As an investor, you should never overlook insurance as a means of protection. It will cover many claims for accidents that occur such as when someone slips and falls or in cases of negligence. Possessing insurance to cover these claims will help greatly if your corporation is undercapitalized. If you don’t have insurance and an accident occurs on your property, you may wind up being sued and required to pay a lot of money. Though insurance does not typically cover breech of contract claims, courts will often set aside a corporation where these types of debts are concerned.

An insurance company will also be more likely to pay for your legal defense than to pay for a judgment against you. This is another great benefit of having insurance. It protects you in many different situations, especially where legalities are concerned.

There are many different types of insurance you can get as an investor. If you are running a business, you will want general business liability insurance. This will cover a wide range of law suits from personal injury to copyright violations. While the latter isn’t something you will need to worry about in real estate, there are many types of claims in between that will be covered that can make having this type of insurance a distinct advantage for you.

If you own property, you will have property insurance. You will need this should something happen to your property. This often covers theft, fire, and in some cases, natural disasters such as storms. More specific disasters like earthquakes or floods are generally covered under policies specific to those types of disasters. If you live in an area where either of those is likely to occur, you may be required to carry the policies. If you do not live in an area where they are required, but earthquakes or floods still could occur, you may decide to take on those policies. Though they can be costly, you may find them beneficial in the end.

Insurance is a means of protection. It can protect you against many different types of situations. There are different types of insurance policies you can purchase so before doing so, it is a good idea to know what you need. Having all types of insurance won’t necessarily provide you the protection you may think in all situations. For example, you don’t necessarily need flood insurance if your property is located in an elevated area where flooding is not likely to occur. This would only wind up costing more money and not really providing you any real benefit.

Know what you need and find the best policies to serve the purpose. Understand what your policies do and don’t cover and exactly how they work. This is what will protect you the most in the end.

There are many different types of money mistakes that people make on a regular basis.  Some of the most common are budgeting errors, tax mistakes and investment errors.  Below we are going to show you some of the most common money mistakes and what you can do to avoid them.

• One of the most common mistakes among real estate investors is trying to time the market.  While many of us can only purchase a home once we have all of our ducks in a row others choose to try and determine the perfect time in the market to make their purchases.  Timing the market can be a problem because there is no sure fire way to determine when the market has reached the bottom.  With home affordability at the best it’s been in years, and mortgage rates the lowest they have ever been there is no time like the present to either purchase a first home or purchase an investment property. 
• Don’t focus only on the price of the home.  The price is just one factor in determining the true cost of the home each month.  You should also take into consideration what the mortgage rates are and how they will affect your monthly payment.  With rates the lowest they have been in years, they are not going to stay that way forever.  They are already showing signs of increasing and experts expect that they will continue to rise steadily through 2012 and 2013.  What this means to you is that even if home prices continue to fall, the increase in mortgage rates will counteract that.
• Be aware of your credit score.  Your credit score is used to determine everything from pre-approval amounts to your insurance premiums.  The more familiar you are with your credit score the better prepared you will be to negotiate the best deal for you.
• When looking to secure a loan it is common that many people choose their first offer without researching any other loans that may be available to them.  Most people spend more time researching an auto loan than they do a home loan.  Don’t be one of those people; take the time to find the best type of loan for you. 

By avoiding these common money mistakes you will more than likely be able to secure a loan that has acceptable terms and features a low interest rate.  Take the time to do a bit of homework and you should be able to secure a home loan that will not leave you treading water, but rather enjoying the benefits of making some well-educated decisions.  

It is not uncommon to drive through a neighborhood and notice a vacant lot and wonder what that piece of land is worth.  Vacant lots are also attractive to homeowners whose property sits next to a vacant lot; there are a lot of things a homeowner can accomplish by adding that piece of property to their own.  Whatever the case may be, it is not as difficult as you might think to value that empty piece of land.  In determining the price of a vacant lot it is common to use a valuation technique known as Residual Land Valuation or RLV.

Residual Land Valuation is a relatively simple process for determining the value of a single-unit vacant parcel of land.  However, if you are interested in building more than a single family structure on the land the process can become a bit more complicated.  In this case it is necessary to factor in any city, state or local regulations as well as zoning laws and costs of construction.  But if you are only interested in the property as a single unit then the determination process is much simpler.  The first step in the process is to determine what type of home is going to be built on the land and how much you would like to sell the home for once it is completed.  To do this you will need to review the current housing market, contact real estate agents, review comp properties and use all of that information to determine the size of the home that should be built.

