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Calculating A Home’s Worth As A First Time Homebuyer June 10, 2010

Posted by minnesotarealty in MN Realty.
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First time homebuyers can save a lot of time, money and effort by being organized and prepared for all the steps in the home buying process. When you are choosing any of the homes for sale, one of the most vital steps to take is the valuation of the home or being able to determine what the home is worth by making your own assessment.

Authors Eric Tyson and Raymond Brown of the book “Home Buying for Dummies” point out that the true value of the home doesn’t only consist of the price. Value means different things to different people, so you need to identify the factors that are most important to you when searching for your ideal home. Ultimately, the value of the home is what a particular home is worth to you, and what types of benefits you will derive from this type of investment.

When you begin the valuation process of any of the homes for sale, the first step that you can take is to review its actual dollar cost and compare it to the other homes for sale in the same neighborhood. This can be done by studying the Minnesota MLS listings of the area and discovering how much the seller had paid for the home, if possible. Finding out how much was paid will give you a baseline amount to use in your assessment, whether or not it is lower or higher than the seller’s current asking price. Other factors that you have to take into consideration is when the seller had bought the home because if more that 3 years has elapsed, an estimate based on the purchase price will no longer be accurate.

The next step in determining the value of the home is to consider how much work needs to be put into it if you were to move in next week. What needs to be fixed? How much do you estimate the repairs would cost? This amount may or may not be factored into the asking price, so it’s important that you understand what type of investment you will need to make on top of the asking price in order to ensure your home is exactly how you would like it to be.

The final step in determining the true value of any of the homes for sale is to project what the real estate value of your investment will be 5, 10 or 20 years from the date of your purchase. Is the home for sale located in a brand new subdivision or in a historic part of town? What is the average appreciation price of the homes in the neighborhood that you are interested in? Home buyers must be aware of the fact that investing in real estate property in an area where the price steadily appreciates will be to their advantage in case they ever decide to sell the home that they have purchased.

There are several factors to consider when you are looking at different properties and exploring various neighborhoods as a first time homebuyer. The true value of your home goes well beyond the asking price because you need to take into consideration how much of the home needs to be repaired, what the biggest benefits of living in a particular neighborhood are, and what the property will be worth in a few years. Take the time to learn about the price history and general market appreciation (or deprecation) rates in your neighborhood so that you can make a well-informed financial investment as a first time homebuyer.

Minnesota Real Estate Investors Think Smart! March 24, 2008

Posted by minnesotarealty in Minnesota MLS Listings.
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Several years ago, with regard to dieting, periodicals would tell you to “think thin.” They were reluctant to actually explain how exactly this was done, but everyone knew they were supposed to do it. Adopt the psychology of the thin, whatever that was. It follows that, if you want to make money, one should be able to accomplish that goal by adopting the mindset of the rich, right? As a matter of fact, this does work. In particular, you ought to internalize the mindset of the successful property investor.

Successful Minnesota real estate investors see the world through an opportunistic lens. They constantly have their antennae up and ready. They position themselves in the way of information. They “walk the walk” of the real estate investor, in a manner of speaking. Because of this behavior, they notice things that others do not.

Ken McElroy, writer of “The ABCs of Real Estate Investing,” which is part of the Rich Dad book series, says it’s all about noticing patterns. If you check out enough pieces of property, study enough areas, speak with enough people, McElroy said, you will start to see these patterns. Then things will start to change. You may start to seem lucky. And, McElroy says, it may be luck, but it is a sort of luck that comes from being prepared.

Remember the axiom: fortune favors the prepared mind. Opportunity is all around us, but if we don’t stay alert, it will seem as though it doesn’t exist. The prepared mind notices opportunity.

McElroy emphasizes repeatedly that becoming a successful property investor is a process. It isn’t an event that occurs instantaneously. It is something that you do each day. Eventually things begin to happen for you.

Someone who is successful focuses on doing a little at a time, on learning one subject or another, or closing this particular deal. It is a “walk before you can crawl” process.

For example, McElroy says, if you have found a good deal, you will be able to get the necessary funds as others will inevitably want their own share of the eventual profits. This is not about negotiation skills necessarily, he said. Of course, skillful negotiation can get you an even more advantageous deal at times, however you don’t need to worry about whether you can hold your own at the negotiation table. Just look for good deals.

Though investors are always considering risk, constantly aware of it, successful investors aren’t scared off by it. They determine whether or not a risk seems reasonable. If the numbers add up, says McElroy, then it is a good deal. If it’s a good deal, the smart real estate investor goes ahead with it.

Simple.

People who don’t understand how to accurately assess risk may believe every deal is too risky. They make the assumption, for instance, that a larger deal involves to great a risk for a beginner to deal with. They make that assumption because they think the investor is sinking a lot of personal funds into the deal when, in reality, a bigger deal has the potential to generate a larger sum for those involved. Therefore, you may be able to get backers for this sort of deal. In the end, not need to put up as much of your own money as you would’ve on a smaller deal.

Real estate investment is similar to anything else you might want to learn. For one thing, you first have to learn how to do it. And you learn by doing it. Go out and examine properties. Visit cities as if you had the intention to make a purchase. Log on to the Internet and read about areas. Check out what other people have said about the real estate climate a particular area. Get to know people. Before long, you’ll have learned enough to begin thinking about making a deal. You do not have to have a stack of cash at your disposal before you start playing the game. All you have to do is get out there and enjoy the process. Search the MLS Minnesota for free to find investment opportunities and everything else will come in time.