Why would you buy investment property without seeing it? It’s a numbers game. Whether or not you see the property before you make an offer isn’t nearly as important as making sure the numbers make sense.

A man in California used to just send out offers on a hundred MLS listings at a time, offering 25% less than the asking price on each one. Occasionally a few sellers would accept his offers. He never had to look at the homes beforehand. Including an “inspection and approval” clause in the offer meant he could always back out of the deal later when he saw the house. Meanwhile, he efficiently found the truly motivated sellers.

This true story demonstrates that with a good clause or two in the contract, you don’t have to worry about making an offer before you see a property. It’s true when you buy investment property or your next home. When it isn’t everything the seller says it is, you can reject the deal with little or no loss. So why wouldn’t you want to look at the property?

Buy Investment Property By Numbers

The main reason you might skip looking at a property before making an offer is time. This is certainly true if the property is far away. If you don’t get a price that makes sense, why spend your time traveling to look at real estate investments? A price and terms that make sense – this is what is important. Of course you’ll probably want to look at the actual property eventually, but looking at the numbers is how you invest.

Investors value income property according to current cash flow (or should if they want safe and viable investments), so start by verifying income. Get the actual income figures for the past 12 months. Always consider the potential income if rents are raised, vending machines are added, etc., but base your offer on the current income.

Verify all expenses with investment properties. If any expenses listed by the seller seem unusually low, they most likely are. Just substitute your own best guess in place of any suspicious numbers.

After you determine the net operating income, apply the appropriate capitalization rate to arrive at the value. If you’re not sure how to do this, get help. However, you really should understand the principle of how to figure a cap rate. This is a numbers game you’re playing.  
Calculate loan payments (talk to your banker), and see how much cash flow you’ll have. Then you can figure your cash-on-cash return based on how much of your own money you put into the deal. Just divide the cash flow by your investment.

When the numbers work, you can safely make an offer. Inspections will tell you if there are problems that will affect the cash flow. You can always renegotiate if there are such problems (assuming you made your approval of all inspections a contingency of the offer). Of course, you can even go take a look now that you are truly ready to buy that investment property.

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Picking yourself up out of debt can be difficult and tiring. This process requires hard work and focus, as you must learn to change your spending habits. It can be difficult for anyone to follow these changes and become debt free. If you want to be debt free, you need to follow a set plan. These 5 tips will help you to create, and stick to, that plan.

Assess your Debt

The first thing that you need to do is to assess your current debt situation. You need to understand how much debt you have. You need to understand how much interest that debt is incurring. These numbers will help you to set your goals. If you want to be free of all debt, you need to fully understand that debt.

Make More than the Monthly Payment

Many attempt to be freed from their debt by paying the minimum monthly payment on their credit cards. This method will not remove debt from your life. In some cases, the debt can still rise. You need to make an extra effort to pay more than the minimum amount each month. The more you can afford to pay a month, the better off your finances will be.

Budget Your Paycheck

If you want to be free of debt, you need to budget out your paycheck. You need to budget for payments such as rent payments, car payments, and insurance payments. You should also budget out a specific amount for gas and groceries. After you have budgeted these needs, you can budget in the amount of money that you want to pay on your debt. This will help to keep your current finances secure.

Start Saving

If you are looking to be free of debt, you need to start saving money. A solid savings account can help prevent you from going into unmanageable debt in the first place. While you may not be able to contribute a lot to your savings per paycheck, the account will eventually grow into a stable and reliable account.

Take Something Out of your Routine

Most people have a habitual spending habit that will drain them of a decent amount of money per month. Think about a specific spending habit that you have. Some people go out to fast food on specific days. Others need their cup of coffee from their favorite coffee house every day before work. Taking these extra expenses out will help you to reallocate that money to a savings account or debt payment.

It is important for you to assess your debt before you create your plan. This will allow you to understand your situation fully. When you understand the situation, you can plan for monthly payments. This plan will also help you budget for your life, and budget for a savings account. These components all add up, helping you to be debt free as quickly as possible.

If you are interested in buying and profiting from short sale properties, you have many options. The most common is to flip the property. For example, buy a single family home, make needed repairs, and relist the home for sale. An alternative is to rent the property. If this is your first choice, you may consider allowing the borrowers or current home occupants to rent, but is this a good idea? It depends.

How much would you charge for rent? What you must remember is how you were able to buy the property. The borrowers were unable to afford their mortgage payments. What makes you assume they could afford monthly rent and utilities? The goal of profiting from short sales is to make money as quickly as possible. This means charging a fair value for rent. If average rental rates in the area are $900 a month for a single-family home, can they afford? If they were unable to pay similar mortgage payments, you got your answer. Either resell the property or find a tenant who can pay.

Average rental rates in the area. As previously stated, if it is common for a single family home to rent for $900 a month plus utilities, charge that much. Yes, a sob story may tug at your heart and you may want to do your good deed for the year, remember your goal. That is to make money. Truthfully, there are many families in need of a home. You can find a tenant who is willing to pay fair rental rates. Chances are, they have a heart tugging story too.

The current property state. Typically, properties are in better condition with short sales than foreclosures, but there are no guarantees. Commonly, borrowers suggest short sales. They want to avoid the damaging consequences of foreclosure and bankruptcy. These individuals take pride in and care for their home. They just can’t afford it any longer. When inspecting the property, how does it look? If you notice holes in the walls, torn furniture, and other small but costly damages, think about the added costs. If they are willing to “destroy,” the property when being the legal owners, what would happen if they were just renters?

