It has been said that Escrow is a real estate investor’s best friend.  There are many reasons for this, but the most important can be summed up with the word protection.  Escrow is really nothing more than an impartial third party bank account.  The purpose is to provide protection to both parties in a real estate transaction.  The escrow holder, in most instances a title company, controls and disperses monies and documents associated with a transaction.  The escrow holder clears payments and performs the duties necessary to settle the accounts between the two interested parties.  They also handle the issuing of title insurance, the recording of the county documents and closing of the property between the buyer and lender.

Once escrow has been opened, a preliminary report is always issued.  This report shows the ownership details of the property, as well as title liens and defects.  If there are restrictions or conditions on a prior deed, those will also be listed.  The purpose of the report is ultimately to allow the buyer to seek adjustments and or removals to the contract prior to purchase. 

Escrow is particularly important in rent to buy real estate transactions and when rent prorations are necessary, such as the selling of a rental property.  Because rental income and security deposits are normally prorated as of the date of the close of escrow, the seller is responsible for making payments on the property and can collect rents until the title transfer takes place.  After closing escrow, the payments and income are turned over to the buyer.  Escrow in this case, provides protection to the buyer by keeping an account of all monies paid to the seller in the form of rent and security deposits so that when escrow closes the income can be credited properly. 

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Believe it or not, the time to make your millions in real estate is now.  The market is full of desperate homeowners willing to nearly give their properties away and you shouldn’t be afraid to get your piece of the pie.  But where do you start if you have no experience?  The answer is very simple, under the wings of a professional.

One of the biggest causes of failure when you first start out in real estate investing is self doubt.  After all, is it really possible for you to put together million dollar deals?  The answer is yes, it most certainly is.  A good mentor will help boost your confidence when you need it most.  They will show you the tricks of the trade, shortcuts and secrets that created their success.  An experienced mentor will help alleviate self doubt and confusion by providing the information you need to make wise decisions.  The truth of the matter is that nothing will help you gain confidence more than by making sound decisions at crucial moments.   

A real estate mentor will not only teach you strategies, but they will explain those strategies in a way that will make sense to you.  Professional real estate investors know which strategies work in a given situation and that information can be invaluable to you as a newbie. 

So, where do you find these mentors?  First of all, there are mentors dedicated to nearly every aspect of the real estate business.  You can always choose a nationally recognized team of mentors such as those provided by Dean Graziosi; or you can find a local professional that is dedicated to the type of real estate you are interested in such as foreclosures and short sales. 

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Seclusion can mean a number of things. For many, seclusion denotes the peaceful tranquility of life outside of the mainstream hubbub.  It means wandering down country roads without worrying about excessive traffic or obnoxious passers-by.

For others, seclusion may have a slightly different meaning.  The seclusion of some rural areas means being disconnected from services such as cable TV, city-regulated water, and sewers.  Response time for the fire department or ambulance may be greatly slowed.  In colder climates, many rural routes don’t have snow removal services either, which could be hazardous for anyone unprepared or in bad health.

The distance to the nearest city or town may determine the length of daily commute.  Some people are retired or work from home and don’t have to worry about the location of their jobs, but others must bear in mind how much time and fuel may be spent in the day-to-day travel between work and home. You may also have to drive some distance for such simple things as grocery shopping.

Having some land to plant on, keep animals, or just let grow wild for the local wildlife can be a wonderful perk to living in a rural area. However, the amount of property taxes owed, as well as the cost of water rights or other fees that go with it, must be kept in mind. Additionally, most rural areas have no ordinances regarding noise levels, leash laws or outside appearances.

With all of the perks and positive things about these homes, there are still a number of challenges, but the benefits are unlimited for the right person.

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Nearly everyone who has ever considered purchasing a home has heard about points, though many still aren’t sure what those are. Simply put, points are purchased to lower your interest rate on a new loan. Not all lenders give the option of purchasing points, but they have the potential to save thousands of dollars for a homeowner throughout the life of a loan.

Most lenders give you the option of purchasing up to three points, each one reducing your interest rate by a set percentage. For example, if you are offered a loan at 8.5% and each point will lower that by .25%, you can reduce that interest rate to as little as 7.75% if you take the option of purchasing all possible points.

The price of each point will vary per lender, as will the value of each in respect to the percentage decrease. In general, points will give up to a .25% discount apiece, though it can be lower. Many lenders use a percentage of the overall value of the loan as the determining factor in the price of points, while others have a set price of $1,000, $2,000 or more per point.

While the cost may seem a bit high, points can be well worth it in the long run. Over the course of a 15-year loan, the purchase of points can save several thousand dollars in interest. If you’re planning on staying in a home indefinitely, preferably ten years or more, points are most likely worth looking into as they can decrease your payment and significantly decrease the overall expense of purchasing a new home.

