Investing in real estate has long been considered a profitable opportunity for individuals looking to diversify their investment portfolio and build long-term wealth.

While the world of real estate investing may seem complex and inaccessible to some, there are simple and practical ways for beginners to get started in this exciting market.

By understanding key strategies, doing thorough research, and leveraging available resources, you can embark on a journey to invest in real estate and unlock the potential for financial growth.

Why should you invest in real estate?

Real estate is a unique asset class that offers excellent investment returns. However, it is recommended to include it in a well-diversified investment portfolio.

By investing in real estate, you are also purchasing an appreciating asset. It has a good long-term track record, especially when inflation is considered.

It offers the potential for both rental income and capital gains, making it an attractive option for investors seeking multiple sources of return.

Investing in real estate can help you become debt-free or pay off debts. For instance, homeownership can help pay off debts by building equity, property appreciation, tax benefits, and generating rental income.

Additionally, if you have multiple debts, you may consider, which involves using the equity in your home to consolidate all your debts into one loan with a lower interest rate. This can simplify your debt management and save you money on interest payments.

It provides financial stability and long-term investment, allowing you to focus on debt repayment with a clear financial plan.

However, it requires careful planning and financial management. You must consider your financial circumstances, goals, and risks involved and devise a well-thought-out strategy to effectively leverage homeownership. Alternatively, it can be helpful to seek professional advice.

How to invest in real estate

Buy Your Own Home

Buying your own home is one of the best ways to invest in real estate. Homeownership can be considered an investment with benefits such as building equity, stable monthly payments, and potential tax deductions.

By owning a home, investors can build equity through mortgage payments and benefit from lower mortgage rates and down payment requirements. It can be a good option if you plan to stay in the area long-term, as it allows you to lock in a stable monthly payment comparable to rent. Owner-occupied properties often receive favorable treatment from banks, resulting in lower mortgage rates and down payment requirements.

Additionally, potential tax deductions on interest expenses are available for homeowners.

Rental Properties

Owning rental properties can offer significant advantages to individuals willing to manage tenants. It provides a consistent income stream, which properties may appreciate over time. You can maximize your capital using leverage. Additionally, many expenses related to rental properties are tax-deductible.

However, there are challenges you must consider. Managing tenants can sometimes be demanding and time-consuming. There is also the risk of potential property damage caused by tenants, which may lead to additional expenses. Also, occasional vacancies can result in reduced income, so having sufficient capital to cover maintenance costs and vacant months is crucial for a successful rental property investment strategy.

Real Estate Investment Groups

Real estate investment groups, or (REIGs) offer an opportunity to own rental properties without the hassles of managing them. Investors join a group that collectively manages a set of rental units, handling maintenance and tenant-related tasks. The company takes a share of the monthly rent in exchange for its management services.

While REIGs offer a more hands-off approach to real estate investment and offer potential income and appreciation, there are risks, such as fees similar to mutual funds. It is essential to be cautious about the management company’s integrity when considering real estate investment group investments.

Real Estate Investment Trust

Real Estate Investment Trusts are suitable for investors seeking real estate exposure without direct property transactions. REITs function like dividend-paying stocks, as corporations use investors’ funds to acquire and operate income properties. They offer entry into non-residential investments, such as malls or office buildings, that might be inaccessible to individual investors.

REITs are highly liquid since they are exchange-traded trusts, making it easy to cash out investments without needing a real estate agent. However, investors should distinguish between equity REITs (representing ownership in real estate) and mortgage REITs (focused on income from mortgage financing) to understand the nature of their exposure.

House Flipping

House flipping is a high-risk strategy suitable for you if you have extensive knowledge of real estate valuation. It involves buying undervalued properties, quickly improving them, and selling them for profit. Successful house flippers need significant experience in valuation, marketing, and renovation.

While some flippers look for quick returns by selling properties in less than six months, others add value by renovating and may hold the property for a longer time. Flipping requires access to capital and a deep understanding of the market. However, it comes with risks, such as potential losses in cooling markets.

Online Real Estate Platforms

Real estate investing platforms, or real estate crowdfunding, allow investors to pool their capital and participate in more significant commercial or residential deals. These online platforms connect investors with real estate developers seeking financing for projects.