So, should you let a borrower rent your recently purchased short sale property? It depends. The decision is yours to make. With that said, remember the quickest way to profit is from flipping. Unless you are able to purchase a low-priced property, have experience in the rental industry, or purchase property in an area where rentals are in high demand, reselling is your best option. These are less risks and the profit arrives sooner.

The only exception to the above mentioned factors you should take into consideration is with multi-family homes. Unfortunately, renters are left in a pinch with the high rate of foreclosures. Most pay their rent on time. It is the landlords and property owners that make poor financial choices. Some renters are literally having their money stolen from them, as it should go towards paying the rental unit’s mortgage, but it does not. If you have the option to purchase a multi-family or single-family home with paying tenants, keep it that way. In a couple of years, you recoup your expenses and make a profit but without the hassle.

The US housing market consists of the construction, sale and resale of residential properties all across the country. In the second quarter of this year, reports have shown that there has been a decline in home building as well as the sale and resale because of the collapse in the subprime lending industry last year which was one of the factors that contributed to the current financial crisis.

This means that a lot of people have to foreclose their homes if they can’t pay the amortization. Those who have not yet lost their homes are trying to find a way to keep theirs. Individuals who are well of have to think twice before considering building a home so they don’t fall in the same situation as others are also experiencing.

Companies involved in the construction industry have to layoff some workers rather than keeping them on the payroll because they are just wasting money keeping them around when there is no work to be done.

But it is not as bad as you think. There are advantages when there is a decline in home building. The price of materials and cost of labor are much cheaper so you can do a lot with your hard earned money. Since contractors need projects to survive, you will be able to find one very easily and also get a good price.

When you hire a contractor, you should know that your home will be built at a slower pace. This is not to stiff more money from you but to make sure that it is done right. Surely, you don’t want to stay in your new home and experience some problems less than 6 months after moving in right?

One way to make sure it is done just the way you want it is that the contractor of your choice will be able to hire only the best to work on your home.

The only catch to build your dream home is that you must have money stored somewhere since you will have a hard time lending this money right now from the bank.

If you don’t have that much cash on hand to build a house, another option will be to buy one because there are a lot of foreclosed homes right now and banks would rather sell it than just keep it with them.

Just how bad is the decline in home building? A report released by the US Commerce Department reveals that in August, there was 6.2% decline so that existing built units could be sold. This is their way to restore stability between supply and demand but it is going to take more than that to change the current situation.

Some stronger remedy is needed and maybe the $700 billion bailout plan could be the answer. Will it work? Only time will tell but a lot of people hope that it does so the economy will be in good shape and we can see a construction boom in the foreseeable future.

So what should we do until that happens? Pray and just hope for the best. If things work out like what most analysts predict, we will see a recovery by the 2nd half of 2009 which means thee will be no longer a decline in home building.

Auctions play a very important role in the buy of foreclosed homes or property. Thus it is vital to know as much as you can about the auction processes and guidelines. My discussion today will be focused on all the tips, tricks, do’s and dont’s when in attendance at an auction. You need to behave per the policies of the auction so it’s better to learn the protocol before hand.

You need to attend your first auction fully prepared. Don’t expect to be given details and information about the process or about any of the properties or houses being foreclosed. Banks move when they want to liquidate the property. Their goal is to liquidate the property as soon as possible because they have much more pressing work on hand. Banks never provide house details as some regular real estate agent would. Make sure you have all your homework done by the time you reach the auction site.

Information that you likely have to get before you reach the auction place are the tax details, location, conditions and market value of the house at auction. Get as many legal records as you can. It is possible that the owner or the tenant presently living in the house won’t allow you to enter and make a detailed inspection. However a careful observer can notice a lot of important things by just walking by or observing from a distance. Don’t forget the neighbors in this regard. They can help you a lot in your quest. And don’t be surprised if they aren’t more than willing to give you the real “dirt” on the property condition. A foreclosure property is often neglected and the neighbors might rejoice in losing the current occupants.

Another important check is to ensure that there are no liens against the property. You may be liable to pay them off under certain regulations if you win the auction.

Never expect to move into the house the same or the next day if you win an auction. Transfer procedures may take up to a month or maybe more in some conditions.

Be prepared ahead of time as to how much you would be willing to pay for the home in question. Auctions proceed very quickly and usually don’t give you much time to think. Restrain yourself from bidding more than the price you have set as your budget. Auctions may proceed in such a manner that you may feel inclined to bid more and more. Avoid getting caught up in the excitement and competition and stick to your plan.

It is good to reach the auction venue ahead of time. If you intend to bid in the auction then do place a certain amount of money at the clerk table. This amount is refunded if you do not win the auction so you should not worry about placing a guarantee. This actually puts an impression that you are a serious bidder. You can either pay cash, or place a check if you don’t have cash at hand.

Reaching the venue earlier may give you a chance of getting into a conversation with the representative at the auction and you may learn some useful points about the property at auction. You can also get the value for the percentage of down payment required by the winner and make sure you have the required funds available at that particular time if you win the bid.

Be mentally prepared for quick legal procedures if you win a bid and always keep the necessary documents with you. You may expect to sign a contract if you are the winner of the bid. A down payment will also be required, which under normal conditions is 10% of the bid value, and failing to do so may cancel your deposit and your bid as well.

After you place the deposit, you will be given a time-line to make the complete payment. Failing to do so will make you lose your deposit as well.

Do keep in mind that it is not mandatory that the final price be the same or even near to the minimum bid given. Auctions are mostly closed at higher prices. Whatever the price, even if it is higher than the minimum bid, will still be much lower than the market value of the property.

Placing a bid at any auction needs wise decisions up front. Happy bidding!