For many years, real estate investors who ventured into unfamiliar territory exponentially increased their risk levels. Because communication between markets was slow and poorly defined, these intrepid investors were flying blind. All that has changed.

By its nature, real estate is a local investment vehicle, with values dependent on local property characteristics, local demand, and local economic conditions. Traditionally, if one or more of these variables fluctuated — driving the local market into unprofitable territory — investors were left to choose between waiting for a turnaround and rolling the dice with less-than-favorable conditions.

Today’s property investors have a third choice; they can look for opportunities in another city, another state… even another country.

Enter the Internet
In the brave new world of real estate investment, the Internet provides visibility to markets all around the globe, as well as instant access to the information investors need to make informed decisions.

Jen Matlock, formerly of Florida and now living in Dallas with her husband, is a licensed real estate professional and instructor in real estate investment strategy. Her principal real estate activity is buying and selling residential investment properties.

For years Matlock invested successfully in her local Florida market. As that market softened, however, her business model lost viability. So she started looking elsewhere. Using the Internet as a research tool, Matlock began searching for a market in which she could operate profitably and with confidence. Her research led her to Dallas/Ft. Worth, which she determined was undervalued by 30 percent.

The market fit her business model nicely. She developed a business relationship with a Dallas-based relative who took care of the due-diligence tasks that she performed in the Florida market. The arrangement worked very well, and she was so successful with her Dallas-Ft. Worth investments that she eventually moved to the area.

And though she continues to find local investment opportunities that fit her business model, she’s also searching for other undervalued markets. In recent months, she began investing in Houston, and next year she plans to explore opportunities in San Antonio and Austin.

Stick to the plan
Successful investing in any market — local or distant — requires discipline. That means developing a business model that produces the results you want, and then following the model.

Matlock’s business model is simple in concept, but it requires abundant information. Whether she is investing locally or from a distance, she won’t put money into a property unless it generates more cash inflow than outflow and has substantial equity — at least 25 percent — after fix-up.

These criteria sound simple, but they require accurate research on real estate values and regional economics.

So Matlock also relies heavily on the Internet, because it enables her to perform her due diligence paperlessly, from start to finish. And she can move through the process of buying and selling rapidly.

For example, with a few searches and a couple clicks of the mouse, an investor can find:

• Multiple Listing Service (MLS) statistics and data on available houses
• A regional economic outlook
• Listings by neighborhood and region, by price, and by other criteria
• Demographics by region and by neighborhood
• Tools for assessing the investment potential of properties

A few short years ago, this type of information was available only by traveling to and doing research at libraries as well as city, county, and state repositories of records and data.

Another key element of Matlock’s business model is developing a tight business relationship with a person who lives in the investment market and knows it well. This person, who acts on behalf of Matlock and benefits when she benefits, may be a relative, a business associate, or another real estate professional.

More rules for investing out-of-area.
If diligent research is important for investing in your local real estate market, it’s even more important when you invest outside the lines. Here are some rules that real estate professionals say wise investors should follow.

Consider real estate investing a team effort. Unless you are a veritable renaissance woman, you’ll need to rely on others, particularly if you’re investing outside your local area. You’ll want a relationship with a real estate broker, a property manager, a local attorney, a building inspector, and an insurance agent — regardless of whether you find these capabilities in one person or several. Equally important, you must be able to trust your team members and agree on their fees before you begin making investments.

Understand real estate laws before you invest. In the United States, real estate law is essentially local law, and it varies greatly. The Western states have the best investor protections, and in some other states protections are minimal. Find out specifically what protections you’ll have before you invest in any area.

Go local first. An investment in a distant market should not be your first real estate deal. No amount of information will replace experience, and local real estate investment experience is essential as preparation for investing in distant markets.

Don’t scatter your investments.
If you’re in a good market, you’ll gain from your increasing knowledge of that market. It’s easier to focus on one or two markets than many scattered areas. Move out of the markets you know only when they stop yielding the returns you expect.

Educate yourself. The Internet is a boundless source of real estate information, and many campuses, such as the University of Texas and Washington State University, house research institutions that provide abundant real estate and regional economic information. Much of that information is available online.

