Tuesday, August 28, 2007

Investment Loan Types for Rental Investments

This is a complex topic and takes a lot of explanation. That’s probably why my video podcast on this top ended up being over 5 minutes long! I truly don’t intend to lose any of you, but I have been sent e-mails requesting information about the different types of loans for investment properties. Of course, please feel free to e-mail me if you need further explanation.

There are 2 Types of Non-Owner Occupied Investment Loans:
  1. Secondary Market Loans.
    This is a 15, 20, or 30 year fixed rate loan for up to 10 loans. We only recommend sticking with a 15 or 20 year loan, reason being is that if you get a 30-year loan, you can only depreciate for 27 ½ years.
  2. In-House Loans.
    Banks will do in-house loans and loan money to Investors with great credit and history from their own personal portfolio. These type of loans are the types that you'll get once you go beyond the 10 loans mentioned above or if you purchase commercial (Land or Apartment Complexes). These loans usually require 20% down payment.

    Of course there are pros & cons to these types of loans. Some of the advantages of in-house loans are that they are typically less paperwork and smaller closing costs. However, the downside of these loans are that the interest rates are only locked for 3-5 years then they balloon. Oftentimes, the bank will renew the loan once it balloons and that is where most people prefer an adjustable rate mortgage (ARM).

I hope this gives you a little insight into the world of investments loans. I, of course, would be more than happy to discuss this further, just shoot me and e-mail or comment below.

The biggest piece of advice I can give you is be sure that you shop around for lenders!

Tuesday, August 14, 2007

9 Tips to Repair Your Credit to Purchase a Home

In our latest video podcast, Paul shares 9 tips to cleaning up and repairing your credit so that you can purchase a home either as your primary residence or investment (rental) property.

Usually, when you purchase an investment home, most lenders require a credit score of 680 or higher. We break down the credit scores in our own opinion of what is good and not so good as follows:

Below 620 = Not So Great
620-700 = Okay, Room for Improvement
700+ = Excellent Credit

Now, if you're trying to improve your credit score, here are the 9 tips that we give:

1) Pay all of your bills on time.
The most obvious but can be the hardest to do. You want to pay all of them on time but if you had to choose-- always pay the revolving debts first and on time; i.e. credit cards, car loans, rent or mortgage payment, etc. These can affect your credit score the most.

2) Avoid companies that offer assistance for a fee.
They are not all bad, but usually you'll find yourself paying a fee for someone to tell them to pay their bills on time. Many of these change-your-credit-overnight gimmicks are just that. Use the fee that you would pay them to pay down on a credit card; you will be way ahead.

3) Have your monthly payments auto-deducted from your bank account.
Out of sight, out of mind. Having auto-deduct makes sure you are never late and you learn to live off of what is left over. Besides, it will save you a stamp.

4) Consolidate your high interest credit cards to one with a lower rate.
High interest rate loans will be the death of us all. Try to lump balances together and look hard for a lower rate. Sometimes you have to dig a little, but it can save you a ton of money.

5) Watch your credit lines on your current cards.
The higher available credit limit you have, it could result in a lower score. If other areas of your credit are weak, just the fact that you have the ability to pull thousands off of a credit card can weaken your score. So, have your limit lowered to only what you really need. It can always be increased later.

6) Establish new credit.
A gas card. A department store card. Some of these types of cards are easier to obtain and have modest credit limits, like $250 or so. However, these types will help your score as long as you pay on time.

7) Avoid a lot of credit inquiries.
Trying to apply for any type credit puts an "inquiry" on your credit report even if you are not approved. Too many of these inquiries gives the impression that you may be trying to borrow more than you can afford. Therefore, this can hurt your score. An occasional inquiry is no big deal, but applying for 10 credit cards in a month will hurt.

8) Use your head and stay focused.
Cancel any unused credit cards. Pay off lower balances and use the additional money to put towards higher loans. If you stay the course and keep everything current, your score will improve. It will take time and there is no quick fix, but you can do it!

9) Check your credit again in 6-12 months to see signs of improvement.
About every 6 months, credit scores seem to be updated. Partly due to when the credit companies report about your activity. However, if you are late, they are quick to report and it will destroy you immediately. So, you will probably begin to see improvement in about 6 months but it could take at least a year depending on how low your score is. It will take time, but clearly worth the effort.

Then when you are ready to purchase a home, then contact us and we'll get you on the right track. If you have questions, don't hesitate to e-mail!

Wednesday, August 01, 2007

What are Tenants looking for?

According to an article that I read in REALTOR Magazine online, Apartments.com conducted a survey and there is a list of what Tenants are mainly looking for when renting property. (Among the many other lists and demands that they already have...yes I said that with sarcasm).

First, if a Tenant was comparing equal properties side-by-side, over 52% said that location would drive their decision.

The other items were as follows in the Tenant's lists of "wants":

Air conditioning: 81%
Parking: 81%
Washer and dryer in unit: 54%
High-speed Internet in unit: 47%
Dishwasher: 46%
Elevator: 24%
Pool: 21%
Hardwood floors: 13%
Fireplace: 5%

We can't guarantee that we've got all of these things that Tenants are looking for in renting property, but we sure get close. You can see what rental properties that Dizmang Properties has available by checking out our web site.