Category: Options
Do I Need a Letting Agent?
In the UK, they have a term for real estate agents that specialize in rentals: letting agents. In the U.S. most “letting agents” take the form of real estate agents or property managers. If you are looking to rent a property but you are intimidated by the prospect of finding a qualified, trustworthy renter and maintaining a property on your own, a letting agent can make the process easy.
Most letting agents or property managers will screen potential tenants, market and show your property, and perform credit and reference checks to determine if people can afford to make payments. They can also give you an idea of how much you can reasonably charge, and what you can do to make your house more appealing to tenants. Some even arrange for maintenance, collect rent, and deposit it in your account every month. In exchange for this help, landlords can expect to pay a percentage of the rent they charge for the length of the contract, usually five to ten percent. So if you rent your property for one thousand per month for one year, and the agent charges ten percent, you will have to pay twelve hundred dollars when the contract is signed. Property managers that provide more ongoing services will charge more.
Many landlords that don’t live near their property, have too many properties to manage, or are simply inexperienced at finding good renters on their own would benefit from the help of a letting agent or property manager. If you decide that a letting agent is a good option for your needs, ask friends and local landlords for recommendations and compare each agent’s credentials, fees, and experience. If you can get names of landlords each agent has helped in the past and permission to contact them, it would help take some of the guesswork out of the process. It’s obviously not necessary to employ a letting agent or manager to help you find a renter, but if you will be living far away, are inexperienced at finding renters, or simply don’t have time, they can be very helpful.
Real Estate Loan Advice from PMI Education
Here are a few quick tips from the Professional Marketing International real estate team to help you find the best deals on real estate loans. Because securing funding is one of the most important elements of any deal, the consultants from PMI Education devote much of their time each week helping clients identify the most affordable and trustworthy sources. Consider the following points any time you are looking for a loan.
- Safeguard your credit. The better your credit, the better your prospects of getting a good loan. Credit card debt and other consumer debt should be avoided whenever possible.
- Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders.*
- Consider other funding sources. If you have limited money and limited experience, joining a group of other real estate investors may be a good strategy. Identify what specific skills you could contribute, such as available time to look for houses, professional rehabbing skills or a good network of contacts. Other investors could help contribute the capital.
- Talk with several lenders before you decide. Most lenders need 3-6 weeks for the whole loan approval process. Your real estate broker will be familiar with lenders in the area and what they’re offering. Or you can look in your local newspaper’s real estate section – most papers list interest rates being offered by local lenders.*
Understanding Loan Costs
Buying real estate is the most expensive and long-lasting financial commitment most of us will ever make. Doing your homework beforehand will help you stretch your mortgage budget and get the most out of your options. The real estate consultants at Professional Marketing International have years of experience and are specially trained to help their clients navigate the common snags which trouble investors. Here are a few tips from the PMI Education team to help you prepare for your next real estate investment.
Pre-approval
It is important to get pre-approved for your next loan. This requires you to complete a loan application and provide pay stubs, bank statements and other employment information. Upon approval, the lender commits in writing to make the loan if the purchase occurs within the agreed period of time. Generally, you will have to pay a nominal fee for this service. So why is pre-approval better than pre-qualification? With pre-qualification, the lender may require all the same information, but they don’t necessarily check it out. More importantly, there’s no assurance of a loan approval.
By getting pre-approved, you have a loan guarantee. This puts you in a strong bargaining position with sellers and real estate agents, and those who are in a hurry to move a property will often accept a lower bid from a pre-approved buyer because they have confirmation that the deal will close.
Closing Costs
Because closing costs can significantly add to the final bill, you should try to minimize these fees as much as possible. A good place to begin is by not overshooting your budget. The cheapest lenders often provide the most conservative underwriting standards, meaning you can save money by maintaining a reasonable budget.
In addition to limiting your budget, take the time to shop around for the lowest closing costs. Don’t merely take a lender’s word…analyze their fees and make sure you know what to expect. Federal laws assist this process, requiring lenders to provide borrowers with a good faith estimate of settlement charges three days after they apply for a loan.
Final Negotiation
Remember that you can walk away from the mortgage any time before closing. Compare your good faith estimate to the initial ballpark figure. If you see additional costs added to your loan, don’t be afraid to take your business elsewhere. If you move forward with your loan, ask for a copy of your HUD-1 settlement statement at least one day before closing. This will provide you with a final tally of all the costs and where the money will be allocated. If there are discrepancies between the HUD-1 and the good faith estimate, you should take action. If your lender is not cooperative, you can file a complaint with the U.S. Department of Housing and Urban Development Office. Also, as a final option, you can sue your lender.
By doing your homework, you can prepare for your next real estate deal. You’ll save money and reduce stress by budgeting your expenses and ensuring your lender is on the level. If you have a question, ask it. If something doesn’t feel right, find out why. Doing so will make your next purchase a positive experience.