It offers the opportunity to diversify investments with less capital than required for direct property purchases. However, these investments may have lockup periods and management fees, and they tend to be less liquid compared to other investment options.

Final Thoughts

Real estate investment offers diverse opportunities for individuals to grow wealth and achieve financial goals. Whether through direct ownership, real estate investment groups, real estate crowdfunding, or other methods, investors can benefit from the potential for rental income, property appreciation, and tax advantages.

While real estate investment can be rewarding, it is crucial to conduct thorough research, understand the risks, and align investment strategies with personal financial objectives.

By adopting a well-informed approach and seeking professional guidance, individuals can take advantage of the simple ways to invest in real estate and establish a solid and profitable portfolio.

About the Author: Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific鈥檚 McGeorge School of Law in Sacramento, California, in 1998 and currently works for the in California as a principal attorney.

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The 50-year mortgage first appeared in southern California, where housing was becoming increasingly costly, and people were looking for new ways to reduce their monthly mortgage payments. Except for the extra two decades to pay off the loan, it works the same as a 30-year fixed mortgage.

The advantage of a 50-year mortgage is the lower payment, but the significantly higher long-term costs may outweigh this advantage. Let’s see if you should go down that long road.

What’s the point of a 50-year mortgage?

Some 50-year mortgages have fixed rates. They are designed to be paid off with consistent payments over 50 years. Adjustable-rate mortgages (ARM) with a term of 50 years are also available. An ARM has a fixed rate for a set period, which can be adjusted regularly for the remainder of the loan term.

The most common reason people take out a 50-year mortgage is to lower their monthly payments. The idea is to spread the mortgage over a longer period so that you can pay less each month than you would with a shorter-term loan.

Your monthly payment will be higher if you use a 15 or 30-year mortgage. Monthly payments may be significantly reduced by extending the loan. A 50-year mortgage lowers your monthly payments, which allows you to borrow more money and buy a larger house than you can afford.

Fifty-year loans with an initial period of only paying interest may also provide more flexibility at the start of your loan term. This can be useful if you deal with the high costs of moving into, furnishing, or repairing a new home.

Disadvantages of 50-year mortgages

You can get a mortgage for as long as 50 years in the US, but these aren’t “qualified” mortgages. Only some lenders are interested in non-qualified mortgages, so your choices would be limited. But this isn’t even the first or second most significant disadvantage of 50-year mortgages.

First and foremost, the total amount of interest paid at the end of the term will be significantly more in the case of a 50-year mortgage. This results from the longer loan term and the higher interest rate combined. All of this leads to 50-year mortgages having a very high total cost compared to a 15 or 30-year mortgage.

Secondly, because the loan term is so long, you’ll accumulate equity at a slower rate with a 50-year mortgage. This can result in a longer-than-usual wait time if you want to refinance, get a home equity loan, or get rid of private mortgage insurance (PMI), all of which require you to meet minimum equity thresholds.

Fifty years in debt is a long time. Even if you buy a house when you are 25, you will only be able to pay it off once you are 75. It will take you a half-century to own the home, and you will also be paying interest on top of the principal amount during this time.

Alternatives to getting a 50-year mortgage

Budgeting is the most effective way to increase your spending power on things that truly matter. Make a monthly budget and eliminate a few luxuries to allow for a 30-year or even a 15-year mortgage. Using the budget correctly will ensure you will avoid having to go into debt for the next 50 years.

An emergency fund is also required because it will cover your expenses in an unexpected financial crisis. Save enough money to last at least a couple of months in case of job loss or injury that prevents you from working. An emergency fund will also help you stay out of debt by providing cash in times of need rather than relying on your credit card or a personal loan.

Managing your debt will also help you keep your monthly expenses low, allowing you to afford a faster and less expensive (in total) mortgage. If you have numerous insecure debts, consider into a single, more manageable monthly payment. Dealing with all your debts will give you room in your budget for a quicker and overall cheaper mortgage.

Your other options to reduce mortgage payments include the following:

• Saving for a larger down payment.
• Using an adjustable-rate mortgage.
• An interest-only mortgage.
• Buying a less expensive home.

The Bottom Line

Fifty-year mortgages are not new or groundbreaking, and there is a reason why they are not popular. Although they can be helpful for some people looking to buy a house in an expensive housing market, for most of us, it is best avoided.