Once you have decided on a style of home you will now need to estimate the price at which it will sell and how much it cost to build the house including all permit fees, supplies, loan interest and everything else that went into the construction of the home.  After the final total is added up you can now determine the RLV which will show how much a developer should offer for the vacant lot.  If the RLV value is determined to be $350,000 the offer should start at $250,000.  But remember if the seller wants more than is reasonable it will cut into the amount of profit you will make and make the whole deal worthless.  The key to successfully renovating a vacant lot into a home is to leave yourself enough room between the purchase price and the sale price to make enough of a profit that you feel comfortable with.  The hardest part about determining a value of a vacant lot is determining the value of the structure you are planning on building.  If a mistake is made in the valuation of the home and the expenses it can end up cutting into your profit.

There are many advantages to working with partners in real estate investing. You can share the workload and pool resources. It is like a marriage of sorts, but do not let yourself be fooled. You have not made a lifelong commitment to your partners, and they have not made one to you.

You still have to protect your interests along the way. It is so much easier to do if you choose great real estate investing partners in the first place. Intelligence, savvy and a good deal of reflection will help you find the partners who will help you be the most profitable investor you can be. Rushing into a hasty alliance can prove disastrous. Here are some ways the right partner can make all the difference in your success.

A great partner will:

1. Bring something specific to the table.

You might have a nice, warm feeling about a friend. It does not help you if he does not have anything to offer you in your real estate investing ventures. If he does not have a talent, skill, attribute  or financial resource that will assist you in making and completing deals, he will be worthless to you in this position at best, and a liability at worst.

2. Understand enough about real estate to help you.

Every partner in a real estate venture does not have to have the same level of knowledge of the real estate business. The partner you choose may be helpful for other reasons. However, she should have a working knowledge of it in order to participate in discussions and contribute to decisions.

3. Be fearless.

There is no place in the real estate investing business for wimps. Sometimes, there is a need for caution. That is an intellectual activity that comes from deciding to learn more about an investing situation before making a commitment. However, fear is not appropriate. Fear-based decisions are rarely the most advantageous. Calculate, analyze, consider, decide – but never, ever fear.

4. Know when silence is golden.

There is a time to speak up in your real estate investing deals and a time to be more reserved. The intelligent partner will know when it is time to stop talking. She will know when it is better to let the other person think about the offer without distraction. She will understand that there are times when it is better to let the other person think the deal may be over if they do not make the first move.

5. Be great at strategizing.

Real estate investing involves creating strategies for making the best deals. A great partner will help you make plans that will result in success more often than not. Then, your ideal partner will help you put your strategies into action as you close the deals. You may never find the perfect partners for your real estate investing, but it helps to know what you want.

Most landlords absolutely hate raising the rent. They usually do not do it to improve their profits, but to maintain their cash flow at the current level. This becomes necessary when taxes, insurance, maintenance or other costs increase.

Tenants find it difficult to understand or to accept when they have their own money difficulties as well. Landlords who are forced to raise the rent must find the least objectionable way to do so if they want peace in their buildings and continued high occupancy.

One important step to take is to give tenants the news face to face. It is not only cowardly to notify the tenant of a rent increase by letter, notice or email. It can also be confusing, frustrating or infuriating to the person who has no way to express their disapproval.

By talking to the tenant face to face, you can calmly discuss the situation. If nothing else, you can give your tenant a chance to tell you his opinions. He will feel better when you validate his right to feel that way.

Another key to success in raising rent with the least trouble is to do it in the summer. With more people moving, you will have fewer people to notify. Also, you will give people a better option to move if they are vehemently against the raise in rent. At the same time, you will have more people looking for apartments, so it will be easier to fill the vacancy.

One tip is to make special offers at the same time you are doing the rent increase. For instance, allow people to lock in the new rent rate for a set period of time. You gain a long-term resident, and you have less hassle in raising the rent.

Some landlords build an annual rent increase into every rental or lease agreement. This makes sense in a way, because taxes and insurance are likely to go up. Maintenance can become extremely costly as the age of the units rises. If the tenants are prepared for a rental raise, they will not be caught off guard. They may grumble a little, but they will not be shocked.

There is an old trick employed by certain landlords that has helped some renters to feel more comfortable about the rent being raised. The landlords will send out a notice proclaiming a huge raise in rent. Then, they come back and lower the amount to a lesser raise, which is the raise they wanted to make all along. It seems a little dishonest, but some landlords still do it.

No matter how you go about raising the rent to your tenants, it will require some degree of tact and diplomacy. Do your best to make it as easy for them as possible. The result will be more tenants, more loyal tenants, and a more peaceful apartment complex or neighborhood.

Losing your home to foreclosure can be a traumatic event for anyone to go through, and finding somewhere to live after a foreclosure can be almost as hard.  When your home is foreclosed your credit score takes a hit.  Previously this could have seriously hurt your chances of securing a rental, but in the times we currently find ourselves in landlords are showing signs of being more understanding.  In fact, many landlords may have also been hit hard by the real estate downturn.  There are some things you can do during a foreclosure to minimize the damage to your credit score.

