Aside from having a good credit, capacity to pay, and a history of being financially healthy, you should also know the different types of financing options available to you as a borrower. There is actually no hard and fast rule when it comes to obtaining mortgage loans. It all depends on what you need, your personal options and how you plan to pay the loan. The most common resources of mortgage loans are the following:

Mortgage Brokers

Mortgage brokers are the most common source of real estate loans and majority of those who have already purchased foreclosures got their loans through these brokers. Mortgage brokers are what you can call middle men between lenders and buyers. They have an extensive network of lenders, sometimes numbering to hundreds, to whom they refer buyers.

When buying foreclosed homes, mortgage brokers can operate as an upfront desk where they will ask a fee from you in exchange for shopping for the lowest interest rates and most flexible terms available for a mortgage loan. Be also aware that some mortgage lenders are paid either by the buyer or lender.

Mortgage Bankers

As the term connotes, mortgage bankers are people who work for a bank-lender. The loans that they facilitate are actually funded by the bank which acts as the lender. However, a mortgage banker does not necessarily work for a single banking institution only, but can actually work for a number of banks that provide home loans.

The important thing to remember about mortgage bankers is that the fees are often non-negotiable since they are fixed by the bank. You may also be limited to the type of loans that are only offered by the bank, which means that there is not much flexibility in the options. Lastly, not all mortgage bankers are licensed.
Commercial Banks

It is not actually the business of commercial banks to offer and facilitate mortgage loans. But commercial banks like Wells Fargo, Bank of America, and Citigroup do extend home loans to those buying foreclosed homes. The good thing about obtaining loans from these institutions is that they offer competitive terms and they could offer you further reductions in price and interest rates if you are already an existing client or are willing to maintain an account with them.

Some Things to Keep in Mind Before Buying

While investing in real estate overseas is a good idea and finding international real estate listings is not a difficult task, there are some things that investors need to know beforehand.

Rates of currency exchange can either enhance or pull down profit margins: If your aim is to purchase property overseas for investment, you must keep in mind that currency exchange rates can hugely affect profit margins. While a strong currency value can enhance the profit, a weak one can pull it down substantially. It is, therefore, important to keep the value of currency in mind when buying and selling an international property.

Legal nuances are different for every country: When you buy international real estate, make sure that you equip yourself with all the legal nuances and details of the country beforehand. The laws and regulations in a new country would be very different from what you are used to. Taking the help of a local legal counsel in the matter is always a good idea.

It is important to get in touch with local realtors and professionals: Buying property in a new country can be very difficult no matter how experienced you are. It is, therefore, important that you seek the advice and counsel of local property professionals. Before you start working with a realtor or a company, it is very important that you do a background check and ensure that the source is trustworthy and genuine.

One needs to go through the available options carefully: When you set out to purchase international real estate, you will first be presented with a list of international real estate for sale and the sheer number of properties can overwhelm you very easily. It is, therefore, important that you take the time to narrow down the options before actually setting out to assess each one. This will make things easier and more convenient for you.

While it might not be the easiest thing to invest in estate, it does not have to be all that tough and confusing as well. You can always turn to internationalrealestatelistings.com to go through good properties overseas and buy one with expert professional assistance.

It is true that most of the properties fall under expensive categories, but you should also accept that not all of us could afford them. However, due to extreme availability of properties, there is a great competition in the market as which promoter or real estate agent is going to make the maximum business while selling plots.

In addition, if most of the plots for sale offer for high price range, then only a certain section of people from the society will afford these ones. However, that section is much less than the middle class section that makes up the most of the society. That is the reason that these promoters and real estate agents are bringing up many properties for sale with cheap price ranging that makes it quite affordable for the normal middle class to think of buying them.

If you go through the local newspaper, you will find a number of advertisements that feature for tags like buy land, sale, etc. You will see that certain details pertaining to the selling of such properties like the total area of the land, the approximate price range, the location briefing and most importantly the contact person regarding buying of the property.

Before you make up a decision to buy a particular property, you need to verify the minute details of the property in the most specific of its ways. You need to verify the fact whether the land is a legal one or some illegal property (as such sort of things do take place frequently).

Moreover, you also need information about the area where the plot is situated. What is the future prospect of the area, or what is status of the area needs to be verified from reliable sources other than the promoter or seller personnel. Another important thing that needs to be sorted out is the security issue. How safe is the locality and what are the obstructions that may occur while staying in this area also needs to be verified from not only a single source but a number of reliable sources before signing in the contract for purchasing certain properties.

The location of the land is one of the main criteria which should be considered. The land should have access to roads and other pathways that would allow consumers and clients to pass through easily.

The proximity of the land to different business centers should also be a priority. Residents would prefer a house that would be near a grocery, shopping mall, work place and school.

The businessmen should hire a reliable and efficient contractor. The land property can be turned into a pleasant condominium or apartment complex using the right materials and items. The houses established should be very functional. This is necessary in order to maximize the use of space and other resources.

