Real estate is often regarded as the gold standard of investments. The underlying assumption is that real estate is finite and will invariably appreciate over time. Coupled with low-interest rates in the US and globally, and increasing demand, it is generally a safe investment to make. Robust growth in the housing market has pushed prices up to their pre-financial crisis levels, helping to drive a boom in this mega market. Of course, there are always caveats. Real estate tycoon, Ofir Eyal Bar shares several important insights into real estate investments:
Always do your homework
Real estate purchases are arguably the biggest purchases the average person will ever make in their lifetime. Of course, if you intend to get a US college degree and advance your education, your costs will likely match the value of your home purchase. On a serious note, always conduct the necessary research into your preferred home. Will you be buying a condo? A townhome? A freestanding property? A vacant lot of land?
The answers to these questions are important. Each type of dwelling is associated with specific local ordinances, county rules, and regulations, Homeowners Association (HOA) rulebooks, and the like. More importantly, what is the history of the property? What amenities does the property offer? The location is often touted as the most important factor in your decision, for obvious reasons. It’s always better to own the least expensive home in the most expensive neighborhood than the most expensive home in the least expensive neighborhood.
Pick your realtor carefully
While all realtors are required to be fully licensed agents, not all realtors behave with the same ethical conduct. Some realtors will push you into making home purchases that are clearly unaffordable to you, or at the very least undesirable. Make sure that you have a good rapport with your realtor and that they understand your budget, your needs, and your preferences. Be sure to have your realtor working on your behalf to negotiate the best deal with the seller’s agent.
If a home property inspection reveals issues that need attention, your realtor should be your representative in this regard. The right agent can point you in the right direction. The wrong agent will point you in the wrong direction and cost you a lot of money. Ask around, find out who is the most respected agent in your area. Check out their LinkedIn profile, reviews on Google, and other social media.
Get the best possible financing for your real estate investment
Just because you need to borrow money to purchase real estate doesn’t mean you need to accept any offer that is thrown at you. You can shop around for the best interest rate and the best mortgage deal. If your broker offers you a rate of 5.25% when you can get a rate of 5%, think twice. Of course, there are many aspects to consider when it comes to being approved for a mortgage. Will you be putting down 5%, 10%, or 20%? Be sure you understand the points system so that you can save yourself money on repayments.
The higher your credit score the more favorable the interest rates you’re privy to. Your broker or mortgage lender should work with you to help you boost your chances of locking in a favorable interest rate. You can easily check your credit score online and plan to boost your score in anticipation of applying for a mortgage. These are strategic purchases that should be planned well in advance. Lay the groundwork and provide yourself with the best possible option of success.
Don’t let your excitement get the better of you
Ever wanted something so much you didn’t care what you were going to pay for it? Don’t let your real estate purchase be the first time this happens to you. Real estate is costly,
and it’s even more costly when you pay a premium price for it. The longer your search continues the more likely you are to pay a little more for a property that finally meets all your check marks. Don’t fall into the trap of paying more than a property is worth.
For starters, it may not get approved by the bank and you may not recover your money if you want to resell the property. Try your best to negotiate a price less than the asking price. Everyone has to give a little in a real estate transaction. Remember the following rule: whenever you emotional about something, desist from making an important decision until the next day. When you’ve had time to think about it, then present your offer to the seller.
Don’t be complacent about the property you want
Searching for the ideal property is almost like finding a needle in a haystack. You will likely have to see dozens of homes before one stands out. That doesn’t mean it’s time to relax. In fact, now is when the urgency goes into overdrive. The right properties are only on the market for a short period of time. Other buyers are also looking at these fantastic properties and will likely try to beat you to the punch. If you find a property that you like, be sure to go into the deal knowing that you have been preapproved for a mortgage. Your realtor should have that preapproval letter with them at all times so that you can easily write up an offer and have it sent to the seller’s agent for consideration. You have to act quickly when you find a property that meets all your requirements.
Time your purchase based on seasonal factors
Believe it or not, properties tend to sell better at certain times. If you’re looking to buy real estate, your best bet is when sellers are selling. That’s when prices are lower because more properties are being presented to the market. If you’re trying to buy when there is excess demand, you will be paying a premium. For example, Florida property sellers tend to do well when the northerners come down south. That means that your best time to buy is during the wintertime when the freezing cold temperatures in the north-east drive the snowbirds south to Florida. But if there’s too much demand, this can raise prices too!
Ofir Eyal Bar has been a real estate entrepreneur for 15 years. He brings tremendous experience to the table, and readily assists first-time home buyers and real estate investors in their decision-making processes. With multiple properties in his portfolio, he spends his time between the UK and Israel as a professional management consultant.