Expert Advice for Home Buying and Investing



Whether you’re a financially-savvy real estate buyer or a newcomer to the market, there are things you must do when planning your home investment. Many real estate brokers say, ‘Get your team together,’ during the planning stage. What they’re referring to is retaining an attorney, a mortgage broker, and a financial/investment planner.

Investment Portfolio Art as a Abstract Background

In addition to building the right investment team, you should also look at your portfolio to be sure it’s diversified, with some dividend-producing, liquid assets, such as MLPs or REITS. Due dilligence will always pay off in the long term.

Misconceptions and Reality

While some may think the words “all cash” automatically generate an accepted offer, there is no such “magic bullet.” Most first time home-buyers, or new investors don’t have the assets to make an all-cash offer. Banks, mortgage brokers, and condo boards will delve deep and still look into your overall financial picture.  If it’s not stable, they generally won’t take a chance on you. Your financial lender will carefully sift through all of your credits, debits, and accounts. Hopefully, the property investor will have consulted a financial advisor before diving into the market. Hilton Capital Management, a boutique wealth management firm in NY, suggests:

“Our advice is to search out an investment manager. Key attributes of an investment advisor are experience, discipline, integrity and a strong investment process that will succeed in any market dynamic.“

Management experts have shown us that the investment business is changing faster than ever since the financial crisis. So, it’s important to have professionals who anticipate, react and adapt to the environment. Your mortgage banker wants to see stable, recurring income streams that show that you are a reliable client.

If you’ve never worked with a financial advisor or wealth management company, it’s best to start that relationship before you plan to purchase a piece of real estate. They can help you make the best investment decisions to meet your objectives, and keep your financial goals on track. Here are a few simple tips for investing.

The Financial Snapshot

History can be captured as photographic moments in time, and your financial snapshot is no different. This aspect of investment planning is one of the most frequently overlooked, even for seasoned investors. Even the most financially literate can forget to examine their credit histories for shortfalls and mistakes before initiating a purchase. The end result of overlooking this part of the planning process is always lost time and resources.

The Credit Score

Banks delve deep into credit histories, personal data, and your other financial information before making approval decisions. The wise home investor will have already scoured credit score information in order to present the best possible financial face long before making an offer.

Make sure you request a free credit report from the three major agencies:  Equifax, TransUnion, and Experian, as one of the first steps in your buying process. You must check all three because what may be reported on one may not necessarily be reported on another. Also, it’s possible for incorrect information to show up in these reports, so be sure to scour the reports in case another person with a similar name (i.e. John Smith) might be on your record. If you find errors, you can write the credit reporting agencies, asking for corrections–and this process can take up to six months.

Closing

Before you walk into the deal closing an investor should know the overall cost of the investment. The purchase price is just part of the overall expenditure since appraisal coast, points, attorney fees, and other up-front costs occur for every home purchase. Your investment journey is not over once the document signing is over. The wise investor will have reviewed the budget and the whole investment portfolio. If there is no portfolio, the end of the first closing is a good time to start one.