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High-dollar properties are more likely to be on the market for a long time, especially in the soft economy prevalent in the United States for the past several years. While many people may dream about owning that million-dollar house on the beach, only a minute fraction of the population can come close to being able to afford such a luxury. For every month you pay for a property’s upkeep and pay interest on your investment loan, your overall profit on that property is decreased and the effort that has gone into it severely increased.

Minimizing expenditures is always the first step to a successful investment. The higher the price of the original property, the more money you’ll have to spend on interest payments for an investment loan. Even on interest-only payments for the couple of months it may take to fix up the property and hopefully sell it, this can put quite a dent in the pocketbook.

This is not to say that a high-value property is never a good investment. For the most part, only experienced investors who know their market well should consider the risk of high-dollar properties. Novice investors are often better off finding average-sized family homes in decent neighborhoods for a safer investment. These homes are generally in higher demand and are within reach of the average homebuyer.

High resale values do not always translate into higher profits. These properties are generally larger and require more upkeep over longer periods of time for the average time on the market. Smaller properties may put a smaller chunk of cash in your pocket, but when weighed against expenditures and the amount of time before you can go on to the next investment, they are generally the safer and more profitable way to go.

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One of the largest reasons that real estate turns from an investment into a sink hole is that the investor is unaware of issues that can arise before buying a piece of property.  Many of these issues revolve around the overall upkeep for the investment property.  While you don’t have to be a contractor to invest well, it does help to know some of the warning signs.

·    Land sloping toward the building – This may not seem like a big thing, unless you consider water drainage.  If the land around the property slopes towards the house, chances are good that the ground around the building will get saturated in areas of high rain or snowfall.  Ground saturation can cause mild to severe settling of the building.

·    Cracks in the walls – You may look at small cracks and think, “That’s not so bad”, but those cracks can mean bigger problems.  Cracks in basement walls and foundations, generally caused by settling, can also mean sticking doors and windows, as well as a history of leaks.

·    Discoloration or recently painted walls – Areas of discoloration along the tops or bottoms of walls can mean mild to severe plumbing problems.  Many property owners “clean up” the discoloration by painting over them.  If you suspect this might have been done, check the closets; most people don’t think of painting in there, and the discolorations will show clearly.

·    Bouncing floors – In older houses, the floors are sure to have at least a small amount of give when you walk across them.  However, too much give can mean sagging or unstable supports.  Generally, it’s a good idea to look at the supports no matter how small the amount of give is.

By following these pointers alone, you’ll have a better chance of picking up good real estate investment property rather than a money pit.

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Well, you’re instincts were right.  Abandoned properties are one of the most common sources of leads for real estate investors interested in quick turnovers.  Owners generally aren’t interested in abandoned real estate properties; this makes the property easier to buy, and there is less competition than with a property that’s been taken care of.

The next time you come across abandoned real estate just screaming to be bought, don’t give up.  The following tips can help you hunt down that elusive property owner:

·    Search county appraisal offices – The first thing you’ll have to find out is who owns the property, and county appraisal offices are a great place to start.  It should be relatively easy to find the owner using only the address of the abandoned real estate.

·    Printed notices – If time isn’t a factor, you can leave printed notices at the properties on a regular basis, with your contact details.  The drawback here is that, if the property is truly abandoned, the owner may never visit it – which means they’ll never see the notice.

·    Private detective – If you’re short on time but have the money, a private eye may be the way to go.  Experts at hunting down people and information gathering, private detectives can be an excellent source for contact owners of abandoned real estate.

Now, there may be other ways to go about this – using a paid service, for instance – but these three are a great start.

Keep in mind, however, that there are drawbacks with abandoned real estate.  The top drawback, as you may be aware, is that abandoned properties are usually not well taken care of, and may have a lot that needs to be done before they can be sold.

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Essentially, there are two main types of mortgage loans that you need to be familiar with. There are fixed-rate mortgages in which the interest stays the same for the duration of the loan, and variable-rate loans where the interest rate changes. Fixed-rate loans often start out at a significantly higher interest rate than variable-rate loans, but the latter can fluctuate widely after an initial introductory period. Obviously, fixed-rate loans are the most secure even if it may cost a little more. However, each of these loan types have their specific uses. Using the wrong loan type for your mortgage could result in serious issues with your ability to make the payment on the loan.

The main thing to remember is that fixed-rate loans are ideal for long-term borrowing, such as when you’re purchasing a primary residence that you plan to stay in indefinitely. Many people also refinance with fixed-rate loans after the introductory interest rate on a variable-rate loan is no longer in effect. Variable-rate loans are a great option for short-term borrowing that does not extend beyond the introductory period. Past this, there is nothing to keep the rate from going to a pre-determined cap rate which can add up to the equivalent of buying a house on a credit card. Often, lenders will encourage unwary borrowers to take a variable-rate loan with the low introductory as its selling point, but this has led to issues all over the country as buyers realize they can no longer afford their houses once the introductory period is over.

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