The first thing that you should while going through a foreclosure is to remain current on all of your other outstanding bills.  This means that you should continue to make your utility, cell phone, car, cable and credit card payments regularly and on time.  If you default on any additional credit accounts you will only be doing more damage to your credit score which can make renting somewhere new to live more difficult.  Just because you are experiencing a foreclosure don’t give up, stay as current on your outstanding debt as possible.

You may also want to choose a short sale rather than allowing your house to go into foreclosure.  Choosing a short sale will do less damage to your credit than a foreclosure will.  A short sale allows you to relinquish your debt in writing.  If your real estate agent is experienced with short sales you can ensure that the bank will be less likely to come after you for any outstanding amount you may still owe after the sale.  By negotiating a short sale with your lender you should be able to keep your credit score from taking too big of a hit.  With so many vacant homes on the market many lenders are open to short sales and they understand that this will be the best outcome for everyone involved.

There are also many other options available to help you avoid a foreclosure.  You may want to consider consulting with a debt management organization that can help you communicate with creditors and design a payment plan that will help you.  Also, try and avoid an eviction.  If the bank has foreclosed on your home work with them and come up with an orderly time frame in which you can leave the property.  Landlords find it difficult to overlook an eviction, having a specific time set in which you need to be off the property will also help you plan for your move.  Foreclosures happen, the best thing you can do is know how to handle the situation in the best way possible.

A property sold in probate court is typically a good buy because the property is commonly sold at a price than other homes.  As with any good deal there are risks to purchasing a property through probate court.  Homes sold through probate court tend to take longer to close than a normal sale would.  This longer amount of time it takes to finalize a sale through probate court usually keeps some buyers away just as short sales do. 

A home is sold through probate court if someone dies intestate or doesn’t leave their home to anyone in the event of their death.  When this occurs the state takes over control of the property and lists it for sale in the probate courts.  It is the responsibility of the court to ensure that the home is listed at fair market value and sold at the best possible price.  To ensure that a fair price has been set for the home the court must follow certain procedures to ensure that the best price is determined.  Probate laws tend to vary from state to state, but if your real estate agent is knowledgeable in the area they may be able to get you a home at a great price.

When the court lists a property for sale it is often done in the same manner as any other property being listed.  The only difference is that instead of a homeowner contacting a real estate agent a probate attorney or estate representative will hire an agent, sign a listing agreement and show the property.  The asking price for the property is usually determined by the real estate agent as well as an independent appraisal obtained by the court. 

If a potential buyer is interested in the property they can make an offer at any time just as in a typical sale.  The basic difference is that the offer must include a 10 percent deposit.  Once an offer has been made the estate representative will then have the option of either accepting the offer or providing a counter offer.  If the estate representative is satisfied with the offer, they are then required to present the offer to the court who will then confirm the sale. 

If the court  confirms the sale a sale date will then be determined, after a sale date has been determined the parties involved in the purchase must wait an additional 30 – 45 days before the sale is final.  During this time property must be advertised with a new accepted price, this price is typically the asking price plus five percent.  During this time if any other buyers are interested in the home they must go to probate court where the property will then be sold auction style with the opening bid being the accepted price plus the additional five percent.  If no other interested buyers show up then the first interested party will be awarded the property at the original price and must provide the court with the ten percent deposit.

If you’re interested in a property that is being sold through probate court be very cautious, the home may end up costing you more than you initially expected.  Purchasing homes through probate court is a very time consuming process, be sure that you are willing to put in that extra time.

The cost of many home remodeling projects has dropped in recent years which is allowing many homeowners to make improvements in order to help their home sell.  While this is good news for potential buyers, sellers are finding it harder to recoup their remodeling expenses due to the lower selling prices of homes today.  But despite the low payback on the money you spend on remodeling there are some improvements that can actually add value to your home.

Simple replacement projects tend to be the best choices for sellers looking to enhance the appeal of their home.  Adding new windows, siding and replacing the doors can make the house look great, which in turn helps your home sell faster and for money.  These improvements are not extremely expensive and can give your home a fresh new look.  Not all of the remodeling done on your home has to expensive; there are a lot of minor improvements that can add appeal to your home.

If your home features attic space that is not being used you can make some improvements and turn that often ignored space into a bedroom.  This can be accomplished by finishing and insulating the walls, adding a small window and rewiring the room so that it can be fully functional and accommodate many of today’s electronics.  By changing an unused attic space you are increasing the number of rooms your home has and also increasing your home’s existing value.  Many prospective homebuyers are looking for homes with additional space that can be used as an office or spare bedroom.  Adding an additional room will help buyers see the potential your home has to offer.