The lower payments of a 50-year mortgage fail to outweigh its cons. To own a house, you don’t have to go into debt for the next 50 years. There are plenty of ways to take your existing financial situation to a place where you can easily afford a traditional 15 or 30-year mortgage.

About the Author: Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific鈥檚 McGeorge School of Law in Sacramento, California, in 1998 and currently works for the in California as a principal attorney.

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Going bankrupt is one of the most distressing things that can happen to a person. Some of the common causes of bankruptcy include burdening medical expenses, job losses, excessive spending on credit, divorce or separation, and heavy expenses due to unforeseen events.

All of these can be quite taxing on your mental and physical health, as well as your financial outlook. On top of that, you may also be worried that you won鈥檛 be able to buy a home for yourself and your family anymore, which is an added burden. This article covers everything you need to know about buying a home after filing for bankruptcy.

Is it Possible to Buy a Home After Bankruptcy?

Let us put your mind at ease by telling you that it isn鈥檛 impossible for you to buy a home after bankruptcy. When you file for bankruptcy, there is no restriction or law that prohibits you from buying a house, but it will make the process much more difficult. Not only will you have to follow certain steps, but you will also have to wait for some time before you can apply for a loan or mortgage.

Once you are cleared from bankruptcy, you will be able to qualify for a home loan and apply for it. However, it won鈥檛 be as easy as applying for a loan if you hadn鈥檛 filed for bankruptcy.

Post-bankruptcy Issues to be Addressed

When you are planning to buy a home after the bankruptcy status has been cleared, there are some issues that you will need to address before you can go about it. Let鈥檚 have a look at the post-bankruptcy issues that you will have to go through.

Required Waiting Period

First and foremost, there is a certain mandated waiting period that you need to complete after you have been discharged from bankruptcy before you can apply for a loan. The waiting period can differ according to several factors, such as the lenders and creditors you have approached, the laws of the state, etc.

Fixing Your Credit Score

Bankruptcy can damage your credit score and credit report significantly, and this hampers your ability to secure a loan to buy a home. When you file for bankruptcy, it may cause your very good credit score to drop by as much as 200 points. Moreover, if you have a fairly good credit score, it may even drop by 150-160 points. Therefore, you will have to repair your credit score before you can even qualify for a mortgage.

Finding the Best Mortgage Loan

Another issue that you need to address is the requirement of finding a mortgage that is fair and represents your circumstances, financial condition, and requirements. There are several companies and financial institutions that provide you with mortgage loans with different types of interest rates and conditions, and you will have to review all of them before you make a decision.

Reviewing the Applicable Filing Rules

Lastly, you will also have to recognize the filing rules that apply to your situation, and these depend on where you live, the amount of loan that you need, your credit score, and several other factors.

After How Long Can You Buy a House After Bankruptcy?

The waiting period that you must spend before applying for a loan depends on several factors, including the type of loan you want and the type of bankruptcy that you have filed for. Some of the types include Chapter 7 and Chapter 13 bankruptcy. Let鈥檚 have a look at both scenarios in greater detail.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, or liquidation bankruptcy, is the most common type of bankruptcy, and it causes most of your debts to be wiped away. However, it has a more severe impact on your credit report, and it reflects in the report for up to 10 years.

Once your bankruptcy case is discharged, the lenders have a mandatory waiting period between two to four years, after which you can apply for a mortgage. More specifically, VA or FHA mortgage programs require two years, whereas a USDA loan requires a three-year waiting period. Any conventional loan can be applied for after a waiting period of four years.

Chapter 13 Bankruptcy

This type of bankruptcy filing is also known as reorganization bankruptcy, and it involves periodic payments to clear the debt. Since you are paying the debt eventually, this doesn鈥檛 harm your credit score as much as Chapter 7 bankruptcy does. Also, the waiting period to apply for loans is also lower in this type of bankruptcy.

If the bankruptcy court rules against you, you will have to wait four years from the date at which the judgment was announced. On the other hand, if your case is discharged, you must wait four years from the filing date and two years from the discharge date before you can apply for a conventional loan. Otherwise, you can apply for a USDA loan within one year, and the FHA and VA loan programs have no waiting period.

In a nutshell, you can buy a home after filing for bankruptcy, and you can do it through a home loan or mortgage. However, there might be several hurdles along the way, especially regarding the bad credit score and the long waiting period. Therefore, it is best if you consult with a professional who can provide you with sound before you make this decision.

