Buying Your Own Home or Rental Properties
Buying real estate is a significant financial and emotional investment. Whether you're purchasing a home for personal use or an investment property, it's crucial to approach the process with careful consideration and thorough research. No matter what your budget or goal is, one of our professional agents can be with you every step of the way, from helping you narrow your search, to guiding you through the negotiation process.
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Please note that each real estate transaction is unique, and unexpected challenges may arise. Having a knowledgeable and experienced team, including a real estate agent, mortgage broker, and legal counsel, can greatly simplify the process and increase the likelihood of a successful purchase.
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Here are the general steps to take for buying your own home and investment properties;
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Home for Owner to Enjoy
Determine your budget
You don't need to pay all cash to purchase a home if the property can qualify for a loan. Therefore, it should be the first step to obtain pre-qualification or pre-approval for a mortgage through a loan officer working for a lender, mortgage broker, or your bank, for the amount of down payment and loan program you choose. Consider additional costs such as property taxes, insurance, home or condominium association fees. maintenance, and closing costs.
​Figure out your needs and wants
Make a list of facts that are important to you, such as proximity to work, criteria for schools, size of the home and must-have home features.
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Search for and tour your dream home
A licensed and experienced real estate agent can provide valuable insights, narrow your search and give you tours of the homes that fit most of your criteria. You may also do some home work by searching online for properties and visit some homes when the Sellers' Realtors hold Open Houses.
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Sign a sales contract and close on the sale
Once a property that fits your budget, needs and wants is located, your real estate agent can make an offer, negotiate on your behalf, turn the offer into a signed sales contract, guide you through the steps to close the sale and put the home keys into your hands!
Investment in Residential and Commercial Real Estate
Real estate investment could earn passive income and your property may appreciate in value over time. Also there are tax benefits such as mortgage interest deductions, property tax deductions, and depreciation, which can enhance the overall return on investment.
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Before making a real estate investment, it's advisable to conduct thorough due diligence, including market research, property analysis, and financial modeling. Consulting with real estate professionals, financial advisors, and legal experts can provide valuable insights and help you make informed investment decisions.
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Instead of figuring out your needs and wants in the steps for the purchase of your own home, you shall determine whether the returns on the real estate investment meet your investment goals for investment properties. It's important to note that real estate returns can be influenced by factors beyond the investor's control, such as economic conditions and local market trends. Additionally, individual investor goals and risk tolerance play a significant role in determining what constitutes a satisfactory return. Here are some key metrics commonly used to evaluate the return on real estate investments:
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Cash Flow:
Cash flow is the net income generated by the property after deducting all operating expenses and mortgage payments from rental income. A positive cash flow indicates that the property is generating income.
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Capitalization Rate (Cap Rate):
The cap rate is calculated by dividing the property's net operating income (NOI) by its current market value. It provides a percentage that represents the property's potential return on investment without considering financing. A higher cap rate generally indicates a higher potential return.
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Return on Investment (ROI):
ROI is a comprehensive metric that considers the total return on an investment relative to the initial cost. It takes into account both the property appreciation and the income generated over time.
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Gross Rental Yield:
Gross rental yield is calculated by dividing the property's annual rental income by its current market value. It provides a percentage that represents the rental income relative to the property's value.
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Total Return:
Total return considers both the property's appreciation and the income generated. It's the sum of capital gains and rental income over a specific period.
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