Without a doubt, this is one of the most frequently asked questions I have heard throughout my real estate career and a very crucial one.
First and foremost it is important to remember that buying a property in the United States has always been relatively easy - if compared to other countries in the world - so if you're considering a real estate investment in the United States, Congratulations! This is an especially favorable time to take that step.
Below are the 6 most important steps you should take into consideration in order to make a successful real estate investment:
- Decide the area (or areas) where you would like to buy
- If you prefer a single family home or apartment
- If the property will be an investment or used as a second home
- Size of property (number of bedrooms, bathrooms, square footage, etc.).
- Price you're willing to pay and information needed for getting a loan
- Selecting a professional to represent you
1. Decide on the area where you would like to buy.
This is a very obvious question and it is interesting to see how many people, even after visiting South Florida on numerous occasions, do not know exactly where they want to buy.
If there is any doubt regarding the location where you want to invest it is important to think about your lifestyle: 1) If you enjoy a very urban environment and the need to rely on a vehicle for transportation is not your thing, or 2) If you prefer a quiet place, with spacious green areas, away from shopping malls, etc., where having your own vehicle for transportation is a must.
2. House or apartment?
There is a big difference between buying a home (single family home) or an apartment, and the most important difference has to do with funding. Apartments in the Miami area, for example, are mostly new constructions, which are more difficult to finance under the new banking requirements. It is true that these units can turn out to be excellent buying opportunities (many condos have been repossessed by banks), but you most likely would need to pay in cash for these purchases.
This is not unusual given that these flats were sold at peak price 2 or 3 years ago during the housing boom in the city, and now worth up to 50% less. It is natural to think that banks do not want to risk having more losses. Also, there is a large discrepancy between supply and demand, and many units are vacant, which represents a great opportunity to buy at a great discount if cash is available for the purchase and you are considering an investment for the next 5-10 years.
Buying a single family home is more flexible when it comes to funding. The initial down payment to buy a home is between 30% - 40% of the purchase price. The loan will depend on the financial solvency of the buyer and the real ability to make payments. This process may take between 45 and 60 days (maximum) for the final approval of the loan once the purchase offer is accepted.
Depending on the area where it is purchased, both houses and apartments, can be rented with relative ease, often allowing the investment to
self-finance itself (which did not happen 2 or 3 years ago).
3. Investment or second home?
This will depend on your lifestyle. If you travel frequently to Miami (Dade County) or Broward County, for example, and constantly need a place to stay, having a second home could be very convenient.
If you do not travel very often, say only once or twice a year, then investing in a property that can be rented is an excellent choice. On the other hand, if you intend to buy several properties (perhaps a small building), the mix of options is interesting. Everything will depend on your investment goals and your lifestyle.
4.Size of the property you want to buy.
This is another point that is directly linked to the previous question: Lifestyle and investment goals. There is no doubt it is always better to buy an investment property with a minimum of 2 bedrooms and 1 bathroom and a half or two bathrooms, and that it is more advantageous to buy a less expensive property in a high demand area than a more expensive property in a low demand area; location does make a difference!
5.Price you're willing to pay and information needed to get a loan.
It is vital to know exactly the maximum that you want (or can) pay and be realistic.
Today's market offers excellent opportunities in all price categories.
Below is a list of the basic information the lender will require from you in order to approve your loan:
a) Bank references, business, and import/export information from the country where you live.
b) Your US banking account(s) number, account opening date and most recent transactions (account balance), etc..
c) Personal identification documents such as copies of your passport and visa (if required) needed to enter the United States.
d) Letter from a professional accountant with information about your job or profession, years of experience and salary received during the last 2-3 years until the present.
e) Demonstrate that you have a "reserve fund" in a U.S. bank, enough to cover the first six months of mortgage payments if necessary.
f) Funds available for the down payment of the property you are buying, which can range from 30% to 40% of its value; keep in mind the bank will only finance the remaining 60% or 70%.
g) Provide all personal information for immediate contact (very common requirement in these cases) such as telephone numbers, cellular, home, office and fax; home address, email, and any additional information for you to be immediately contacted if necessary.
h) Prevention is the best remedy. It is highly recommended that you have available funds to cover for at least 6 months of your property's maintenance, property taxes and insurance.
6. How to select a professional to represent you.
It is imperative to seek the advice of professionals who have a wide experience and knowledge of the real estate market, and preferably someone that comes well recommended by previous clients, thus reflecting a positive career.
A true professional will always put your interests first, will guide you and will present you with the best options by assessing each one, and will also have a handy list of good attorneys and other professionals who may be consulted if necessary.
What is the difference between an agent and a Realtor?
All real estate agents must be licensed by the State where they serve, however in order to be a Realtor® the agent must be a member of the Association of Realtors of the city (or cities) where they work.
It is also important to remember that only Realtors, through the association to which they belong, may have access to the system that offers all the properties available for sale, this system is called "MLS” (Multiple Listing System).
Don't forget to Blog your comments and questions.
Here to the future of great real estate investments!
By Oscar Resek
(305) 694.5354
oresek@kw.com
Certified International Property Specialist (CIPS)
Certified Residential Specialist (CRS)
theresekgroup.com
Keller Williams Realty Miami, Florida
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