what are The TopThings Every Investor Should Know?
When it comes to investing in Delaware real estate, there are a few things investors should keep in mind. Here to help formulate a plan of action are the top things real estate brokers and bankers don't want to tell investors. Savvy real estate investors searching for Delaware homes for sale should do their homework and ask – don't assume – specific information that may impact your financial future.
1. It isn't always possible to refinance. In the past, unscrupulous mortgage brokers provided teaser rates with artificially low adjustable rate mortgages that allowed investors to purchase homes with little money down and even lower monthly payments. The assumption was the real estate loans could be refinanced before new rates took effect. Unfortunately, that only works when home prices are increasing - not decreasing. Changes in employment, banking regulation, housing trends and other financial considerations can quickly change lending standards and make it more difficult – or impossible – to refinance.
2. Real estate doesn't always go up in value. While historically real estate has kept pace with the rate of inflation, it is also true that many local areas have decreased in value for long periods of time. Growth rates are not predictable so before investing in real estate it is important to count the full cost of ownership. If you are unable to afford to hold the property for a long period of time it may be wise to search for a more affordable property.
3. Holding takes time and money. During the height of the real estate market the media sensationalized homes selling in a matter of hours after being placed on the market. Unfortunately, examples like that are exceptions to the rule. Historically homes take an average of six months to sell. In the interim you must continue to service the mortgage, taxes, insurance and all other maintenance payments.
4. Renting isn't always an easy option. Common wisdom dictates you can simply rent a home to recuperate costs if it cannot sell. Sometimes that is easier said than done. Renting a home can help reduce out of pocket expenses, mortgage and other costs but it may also hinder the ability to sell the home. Renters often want long term leases while buyers may want a quick closing to move into the home. Damage to the home may make it less appealing and can even result in the need for repairs and costly replacement of carpeting, painting and other fees before selling.
5. Leverage isn't always good. While leverage can allow an investor to control a greater amount of assets - it isn't the same as "owning" those assets. Until they are paid in full, the investor is subject to greater risk when using more leverage. Leverage is a form of debt that works very well in an expanding economy - but quickly becomes a financial burden in a contracting economy. Use leverage wisely by making sure you are able to service your own debt.
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How can I make my home more energy efficient and better able to sell?
The ever rising cost of fuel, gasoline and utilities has renewed the interest in energy efficient homes. Delaware new homes are often equipped with the latest energy efficient appliances and improvements but for those searching for pre-existing Delaware homes for sale or considering upgrading your home before placing it on the market here are some excellent energy saving resources and ideas.
1. Delaware Helpline. If you aren't sure where to begin, call 1.800.464.HELP for information and referrals to programs in your local area.
2. Weatherize with WAP. The Weatherization Assistance Program installs energy efficient improvements to help lower utility bills and improve the health and safety of Delaware residents. For more information contact
Director, Division of State Service Centers:
Gloria Upshur, Director
1901 N. DuPont Highway
Charles Debnam Bldg.
New Castle, DE 19720
302-255-9675; FAX: 302-255-4465
3. Sign up for budget billing. Ask Delmarva Power and Electric about the budget billing option to help you regain control of utility bills by dividing payments into equal installments throughout the year.
4. Go Green! The Delaware Green Energy Program offers grants of up to 50 percent off the cost of the purchase and installation of solar water heaters and other alternative energy saving devices.
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How can I purchase business occupied real estate?
Delaware is well known as a business friendly state so it should come as no surprise that many people are interested in business occupied real estate. Whether you are looking for a small retirement income, supplement to a home business or long term investment, business occupied Delaware real estate can be a solid idea.
Today, one of the most popular programs is the Small Business Administration or SBA loans. Small business owners, minorities, disadvantaged small business owners, veterans and their families may all be eligible for various SBA guaranteed funds to establish or expand a small business - including the purchase of business occupied real estate.
For example, the SBA Patriot Express program has guaranteed more than $150 million dollars in the past year to veterans and their families to build a business. Individual loans are available for up to $500,000 at very competitive low interest rates of 2.25 percent to 4.75 percent over prime. Funds can be used to purchase start-up equipment, supplies, inventory and business occupied real estate.
To learn more about buying business occupied Delaware real estate, speak to a real estate attorney that specializes in small business as well as a qualified real estate agent. For more information on SBA loans including the veterans programs visit www.sba.gov/vets.
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How can I find help buying Delaware real estate?
If you are contemplating the purchase of Delaware real estate or relocating to Delaware then here are some superb resources to make the move easier.
State of Delaware Real Estate Commission: Look up licensing and disciplinary actions for prospective real estate agents and brokers, verify licensing information online and stay up to date on various Delaware related real estate laws in one quick and easy location. For more information visit http://www.dpr.delaware.gov/boards/realestate/index.shtml.
General Delaware Information: Buy a fishing license or calculate DMV fees required to license your vehicle in Delaware. From foreclosure information to road condition, almost anything you want to know about living in Delaware can be found at the State of Delaware official website by visiting http://www.delaware.gov/.
Delaware Habitat for Humanity: Need help with down payment assistance or interested in volunteering in order to help pay for your own home? Check out the Delaware chapter of Habitat for Humanity affordable housing solutions at http://www.habitat.org/cd/local/.
Housing and Urban Development (HUD) down payment assistance program: for first-time home buyers, as well as lower income and minority home buyers including the ADDI or American Dream Downpayment Initiative. To learn more or find out if you qualify contact www.hud.gov.
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How can I sell a real estate note for top dollar?
Holding a real estate note can be a good investment but often there comes a time when liquidity or cash is urgently needed; instead of holding a note, it might be time to sell a real estate note instead. Selling a real estate note is certainly possible but unless you have extensive experience in dealing with these types of transactions, it can also be confusing – or worse – you may encounter less than scrupulous buyers that attempt to take advantage of the situation. Learn how to protect yourself and still obtain a fair price when selling a real estate note with this helpful checklist.
1. Work with a reputable real estate attorney that specializes in real estate law and the buying or selling of real estate notes.
2. Never pay upfront fees. Reputable real estate note buyers will not requires advance payments, processing fees or other charges.
3. Never pay junk fees. Reputable real estate note buyers offer a rate that includes most fees with the exception of title policy or appraisals. The sudden appearance of extraneous charges and additional fees should be a major warning sign.
4. Always get everything in writing. Verbal exchanges are difficult to prove so it is important to document all offers – and modifications – in writing.
5. Don't accept the first offer. Allow negotiations to take place in order to keep your options open.
6. Plan ahead. As with all real estate transactions, it takes time to process the paperwork and documentation. Don't wait until the last minute when you are more likely to run out of time or feel pressured to make a quick decision.
7. Season the note. Real estate notes are like any debt instrument – those with a steady history are more valuable than an unproven history. Even a six month track record can result in a much higher rate than a completely new note. Whenever possible be sure to season the note and then advertise that fact when considering offers.
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How can I track real estate loans?
Have you ever wondered where the media obtains the latest statistics and information on mortgages, real estate loans and other financial information? It is actually available free for the asking for most consumers, real estate investors and others by contacting the FDIC or Federal Deposit Insurance Corporation.
The FDIC is the federal agency responsible for reviewing the nation’s banking and financial health as well as providing insurance on deposits and other investment instruments. Each quarter and then once per year, the FDIC publishes the FDIC State Profiles report summarizing economic condition and banking trends for each state including Delaware. The subscription is free and a great way to stay up to date on current financial trends including real estate loans. To sign up contact the FDIC Office of Public Affairs at (202) 898-6993 or visit http://www.fdic.gov/bank/analytical/stateprofile/index.html.
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