Check out the Web sites of the National Association of Realtors®, CNN Money, state universities, regional newspapers, business journals, banks and other financial institutions, and real estate agents and brokers, as well as local and state government agencies’ Web sites that relate to real estate. Through these and other sites, you can educate yourself about opportunity and risk in local and distant markets.

Expand your horizons, and mitigate your risk
To be sure, there is more risk in out-of-town investing than in a local, familiar market — especially because you have to rely on other team members and you could feel pressured to make decisions without adequate knowledge. But you can improve your chances of success with careful planning and by operating from a business model that accounts for risk.

Moreover, when the real estate climate in your area is suffering, the risk you incur from investing in a distant locale may be less than that of staying local.

Source: Growing Wealth

It’s time to start considering a re-entry into the real estate market. After all, simple supply and demand dictates it is a buyer’s — and investor’s — market.

Many savvy real estate investors have made excellent returns by moving against the trend with careful market timing. The thought process is simple: When everybody is buying, it’s time to sell. And, when everyone is selling, it’s time to consider buying.

Here are five market conditions that have investors thinking today just might be the perfect time to buy real estate.

No. 1 – Low prices

Prices are down in most real estate markets across the country. In fact, the national median existing home price for all housing types was down 7.7 percent from a year ago, to $200,700 in March from $217,400 during the same month last year, according to the National Association of Realtors^® (NAR). In many markets, the drop is even more substantial, especially when you compare with 2006 prices.

Greed is one of the biggest culprits keeping buyers on the sidelines. They are hesitant to buy now because prices may continue to drop. No one wants to buy a $210,000 home and see its value drop to $190,000 in six to 12 months.

Though this is a valid concern, it can be minimized with careful research of a specific market. You can further ensure your investment will hold value by making an offer that is 10 percent to 15 percent below the current market value.

The days of bidding wars and escalation clauses are gone. Homes are no longer selling for more than market value, and sellers are lucky to get the list price. Now is the time to invest in a real bargain.

No. 2 – Great selection

The housing inventory is on the rise, meaning there are more homes available for sale. According to NAR, it will take more than nine months to sell the national inventory of homes at the current sales pace. In some markets, such as South Florida, there is more than a 16-month supply of homes.

In addition to lower prices, this large inventory means a greater selection for buyers. As an investor, you can look for a home with the features, amenities, and favorable location you desire. By getting in the market now, you can afford to be particular and take your time finding exactly what you want.

No. 3 – Motivated sellers

When faced with the possibility that their house could sit on the market for a year or more, sellers become motivated to work with prospective buyers. Not to mention the fact that the already sodden market is being further deluged with an increase in foreclosures, short sales, and bank-owned properties, providing sellers even more motivation to be flexible so they can sell their properties.

Seller motivation extends far beyond accepting a lower offer. Sellers today will consider owner financing, where the buyer makes payments to the seller over time for all or a portion of the purchase price. Sellers are also more likely to agree to repairs or improvements requested by a buyer or recommended by a property inspector.

No longer in the driver’s seat, sellers are now agreeable to covering a portion of closing costs, buying down the rate, accepting a trade for the down payment, or throwing in new appliances and even furniture in the sale. In short, sellers will now negotiate.

No. 4 – Favorable interest rates

Interest rates are down, making housing more affordable. With the national average rate for a 30-year conventional fixed-rate mortgage at around 6 percent, a buyer can save thousands over time. For example, a $200,000 loan amortized over 30 years at 5.9 percent interest will carry a monthly principal and interest payment of $1,186.27.

Let’s say you’re waiting for the price to drop, however, and you buy the property for $190,000. Sure, you’ve saved $10,000 initially, but in the meantime the interest rate climbs to 7 percent, and your monthly payment increases to $1,264.07. By missing out on the lower interest rate today, you pay an extra $28,008 over the 30-year life of the loan.

In case it bears repeating, now is the time to obtain a fixed-rate amortized loan. There is no reason to take on the risk of an adjustable rate mortgage when interest rates are at historical lows. Also keep in mind that lenders are going back to more traditional underwriting requirements in light of increased delinquencies. This means tougher restrictions on the amount of the down payment, proof of income, and credit scores will make obtaining a loan more difficult. Federal Housing Administration (FHA) loans, seller financing, and lease options are on the increase as alternative financing options to conventional loans.

