Looking to start investing in Real Estate? Read this guide that is full of information to help the beginning novice learn how to begin mastering the real estate market. From renting, to selling, to buying my goal is to help educate as much as possible.
We have covered a lot of material in this series. From the way to find flexible sellers, what exactly, a flexible seller is, how to determine market value of a piece of property, even lease purchase options, and what should be included in a sales contract. This is a lot of information to be presented. Just keep calling sellers and taking notes. Maybe the time to purchase is not now, but keep learning and it will all pay off. You will find that dream piece of property that will teach you a lot. I also recommend watching a show on TLC called “Flip That House” this can also teach you some details about what kind of house can be repaired, as well as what type of budget you are looking at.
Our last topic in this series will be the closing. After all once closing is done, you take possession of the property to either move in, or else the property is ready to be rented, or even renovated and sold. There are several key people that need to be present at the closing, as well as several key documents that need to be present to complete the process. The closing should typically take place either at the attorneys’ office of the buyer, or at the office of the Title Company who is handling the title.
Four major pieces of paperwork need to be present at the closing. The first is the Loan Commitment/Agreement, which covers the terms, and conditions that are typically associated with the mortgage that will be attached to the property. If you are paying cash for the property, this can be excluded. Second is the Sales Contract, if you recall we covered the sales contract in depth in the last installment so you should be familiar with what the sales contract is, and what should be included in the contract at a minimum. Third is the Title Insurance Commitment, this is a report prepared by either a title company or the attorney of the seller that will discloses any liens on the property, as well as anything that may need to be cleared up in order for the buyers to obtain a clear title to the property. Finally the last document needs to be included is the Closing Statement, this document outlines all costs and fees associated with the purchase, included in the sales price, and outlines exactly who is responsible for which portion of the costs.
Once an offer to purchase property has been accepted, there are several things that you need to do. I am going to outline the items so that you have a bit of a time frame to work with. Each situation is slightly different, so there is no need to call a national crisis if a task runs over by a few days, as long as things are completed accurately, and the proper way you should be fine.
Immediately after offer is accepted you should begin working on the financing. If you are going to be assuming the mortgage, then you apply to assume the mortgage with the original lender, if you will be obtaining new financing you should begin applying with several different lenders, if you have a lending company you prefer to work with, make sure you contact them. With lenders the lower the interest rate and fees the better off you are. Shop around carefully for the best results and prices. If you are going to be paying cash for the property or need the assistance of partners or need to secure a home equity loan to get the funds then now is also the time to start those so that you will have the funds you need in plenty of time. Also now is the time to start drafting the Sales Contract, once a draft has been prepared it needs to be distributed to all parties of the sale so that any adjustments that need to be can be done in plenty of time. Lawyers usually do not review documents the same day they receive them, so you will need several days for your lawyer to review and get back to you.
Approximately one week before closing, you need to start working on details for the insurance, title, taxes, and renters if it is going to be a rental unit, as well as utilities. First start with insurance, you need to order a policy and get this set into motion. Next, you need to review the Title Insurance Commitment to ensure that the title is clear, and there are no problems in obtaining a clear title. You also need to obtain and review the Closing Statement so that you know exactly what the expected costs are to be, you do not want any surprises at the closing itself. At this time, you also need to notify the utility companies of the change in ownership of the property. You may need to pay deposits for the utilities and schedule the date when the bills will change to your responsibility. Most utility companies will allow you to schedule this in advance so that the change takes place on the specified date. If the property is currently a rental and there are tenants living there, you need to draft a letter informing them of the ownership change. This is not mailed yet; you just draft and ensure it is accurate and complete. You will not actually mail this until after the closing. If the property is empty, and in good repair and no work is needed you can start working on the newspaper ads that you will be running, most newspapers require at least a few days advance notice to run ads, this gives time to schedule the ads to run at the perfect time compared to closing.
The day before closing there are still tasks to do, you need to very carefully inspect the property to ensure that there is no damage or anything else that you need to know about before the closing. Check everything even if a home inspection was previously done; make sure you are completely satisfied with the purchase before it is finalized. Finally you need to obtain a certified check for the funds that will be due at the closing itself. You need to check with the seller, real estate agent or broker to confirm who the check needs to be payable to. Often the check is to be made to the closing agent’s escrow account, but best to double check before a mistake is made.
Whew, now that all of that work is done you are almost there, it is almost time to do your personal victory dance as you complete your first transaction. At the closing, you have several things that need to be completed. This includes signing all paperwork necessary, delivering the certified check for the closing funds, obtaining the keys to the property, obtaining any warranties and maintenance as well as service contracts that are transferable, also if the property is currently rented, an original copy of all lease agreements should be obtained.
Congrats, sit back and drink a cup of coffee you have now successfully finished your first closing and started your career as a real estate investor. Now that you have your property, it is time to start working on the management aspects of it. If you are going to live there, well it is time to move in and throw a housewarming party. Good luck with future business transactions in your new investment career.
The next few installments of this guide will begin to cover the nitty gritty business of actually managing the property for profit. Since we have just covered closing in this installment, it only seems natural to follow with Installment #17 discussing some methods that can be used for the buyer to get cash back at the closing. While you bask in the enjoyment of having your first property do not let it take all of your time, after all to build an empire it takes more than one piece of property, continue making calls and viewing properties as time goes on.