Consumers would only purchase a real estate property if it provides a high-quality and satisfactory living space. The contractors can use different styles and architectures when building the properties. A good style would be the minimalist engineering method. Constructing minimalist properties would allow consumers to save money since only the necessary materials and rooms are placed in the house. This is ideal for people who want to save money when buying houses.

The main advantage of land development is the price of the raw materials. Vacant lots are very cheap and affordable compared to properties that have erected houses and buildings. The businessmen would only need to spend hundreds of thousands when buying several hectares of land. The cost of the houses being constructed is also low since all the materials required can be bought in wholesale deals. Once the houses and properties have been developed, it can be sold for millions of dollars. The initial investment would immediately multiply.

The process of real estate development is very long but the financial rewards are vast. The businessmen can easily develop land properties by hiring the necessary architectural, engineering and contractor services.

The money invested is quite low compared to the income, which can be received in the process. The businessmen would only need to assure that the land has a good location to attract consumers. Once the properties have been developed, the houses, apartments and condo units can be sold for lots of money.

Negotiating is one of the neccessary things when investing a luxury condo. There are some sellers who do not drop their prices, but because you are in a buyer’s market you can opt in to some incentives. And when everything is settled then have everything in writing and seal the deal.

Keep your eyes with the different choices that are being offered by the real estate market. There is lots of options o not stick with the first property.

Consider the reputation of the builders of the condo. if you do not want to put your life at risk for not knowing who builds the condo. you should access the work history of the builder of the condo. Check out the past project of the builders to ensure that they build quality structure.

You have to ask guarantee in terms of the time your condo will be finished. This is to ensure that it will be done once the guaranteed time comes and offers compensation if not. It is also important to know the covered in the warranty and how long it will last.

Home inspection is very important if you are investing any kind of real estate properties. With this you will have the chance to confirm the quality of the property and most importantly avoid ending up with financial trouble due to repairs.

Builders of luxury condos usually have their own lenders. Never choose their lenders as much as possible because this can lead you to several conflicts of interest. You have to shop around and find the best terms and interest rate for you.

Loan to Value: Commercial lenders tend to be more conservative about the loan to value. Most commercial lenders loan up 75% of the value of the property. The following is just a rough guideline for LTV based on the CAP rate as the actual calculation is beyond the scope of this article.

CAP —– LTV
8% —– 75%
7% —– 67%
6% —– 55%
5% —– 45%

Lenders will only loan you the amount such that the income after expenses, i.e. net operating income is at least 20-25% more than the annual mortgage payment of the property. Or another words, the loan amount is such that you will have positive cash flow equal to at least 20-25% of the mortgage payment. So if you purchase a property with low CAP rate, you will need more down payment. This is so true for commercial properties in California as the CAP rate is in the 5% range. Commercial real estate is intended for the elite group of investors so there is no such thing as 100% financing.

Interest Rate: The interest for commercial is dependent on various factors
Loan amount: In residential mortgage if you borrow less money, i.e. a conforming loan, your interest rate will be the lowest. When you borrow more money, i.e. a jumbo or super jumbo loan, your rate will be higher. In commercial mortgage, the reverse is true! If you borrow $200K loan your rate could be 9%. But you borrow $3M, your rate could be only 5.9%! In a sense, it’s like getting lower price when you buy an item in large volume at Costco.
Property type: the interest rate for a single tenant night club building will be higher than multi-tenant retail strip because the risk is higher. When the night club building is foreclosed, it’s much harder to sell or rent it compared to the multi-tenant retail strip. The rate for apartment is lower than shopping strip. To the lender, everyone needs a roof over their head no matter what so the rate is lower for apartment.
Age of the property: loan for newer property will have lower rate than dilapidated one. To the lender the risk factor for older properties is higher so the rate is higher.
Area: if the property is located in a growing area like Atlanta metro the rate would be lower than a similar property located in the rural declining area of Arkansas. This is another reason you should study demographic data of the area before you buy the property.
Your credit history: similarly to residential loan, if you have good credit history, your rate is lower.
The lenders you apply the loan with: Each lender has its own rates. There could be significant difference, e.g. over 1%, in the interest rates. So you should work with someone specialized on commercial loans to shop for the lowest rates.
Prepayment flexibility: If you want to have the flexibility to prepay the loan then you will have to pay higher rate. If you agree to keep the loan for the term of the loan, then the rate could be 1% interest lower. See more on conduit loan.

When it comes to mistakes, these are often related to one’s choice of property purchased. It is imperative to be knowledgeable about the entire real estate market as well as the property in particular so you know if you are going to make a good purchase or not. There are a lot of people out there who buy properties and then the prices end up going down. Instead of making a profit, they end up with more costs. As a general rule, you should buy a property in a location wherein the prices are on the rise and seem to continue as such for a long time. Ergo, it is important to purchase a property in an in-demand location so you can make a profit out of it. If you buy one in a not-so-desirable location you might end up paying for more in repairs to increase its value.

