values but as the market reaches an equilibrium point buyers have the upper hand in terms of negotiation; this is because banks and other financial institutions want to get these properties out of their books since they are not in the business of owning properties but in the “finance” business.
Benefit – High Supply of Foreclosed Properties to Choose From
There has never been a market that offers such benefits to buyers as the housing market offers to first time property buyers right now. In every part of the country homes are going into foreclosure which is a market condition which widens the horizons of those who want to own their own house of are looking to buy investment properties and yet another added benefits is that since there was a big housing bubble which triggered constructions and developments to spike, foreclosed homes and properties are virtually brand new!
Benefit – All-time Low Interest Rates!
In efforts to stimulate the economy the federal government has cut interest rates to an all-time low, this means first time home buyers not only get a high number of choices but the rates on loans which are meant to finance these properties have dropped dramatically. The fact is that it still costs money to finance a home but it is not nearly as much as it did 2-3 years ago.
Benefit – High number of Incentive Programs
Savvy first time home buyers who want to take advantage of current market conditions can increase their benefits by taking some time to research the incentive programs that are being offered at the state and federal level in order to boost the economy and stabilize the housing market. These programs are tailored and targeted towards first time homebuyers which means that taking some time to do your homework could pay-off, big!
Despite of the fact that it is a buyers market, there are still some factors to keep an eye on, if you are a first time home buyer who is interested in purchasing a foreclosed home, one of them is that these homes may have been empty and unattended for quite some time which is why it is important to have the property fully inspected before signing any document but as you might have figured this is just basic steps that every homebuyer should follow but nevertheless it is good to make notice of such situation, especially in these times when first time homebuyers are trying to get the deal of their lifetime.
While most people will tell you that the reasons foreclosures occur is because you mismanaged your finances, there are definitely more reasons than your own doing. It certainly can be true but rest assured that you are not the sole or only reason why your property is being foreclosed. Tips and info on foreclosures can be handy in circumstances like this. Foreclosures can be a bad thing because it will affect your credit score or credit rating. But foreclosures bank owned and HUD foreclosures can be a gold mine for other investors or investment prospectors.
In most cases if you try and study why mortgages are being foreclose, you will find that personal problems are mostly the culprit. Personal problems like death in the family, being your spouse or the primary financial provider is lost. Divorce is another common reason why homes are being foreclosed. These are some of the few problems that people or families of homeowners are faced with and eventually foreclose on their mortgages.
Mounting medical bills too can add to an already distress financial situation. It only takes one member of the family to be ill and you in for some financial problems. Credit cards and loans can quickly max out and before you knew it, you deep in indebtedness. And these will not take a long time to develop. When mounting bills and payments are in the table, you will be stress out and can be a burden. Eventually you will not be able to pay your monthly mortgage payments and when this happens your lender will foreclose your property.
But hold on a minute, what most people forget to consider on why homeowners foreclose their homes is because of poor local and national economy. These can one of the biggest reasons foreclosures occur. Your local economy should be vibrant in order for you to continue working and keep your job. There are other companies that can be affected quite easily be a poor national economy. When these things happen, people will start to feel the pinch on their wallets.
The pinch on the wallet can eventually become a huge financial problem. Nowadays the health of the economy is in bad shape to say the least. You must have heard people being forced to leave their houses because lenders are filing notice of default on these properties and homes. Subprime mortgage crisis has landed so many people losing their house and properties. It is a shame because this is one thing that is beyond your control. Thus it is not your fault or personal mismanagement of your finances.
To protect you from these eventualities, the old saying save money for rainy days cannot be further from the truth. These tips are very common and simple but it is very powerful and true. Second tips and info; do not fall for foreclosure prevention scams and foreclosure rescue scams. Third tips and info; Talk to your lender and negotiate immediately and do not ignore calls and letters from your lender. As well as do not ignore the problem.
Getting the right tips and info on foreclosures could really help you deal with foreclosure problems or your investment strategies regarding foreclosed properties. Most people think that foreclosures are the outcome of poor personal financial management. While for the most part this is quite true, there could be more telling reasons foreclosures occur. Do not take it too hard on yourself if you are under pressure to foreclose on your mortgage or home. Thinking about foreclosures bank owned? Do more research online and find out.
While you may think that personal problems is the main culprit on your financial woes regarding mortgage payments and bills as whole, the other reasons could be more significant. Your local and national economic conditions can play a very significant role on why you are in such a predicament. Think about of the main industry in your locality or the industry that provides labor in your area. If these companies are affected by both your local and national economy, you will definitely be affected.
When the national economy is going down or is in a crisis, most local industries and businesses are going to be affected. And when local businesses and industry is affected, jobs and commodities start to worry everybody. It will not take long before you will feel the effects. So being prepared for these eventualities could do you a lot of favor if have put aside something for situations like this.
To name a few of the basics but very important reasons foreclosures occur will help you immensely on how you will handle your finances.
The reasons foreclosures occur are, as previously mention, personal problems like death in the family or divorce or illness and with mounting health bills. The effects of deteriorating local and national economy to the detriment of personal finances. Too lenient loan or mortgage terms offered by governmental agencies like the Veteran Administration (VA), HUD, and the Federal Housing Administration (FHA).
The availability of mortgage loans being offered at 80 to 100 percent of the value of the house securing the mortgage loan. Simply put, the homebuyer can buy the house with little or no money down payment. In this case the homebuyer or borrower will bail out at the first sign of trouble because they basically will not lose anything. Foreclosing the property is difficult unless you have so many vested interests in the property.