Remodeling the kitchen doesn’t need to be a huge undertaking, you can increase the appeal of your home by making some midrange kitchen improvements.  This type of remodel can include new countertops, tile, faucets and appliances.  You’d be surprised how much different your kitchen will look after making these minor improvements.  These changes will help take your kitchen to the next level by making it look more modern.  Prospective buyers often base their decision to purchase a home on the kitchen, if your kitchen doesn’t require any work it will appeal to buyers who are not looking forward to spending any extra money to make these improvements themselves.

Home remodeling projects do not need to be major undertakings, making some simple and less expensive changes can add value to your and help it sell.  These are some of the most common areas that buyers tend to look at and if they have been remodeled recently they become even more appealing.

There was a time when nearly everyone who refinanced a home took out the maximum amount they could borrow on the home. This happened often for three reasons. First, people paid on their loans over the years and built equity, which they could tap into at the time of refinancing. Second, the houses sometimes increased in value, giving the same result. Third, there was a time when lending institutions were financing homes for more than they were worth.

This was considered an intelligent move, as long as the consumer could refinance at a lower interest rate. When consumers received cash back on a refinance, they used it to pay off or consolidate debts. They often used it for their children’s education. Sometimes, they used the money to remodel their homes or even to take a family vacation. The whole situation seemed ideal on the surface.

However, those days have been coming to a close for some time now, and the trend is continuing to rise. Consumers are now saying no to cash-out refinancing more than ever. They no longer want to get as much out of their homes as they can regardless of how much they will pay in the future. They are more mindful of the future amounts of their payments and the number of payments they will have to pay.

Amazingly enough, Americans are finally becoming more frugal. They want to get their homes paid off as quickly and painlessly as possible. Most do not consider it a sacrifice to choose this option. Extravagance is no longer in style.

In the last quarter of 2011, the trend was obvious. The number of people who added 5 percent or more to their loans was limited to 15 percent of those refinancing.  This figure marks the lowest point for cash-out refinancing in the last 26 years.

The most incredible figure is the nearly 50 percent of people refinancing who actually brought money into the transaction. These thrifty individuals came out with a lower principal to pay off, and less interest to pay over the lifetime of the loan. Those who used the cash-in to shorten the lives of their loan also got early pay-off.

The contrast between the years when it was popular to cash-out and the current times is stark. The most cash was taken out in the second quarter of 2006. The amount totaled $83.7 billion. In comparison, the fourth quarter of 2011 showed a total cash-out amount of a mere $5.5 billion.

Perhaps American homeowners are growing up. They seem to be taking a wiser and more economical approach to refinancing. The trend does not have to end with homeowners. Real estate investors can make the same choices to free up credit lines, keep down payments and enjoy greater profits.

Mortgage News Daily: Homeowners Continue Shift Away From Cash-Out Refinancing

http://www.mortgagenewsdaily.com/02022012_refinancing.asp

Investing in REO properties can be a great way to earn some quick cash. You can usually buy these properties very cheaply and resell them at market value for a profit. Alternatively you can buy them cheap and rent them out for a huge profit over time. However, there are some important things you need to know before you invest in REO properties.

There are certain pitfalls you can run into if you are not careful with REO properties. For instance, you may find yourself in possession of a property that needs a lot of work before you can do anything with it. You could also find yourself in possession of a property that has a tax lien on it. Whichever the case may be, there are ways to avoid these pitfalls easily. You just have to follow some common sense steps before buying such a property.

The reason it is easy to wind up in possession of a property that needs work is that often you do not have the opportunity to look at such properties thoroughly. Generally there is no open house, just a lot number or address that you can check out. You can’t get inside the house, so you have to look at it from the outside alone. This can leave a lot of things wrong with the house that you could have no idea about. However, there are some things you can do to make sure this doesn’t happen to you.

First, you should get the history of the house. How many owners did it have? How long were the last owners in the home? How old is the home? If the last owners were in the home for a long time, are there any paper trails showing upgrades or work done on the home? How long has the house been vacant? Has the bank owning the property had any work done to the home since they took possession of it? What condition was the home in when the bank took possession?

The answers to all of these questions are important. If you get the answers to these questions you should be able to get an idea of the amount of risk involved in the transaction. The longer the owners were in the home, the more chance that some repair work may be needed. The same is true if the house has been vacant for a long period of time. However, any work known to have been done on the property could make a difference in the risk factor.

Another thing you want to do is check the tax history of the property. This is easy enough to do, as it is a matter of public record. If the house has a small amount or no taxes owed against it, it is a good investment. However, if the house has a large tax lien on it, you may want to shop for something else.