We have covered a lot of material in this series. From the way to find flexible sellers, what exactly, a flexible seller is, how to determine market value of a piece of property, even lease purchase options, and what should be included in a sales contract. This is a lot of information to be presented. Just keep calling sellers and taking notes. Maybe the time to purchase is not now, but keep learning and it will all pay off. You will find that dream piece of property that will teach you a lot. I also recommend watching a show on TLC called “Flip That House” this can also teach you some details about what kind of house can be repaired, as well as what type of budget you are looking at.
Our last topic in this series will be the closing. After all once closing is done, you take possession of the property to either move in, or else the property is ready to be rented, or even renovated and sold. There are several key people that need to be present at the closing, as well as several key documents that need to be present to complete the process. The closing should typically take place either at the attorneys’ office of the buyer, or at the office of the Title Company who is handling the title.
Four major pieces of paperwork need to be present at the closing. The first is the Loan Commitment/Agreement, which covers the terms, and conditions that are typically associated with the mortgage that will be attached to the property. If you are paying cash for the property, this can be excluded. Second is the Sales Contract, if you recall we covered the sales contract in depth in the last installment so you should be familiar with what the sales contract is, and what should be included in the contract at a minimum. Third is the Title Insurance Commitment, this is a report prepared by either a title company or the attorney of the seller that will discloses any liens on the property, as well as anything that may need to be cleared up in order for the buyers to obtain a clear title to the property. Finally the last document needs to be included is the Closing Statement, this document outlines all costs and fees associated with the purchase, included in the sales price, and outlines exactly who is responsible for which portion of the costs.
Once an offer to purchase property has been accepted, there are several things that you need to do. I am going to outline the items so that you have a bit of a time frame to work with. Each situation is slightly different, so there is no need to call a national crisis if a task runs over by a few days, as long as things are completed accurately, and the proper way you should be fine.
Immediately after offer is accepted you should begin working on the financing. If you are going to be assuming the mortgage, then you apply to assume the mortgage with the original lender, if you will be obtaining new financing you should begin applying with several different lenders, if you have a lending company you prefer to work with, make sure you contact them. With lenders the lower the interest rate and fees the better off you are. Shop around carefully for the best results and prices. If you are going to be paying cash for the property or need the assistance of partners or need to secure a home equity loan to get the funds then now is also the time to start those so that you will have the funds you need in plenty of time. Also now is the time to start drafting the Sales Contract, once a draft has been prepared it needs to be distributed to all parties of the sale so that any adjustments that need to be can be done in plenty of time. Lawyers usually do not review documents the same day they receive them, so you will need several days for your lawyer to review and get back to you.
Approximately one week before closing, you need to start working on details for the insurance, title, taxes, and renters if it is going to be a rental unit, as well as utilities. First start with insurance, you need to order a policy and get this set into motion. Next, you need to review the Title Insurance Commitment to ensure that the title is clear, and there are no problems in obtaining a clear title. You also need to obtain and review the Closing Statement so that you know exactly what the expected costs are to be, you do not want any surprises at the closing itself. At this time, you also need to notify the utility companies of the change in ownership of the property. You may need to pay deposits for the utilities and schedule the date when the bills will change to your responsibility. Most utility companies will allow you to schedule this in advance so that the change takes place on the specified date. If the property is currently a rental and there are tenants living there, you need to draft a letter informing them of the ownership change. This is not mailed yet; you just draft and ensure it is accurate and complete. You will not actually mail this until after the closing. If the property is empty, and in good repair and no work is needed you can start working on the newspaper ads that you will be running, most newspapers require at least a few days advance notice to run ads, this gives time to schedule the ads to run at the perfect time compared to closing.
The day before closing there are still tasks to do, you need to very carefully inspect the property to ensure that there is no damage or anything else that you need to know about before the closing. Check everything even if a home inspection was previously done; make sure you are completely satisfied with the purchase before it is finalized. Finally you need to obtain a certified check for the funds that will be due at the closing itself. You need to check with the seller, real estate agent or broker to confirm who the check needs to be payable to. Often the check is to be made to the closing agent’s escrow account, but best to double check before a mistake is made.
Whew, now that all of that work is done you are almost there, it is almost time to do your personal victory dance as you complete your first transaction. At the closing, you have several things that need to be completed. This includes signing all paperwork necessary, delivering the certified check for the closing funds, obtaining the keys to the property, obtaining any warranties and maintenance as well as service contracts that are transferable, also if the property is currently rented, an original copy of all lease agreements should be obtained.
Congrats, sit back and drink a cup of coffee you have now successfully finished your first closing and started your career as a real estate investor. Now that you have your property, it is time to start working on the management aspects of it. If you are going to live there, well it is time to move in and throw a housewarming party. Good luck with future business transactions in your new investment career.
The next few installments of this guide will begin to cover the nitty gritty business of actually managing the property for profit. Since we have just covered closing in this installment, it only seems natural to follow with Installment #17 discussing some methods that can be used for the buyer to get cash back at the closing. While you bask in the enjoyment of having your first property do not let it take all of your time, after all to build an empire it takes more than one piece of property, continue making calls and viewing properties as time goes on.
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