There is the ego type thing that some buyers try to over extend themselves and buy properties which are not really within their reach. Thus, they will fail to secure a cash reserve for any eventualities. Unexpected repairs and expenses by first time homebuyers can quickly turn into a financial nightmare for some. Then they will eventually start to fall behind their mortgage payments. What this means is foreclosures is just around the corner.
As in every business, there are scammers and the hard and honest working businessmen. The existence of these predatory lenders which I call scammers, can hit your wallet in a heartbeat. They target the very vulnerable who have low credit score, low income and have excessive debt and even bankruptcies. These prospective borrowers cannot get loans from the traditional banks and lenders so they are primed for predatory lenders. These homebuyers will end up with high interest rate mortgages and unheard of late fees.
And do not fall prey to advertise low interest rates.
It is very tempting to go and buy homes that are not supposed to be your fit. For instance a couple would have one of them working two jobs and when that other job was lost to downsizing or hard times, the home owner will not be able to pay their mortgage.
With all these tips and info on foreclosures, you should be able to make the right decision when making that home purchase. Reasons Foreclosures occur are valuable tips and info to guide you and prepare strategies for your financial road map.
The question of how people stay in foreclosed properties sometimes for years is one with a simple answer. The foreclosure process is designed to take title away from a homeowner for non-payment of the mortgages on the property.
If a homeowner stops making mortgage payments why wouldn’t the lender take the property back as soon as possible and evict the homeowner immediately. In fact, this is the usual course of action in almost every foreclosure action, however, there are exceptions.
When a homeowner is late making his mortgage payments and the lender starts collection action (harassing calls for example), there becomes an adversarial relationship between the two parties.
The lender views the homeowner as a dead-beat and the homeowner views the lender as a money-grubbing worm. The goal of the lender is to get possession of the property as soon as he gets the deed from the homeowner or through the court and clear out the property and sell it as soon as possible to recover as much of his loss as possible.
So why then would a lender allow a homeowner to stay in the property? There can be a couple of reasons but they are designed to be in the best interest of the lender and not a benevolent action with regard to the homeowner in foreclosure.
The most obvious reason is the lender wants a caretaker in the property to avoid vandalism from neighbors or damage by the homeowner before he leaves. While this sounds simple let’s look carefully at the consequences to the lender of the homeowner staying in the property.
First, the homeowner will be paying the electric and probably sewer and water or these utilities could be turned off. Many states for safety reasons will not allow utilities to be turned off even when a homeowner or tenant is not paying the bills. But the utilities are not the important issue.
The important issue is the liability the lender has with “squatters” living in their property. This liability extends to the former homeowner suffering a physical injury for which the lender will be sued.
The lender can easily get property insurance for uninhabited properties but not for inhabited properties. So the “hearsay” that lenders will allow homeowners to stay in foreclosed properties is nonsense. Have homeowners actually stayed in foreclosed properties? The answer is “Yes”.
There seems a disparity here but the actual reason is that the lenders start the foreclosure proceeding but do not complete the procedure and get the title or deed transferred into the lenders name until such time as they are ready to evict the homeowner. In the interim until the homeowner is evicted or he leaves, the lender puts “forced insurance” in place for an occupied property.
The homeowner will have to pay for this insurance if he works out his foreclosure problem or the lender will take it as additional loss on the property.
So the stories of lenders “forgetting” about properties, especially high priced homes, and leaving the homeowners in these properties for a year or two is generally an “urban legend”.
It may have happened but only when it was in the best interest of the lender. More often, the lender evicts first and would have done better to have the homeowner stay a little longer to help with the transition to a new residence. So don’t take a chance on your lender not evicting you when you go into foreclosure.
“Foreclosure can be defined as a process of recovering the amount of default from a defaulter on a loan either by selling or taking ownership of the property pledged as the security for the loan amount”.
Because of the recession period the economy is going through now, unemployment, huge debts and lack of accessibility to credits, are making it very difficult for many families to pay their mortgage payments, and they have no other go than to hand over the keys of their homes to lenders and walk out.
There are different kinds of foreclosures.
Home foreclosure: When a person borrows money from a money lender, he is liable to pay the interest and the principal amount. When he defaults the payment, the lender then takes possession of the house and this process is known as home closure. The lender then files a notice in the court called Notice of Default, when the borrower defaults for more than 30 to 60 days, to reclaim the property, to recover the amount owed.
If a person owns a property, he is liable to pay property tax. If the owner does not pay tax, the Government places a lien on the property, whereby the owner has to pay tax amount, the interest and the penalty charge for defaulting payment. This process is known as tax lien foreclosure.
When a person takes loan for business by mortgaging commercial property and the business defaults the payment, the property is sold for recovery of dues.
There are four steps of foreclosure:
The procedure of foreclosure varies from state to state, but the process is almost the same.
When the owner defaults payments, a Notice of Default is send to him. This is officially recorded by the bank. Usually it is not send when there is a default of one payment, but several payments.
The owner can reinstate the loan. Just because the foreclosure process has started, he does not loose the house now itself. He can stay in it and he can arrange for the money and repay the missed payments along with the late fees five days before auction of the house.
The date for foreclosure is set by the bank, and it is usually around three months. Till then the owners can live in that house.
Though the owner can stay till the house is sold, once the house is auctioned then the new owner will evict the present owner, sometimes within 24 hours.
Foreclosed property is on the increase in America. Real estate has stumbled down and many Americans are not able to sell their houses and tend to loose their homes. Between July 2007 and July 2008 foreclosure activity has increased by 55 percent.