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This article talks about one of the most important and good news related to real estate investment in Texas…

I want to talk about a new report that just came out from Movoto.com. They have done some research that would be quite interesting for the people who are in Texas.

So, all of you Texas real estate investors listen to me on this because I think this could be really important for you.

According to a new study research, “Most families can afford purchasing a house”. There are a couple of things that are really interesting and according to the study of 2010-11, “Average family income was $64,400”, which I think is quite impressive.

With that, a family can typically go up to a $215,000 purchase price but according to Movoto.com, they are saying that $150,000 purchase price is going to be something that they would be more excited to do. They can go up to $215,000 but they would rather stick around $150,000.

I have talked about it time and time again that you should invest in low end income houses. You shouldn’t try to invest in half a million or million or 300,000 dollars houses.

Again, this study is also going to tell you that the maximum you are going to sell the property for is $215,000 and the more likely price you would like to get for a property is $150,000.

There are a couple of things, which are really important here:

1. Look for Family Houses – We are talking about families here. You should be looking at the houses, which have 4 bedrooms, 2 bathrooms because we are talking about families and annual household incomes within the families itself.

2. Don’t go over $215,000 when it comes to the sales price

3. The most likely prices for family homes is $150,000

So, when we talk about all these types of things, you don’t want to stick to high end homes or expensive properties that are over $215,000 because it will decrease your chances of success as a real estate investor.

If you want to make your real estate investment deal successful, you need to look for family homes in residential neighborhoods with 4 bedrooms, 2 bathrooms. As you are buying, fixing and reselling that property, you need to be looking at homes that are going to sell for no more than $215,000 as a maximum.

There are more than 50% of buyers or families out there, who can afford a home for more than $150,000-$215,000 based upon their incomes.

One of the other things that are pretty interesting is that on Movoto.com, more than 55% houses on their website are under $215,000 and an additional 24% are under $150,000.

It is really easy to tell where the majority of the homes are. It’s under that $215,000 range, which most of the families can easily qualify for, with the median range of salary of $64,400 and most of them are willing to spend $150,000.

So, this is buyer speaking to you. They are telling you what they want. This statistical information means that the real estate investors shouldn’t be purchasing homes or trying to sell them over $215,000 and make sure that you are buying family properties because they are the ones who would be purchasing them at the time of reselling.

This article talks about the current real estate investment market place and some of the things that are happening out there.

I talk to a lot of real estate investors and one of the things that they are consistently telling me is that they are having a little bit of difficulty in finding a good properties to purchase. They have been wondering why that’s the case.

As we know that every deal out there is not really a good deal and analyzing that becomes really important.

One of the reasons that we are having difficulty as a real estate investor in finding good deals has to do with loan modifications.

I want to talk a little bit about a new report that has come out on a loan modification situation. As you know a lot of people are getting their loans modified or trying to get their loans modified and what that’s doing is delaying some of the foreclosure and delaying some of the inventory that may be coming into the market.

A new report that just came out, is talking about, “More rejections of loan modifications are happening then actual approvals.”

This is important for us to realize that if those properties gets rejected or cancelled, then those properties are going to end up back in the market place or short sale or foreclosure type of situation.

This loan modification is kind of a new thing. It’s not something that is happening year after year. It has just happened in the last couple of years. It’s a new type of thing that people are trying to do and the banks are working towards due to the tarp type situation.

But what’s happening is that majority of these banks are not getting the loan modifications. So, you have got a home owner that’s in distress, that doesn’t do short sale or doesn’t go to foreclosure and is in this loan modification phase for several months, which is delaying some of those properties coming on the market.

One of the things I think is that number of people that are hoping that their loan modification will happen have stopped their natural flow of properties, that they were typically going to see and they may have squeeze some of the available properties that are out there.

I hope this may help you in understanding what is happening but here is the good news…

It’s time to start looking for those types of properties because as those have been slowed down or rejected and the loan modifications aren’t happening like they were in the past and there are more rejections and cancellations than there are approvals, those properties are going to start becoming available for short sale and for banks they foreclosed on.

There’s going to be opportunities that are coming. So, that’s the exciting news as if you have been looking for those good deals, I think you are going to start seeing more and more of them as time goes on here.

There is also some good information where we are starting to see the real estate investment market stabilize.

There’s a new report that says, “75% of the prices of the properties in the United States will going to stabilize by the end of 2011”. We have already started witnessing that and I think that’s very good information for you as a real estate investor.

Take this, work out with it, go out there and look at some of the good properties. Hard money lenders are looking forward to help you by giving you loans to purchase these properties and start your real estate investing career.