No. 5 – Rental opportunities

As overblown real estate prices begin to deflate, investors will find they can begin collecting rents that cover all their monthly expenses. It was difficult to find and purchase a rental property that would cash flow at the previously over-inflated prices, but today’s bargains can make a cash-flowing rental realistic once again.

Further, tenant demand for rental properties is on the rise. And with foreclosure filings up 57 percent and bank repossessions up 129 percent over last year, according to RealtyTrac, the rental demand is likely to increase further as people who have lost their homes to foreclosure look for alternative places to live.

And most people who find themselves in this situation will be forced to rent for five to seven years before they can qualify for bank financing to purchase their own home again.

Making the decision

Although there are compelling reasons to consider buying real estate now, it is always important to weigh the pros against the cons.

To help alleviate indecision, follow these rules:

1. Look at values in the local area to see if they’ve stabilized or if they still appear to be in a downward spiral. Only buy in stable areas.

2. If you’re buying a personal home, be sure to plan on living in the house for at least the next three to five years.

3. When buying real estate as an investment, be certain the property cash flows, with rental income exceeding expenses such as the mortgage, taxes, insurance, and other costs.

4. Finally, analyze your economic stability and only buy what you can comfortably afford. Keep at least three months of living expenses in reserve in preparation for that fabled rainy day.

With a little common sense and thorough homework, you’ll likely find that now is a great time to consider buying real estate. Markets are cyclical, and the current combination of low prices, high inventory, low rates, motivated sellers, and increasing rental demand make it a buyer’s market for bargain shoppers.

Source: Growing Wealth

The team at eppraisal.com is proud to announce the beta launch of hoodeo™. Hoodeo plays neighborhood matchmaker, giving consumers up to 10 neighborhoods that best match their needs.

So, you may be asking yourself, how does it work? Well, it’s easy! First, create your hoodeo profile by answering a few questions about your lifestyle, desired property type and price range. Then, let hoodeo work its matchmaking magic then show you your best places to live. Hoodeo goes one step further and shows you homes that are for sale that match your criteria in your best places.

These are my top 10 places:

1. Pittsford, NY 14534
2. Greensboro, NC 27410
3. Pearland, TX 77581
4. Richmond, TX 77469
5. Hesperia, CA 92344
6. Pewaukee, WI 53072
7. Charlotte, NC 28211
8. Cypress, TX 77429
9. Kathleen, GA 31047
10. Houston, TX 77070

What are yours? http://www.hoodeo.com. Post a comment here and let us know what your best places are… oh and don’t forget to share them with your friends… that way they know where to find you when you find your perfect home!

If you are considering the possibility of purchasing a home in the current market, check out this article on Bankaholic. It gives you some tips for purchasing a home given today’s real estate landscape.

 http://www.bankaholic.com/2008/buying-home-down-market/

I thought I would share this CNN article with all of you about closing costs and how to negotiate them. I am currently 30 days out of closing on a new house and having just been through the mortgage shopping process last week, I could really relate to the issues they talk about such as how difficult it is to compare loans between lenders. Everyone has a different set of fees that they charge. Every lender has different loan configurations, no pmi but with a higher interest rate, lower interest rate but pmi added onto the payment. One point, two points, no fees, lots of fees. The more lenders you call, the more confusing it is.

 My advice to you before you start shopping for a mortgage is to first do some research on what is happening in the current mortgage market. Make sure you know what the different types of fees are, what sort of taxes are required at closing in  your area, and some basic mortgage terms. This way when you call a lender or go to your local branch, you will know what you are looking at when they give you the information which will hopefully make it all a bit less confusing.

Your Real Estate Agent can be a good soure of information on this topic.

One other thing to think about before mortgage shopping is to think about your own personal situation. How long do you think you will stay in this loan for? If you are planning on staying for a while, then it may be worth it to pay a bit more upfront to lower your interest rate by buying points. If you think you are going to want to move or refinance in the next couple of years, then the lower the out of pocket expenses, the better.

Here is another article worth reading from Smart Money.