Always view potential scams with a sharp eye. Avoid real estate investors who promise you huge returns that have no risk and you can make quickly. This line is common to most scams and you should avoid this at all costs. Usually, the offer sounds amazing but it might end up being impossible or even illegal. They use twists and turns to confuse you with the explanation of how it works so you end up not knowing where exactly you are putting your money in. If one investment is of the legitimate kind, then the person ought to answer all of your questions until you gain full comprehension of the situation.

Avoid con artists who have the practice of manipulating prices of properties to make it seem as if you are being offered a bargain price. They probably will say that you can get it at the wholesale price so you can make a huge cut when you resell it. They show you that the valuation is actually much higher – only to find out that they lied and overvalued the property to make it seem tempting. It can be hard to spot this scam because the people are usually very sophisticated and seem like they really know what they are talking about when in fact all they care about is taking your money and leaving you with some bad investments. Always avoid these people and make sure you know exactly how the entire real estate market operates. This way, you can stay away from bad scammers and con artists who only have bad intentions for you.

The key is to keep moving and not dwell on each individual real estate investing mistake that you make, especially early on! Just keep on going… and take a few minutes to figure out what the lesson was, add it to your knowledge and experience bank, and move on to the next!

In this series, I’ve highlighted 17 mistakes that I made early on and share with you what you can do to avoid making the same real estate investing mistakes I made…

The first mistake new real estate investors make is always thinking the grass is greener on the other side! That “another” market will have better deals, more motivated sellers, and more qualified buyers. Once your business is established with duplicatable systems in place, it can be easy to expand into additional markets. But in the beginning, stick with your targeted farm area.

Mistake #1: Working outside of your farm area

The first property I ever bought was 4 hours away! I was living in Miami, Florida and the property was located in a bedroom community between Orlando and Daytona Beach. This was about 4 hours away!

You really want your first deals to be close enough to home where you can manage the deal from start to finish. This doesn’t matter if you’re wholesaling, rehabbing or acquiring a rental portfolio. Obviously, wholesale deals are someone easier to do virtually.

Take some time to figure out your tolerance threshold and how involved you need to be in the deal. Although it doesn’t have to be in your backyard literally, you probably don’t want to be driving 4 hours to meet with the homeowner, show the property potential buyers, deal with contractors and handymen, etc.

You might be surprised just how many deals you can find within a 20-mile radius! (after my first deal, I did about a dozen properties in my first year in ONE neighborhood!).

How to Avoid Real Estate Investing Mistake #1

The solution is simple!

Target a specific farm area close by and work it in depth.

Sure, I know YOUR market is probably saturated and that there are no deals left. (wink wink!). But here’s a secret – everyone says that about their own market! The grass is always greener on the other side.

When I was full time in rehabbing, I would REGULARLY close deals that had $20,000 – $40,000+ in profits month in and month out.

Thank goodness my market was saturated with other investors!

A side note about finding deals close to home…

1. Choose a target market, a TYPE OF SELLER to focus on (foreclosures, absentee owners, divorcees, expired listings, etc.)

2. Choose a communication method (direct mail, driving for dollars, advertising, etc.). Direct mail is not a target; it is a method of communication.

3. Choose an exit strategy (wholesale, retail, rental). Again, this is what you are going to do with your deals; it’s not a focus.

Don’t get caught up looking for greener pastures somewhere else. You will be surprised what’s available in your own backyard. If you’re looking elsewhere, you’re likely just procrastinating and making excuses. And I’ll leave you with one of my favorite quotes: “You can choose to make money or you can choose to make excuses, but you can’t choose both, so stop procrastinating and choose one

If you buy a home, you can turn it into a rental property and make money while your investment increases in value. This will provide you with a good income, and essentially your renter will be paying for your property.

For the most part, real estate tends to appreciate in value, sometimes substantially. Even if prices temporary dip because of other economic factors, it’s almost a sure bet that eventually the value of your home will appreciate over time.

Spending relatively small amounts of money on home improvements can sometimes substantially increase the value of your property. This can be some of the easiest and fastest money you can make.

Even if prices go up because of inflation, using your real estate as a rental property can help protect you. In most cases, your mortgage payments will remain the same, but you’ll be able to charge your tenant more for rent.

You can make even more money if you have some basic do-it-yourself home repair and renovation skills. If you purchase a “fixer-upper” property for a really low price, you’ll make even more profits when the time comes to sell.

There are also tax benefits to be had from purchasing property, especially if you plan to live in the home for a while. You may also have access to home equity loans based on your investment, which can provide you money for other purposes if needed.

In order to make the most of your real estate investment, shop carefully before you buy. If you find a great real estate bargain, chances are you’ll stand to make a good profit on your investment.