Our goal is to help you make some profit. We want to put money in your pocket. We want to see better neighborhoods and we want to help you to make the community a better place.

What is the real estate investment? How to become profitable as a real estate investor? What are the things that you should know before entering into real estate investment business? Get all the answers in this blog post…

First off, the key to be successful as a real estate investor is to buy the property right.

Now, what does that mean? That’s what we are going to talk about a little bit here.

There are some terminologies that you need to understand:

1. ARV (After Repair Value) – This is what the property is worth, once it has been repaired.

2. HBU (Highest to Best Use) – This is typically used for commercial type application. When they talk about the property, what would be the highest to best use for that property?

The term highest to best use also holds true in residential real estate investing because as you go into a property, you want to decide what is going to be the highest to best use of money. As you go in there, you don’t want to spend $50,000 on a remodel to only get $20,000 back.

Now, there’s going to be something that you have to do. For example, if the home doesn’t have a driveway and everything one else in the neighborhood does, you are not going to get away with just putting some rocks on. Although, you probably not going to get extra money for that driveway.

But if you want to put nicer kitchen cabinets, it might be worth doing or might be not.

Those are something you have to determine, based upon the competition in the area.

My rule of thumb is looking around all the active homes and looking at the pictures of sold homes and once you have seen that, you want to be in as good as condition as all the active and sold homes.

I would like to do something little extra. I would like to put in granite, if no one else in the neighborhood has granite counter-tops. I would like to put nicer appliances. So, I would like to have one extra thing above all the nicest thing you are going to find out for the active and sold homes.

3. AARV (Adjusted After Repair Value) – Basically what you are going to do is you are going to take the worth of the property once it is fixed up minus the cost of the repairs. That’s going to give you AARV.

Let’s discuss an example here, if the property’s worth is $100,000, once it is fixed up and the cost of repair is $10,000, then the AARV is going to be $90,000.

Now, the question which everyone asks is how much money I am going to get as a loan on this property. If it’s worth a $100,000 ARV, how much loan I am going to get?

First off, you are going to get the AARV i.e. $90,000. Then you have got several other costs. You have got the cost of real estate agent, title fees, and the cost of the closing fee with the title company.

Those types of things are going to cost you about 10%. This 10% of additional cost needs to be taken off from $90,000.

Next, you are going to have your hard money fees, interest fees and a little bit of slush funds. That’s going to be another 10%.

Then you also want to make money as a real estate investor. My rule of thumb is 10% or $10,000 as a minimum.

After deducting this 30%, you are going to get $63,000. That’s what we are going to lend you as a hard money lender, if it’s a single family house in a traditional neighborhood.

Any hard money lender is going to be crazy if they are going to lend you more than 70% of AARV. The reason for that is there is no money for you and if you can’t make money, why you would even be doing that.

So, when you want to determine is to make money on a property, you are going to decide what the property is worth once it is fixed up.

You are going to decide what’s going to be highest to best repair should be done to that property. You will subtract that from ARV. That will give you AARV.

You are going to take off 10% for your title and agent fees. You are going to take off 10% for your hard money fees and interest. You are going to take off 10% or $10,000, which is going to give you $63,000. That’s what you need to be buying this property for.

Now, a word of warning. The biggest mistake that lots of real estate investors make is falling in love with comparables. They find one house that they think is going to be the same house that they are going to sell for but it’s not.

You have to look at the lowest active and lowest sold in the general neighborhood, that have average quality fixed up repairs done to them.

Just because there is one home that has been sold for $30,000 more than other homes in the area, doesn’t mean you are going to get it. You might but it is pretty unlikely.

That’s called lucky and that’s called winning the lottery. That’s called something that isn’t going to happen and so it is important that you realize, is not to fall in love with the property because the number one mistake we see real estate investors making all over the country is thinking a home worth more than it is.

We have independent evaluators that drive to a property, that live in the neighborhood, they have years of experience and know the markets inside out.

They determine what the value of a property is and there are several times that real estate investors think that an independent evaluator is wrong.

The reason they think they are wrong is because they are hanging their hat on one single comparable. Lots of times, they will go across border lines. Lots of times, they will skip over busy street.

If you want to find good comparables, you don’t start at the highest and work your way down. But you have to start at the lowest and work your way up and once you find a home, which is in a similar condition or fixed up condition, that’s what you want to stay with.

So, if you want to be successful in real estate investment business and you want to make money, you have got to be careful and you have to choose right comparable.

If you will do that then, you are going to find funding, you are going to make money and you are going to be successful as a real estate investor.

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