About the Author: Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific鈥檚 McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California. He has contributed to publications such as Entrepreneur, All Business, US Chamber, Finance Magnates, Next Avenue, and many more.

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Getting a home insurance policy is essential when you are buying your dream home. However, just any homeowner鈥檚 insurance policy is not enough; you need to have adequate coverage to financially protect yourself against any unexpected circumstances.

Mistake 1: Buying Coverage Only on the Market Value of the Home

The cost to rebuild your home should not exceed the property鈥檚 market value. If so, you will be underinsured in the event you need to rebuild. On the other hand, if you live in an area where the home market value is more than the cost to rebuild, you may pay more for coverage. Talk to an insurance agent to compare the two and buy adequate coverage.

In Canada, most home insurance policies have Guaranteed Replacement Costs. This means the insurance company pays the amount needed to rebuild your home regardless of the home coverage cost. For example, if the property is insured for $500k but costs $700k to rebuild, the insurer will pay for it. So, check whether your insurer offers this when purchasing homeowner鈥檚 insurance in Canada.

In the US, you can choose from:

• Actual cash value (ACV) – The cheapest possible coverage after depreciation.
• Replacement cost – Covers the cost of repairing the property with the materials available before the damage, without any depreciation or deduction.
• Extended replacement cost – If you need to rebuild your home, a typical policy may pay up to 25% more than the dwelling coverage amount.
• Guaranteed replacement cost – Adds an extra layer of security by covering nearly all the costs of rebuilding the home.

Mistake 2: Choosing a High Deductible Amount to Lower the Premium

Do not jump to choosing a high deductible amount without analyzing your financial situation. The deductible is a lump sum amount you must pay out of pocket before the insurance company pays for the coverage.

While it is true that your premium will be lower if you choose a high deductible, make sure you can afford to pay it. Otherwise, choose a home insurance policy with a lower deductible and a higher premium that is still within your range of affordability.

Mistake 3: Buying a Policy Without Checking the Insurer’s Credit Rating

An insurance company鈥檚 credit rating indicates its capacity to pay policyholder’s claims. Do not buy a policy just because it is the cheapest. Always compare policy coverage against the premium.

Make sure the insurance company is financially solid so that it can pay all claims. Also, check out client reviews to be sure that it has a satisfied clientele base.

Mistake 4: Purchasing Less Coverage to Reduce the Price

Instead of lowering your coverage, look for other options to lower the premium. For example, you can opt for a high deductible plan (if you can afford it, as mentioned previously). By doing so, you can reduce the cost of the policy.

Also, explore discounts available from insurers when you bundle multiple insurance policies.

Mistake 5: Not Considering Your Personal Belongings

Do not choose coverage without calculating the price of replacing valuable items. You also need to consider whether you should purchase special coverage to insure high-value belongings. Complete a detailed home inventory to calculate the cost of replacing your belongings and create a plan to insure them.

Mistake 6: Assuming the Policy Includes Flood Coverage

Usually, standard home insurance policies cover basic water damage, such as water entering your property from external sources from heavy rainfall, a sewer backup, etc. However, you may need flood insurance if your property is in a flood zone.

Mistake 7: Expecting the Policy to Include Coverage for Earthquakes

If you live in an earthquake-prone area, you may need additional earthquake protection. Earthquake insurance covers physical damage to the property along with other living expenses if you need to make alternate living arrangements.

Mistake 8: Not Asking the Right Questions While Buying Home Insurance Coverage

Insurance should never be purchased in a rush, and home insurance policies are no exception. So, ask your insurance broker these questions first:

• If I have a claim to make, how do you handle it?
• Is there a list of exclusions to your coverage?
• How much liability protection do I need?
• Am I eligible for any more discounts?
• Do I need to purchase additional flood and/or earthquake insurance coverage?

Make sure you meet your insurance agent in person and discuss these things in detail before purchasing a homeowner’s insurance policy.

Before you sign anything, it is important you read your policy鈥檚 terms and conditions. This will help you to avoid unpleasant surprises in the future. You will also have peace of mind knowing that you are covered in case you need to file a claim or must rebuild your home.

Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a for the in Rocklin, California.

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