Home Buyer's Advisor: A Handbook for First-Time Buyers and Second-Home Investors


The tax-smart guide for first-time buyers and second-home investors

Whether you're a first-time home buyer or a seasoned investor, this practical guide covers everything you need to know to invest safely, confidently, and profitably in today's real estate market-while getting the most out of the latest tax laws.

The Home Buyer's Advisor shows you precisely what to look for in a real estate investment, where to find the best buying ...

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The tax-smart guide for first-time buyers and second-home investors

Whether you're a first-time home buyer or a seasoned investor, this practical guide covers everything you need to know to invest safely, confidently, and profitably in today's real estate market-while getting the most out of the latest tax laws.

The Home Buyer's Advisor shows you precisely what to look for in a real estate investment, where to find the best buying opportunities, how to use proven holding strategies such as land-banking and lease options, and how to make your home a secure foundation for future real estate investments. Ideas for a secure retirement are also included. Packed with ideas, strategies, and real-world examples, Andrew McLean's Home Buyer's Advisor will show you how to:
* Take advantage of a wide range of financing methods, such as originating new VA, FHA, and conventional loans; loan assumption; wrap-around loans; and other alternative financing methods
* Hunt for bargain properties using the Internet
* Profit from HUD and VA repossessions and bank foreclosures, and bid for property at special auctions
* Use professional appraisal techniques to ensure you're getting the best value for your investment
* Utilize smart investment strategies and holding techniques
* Manage properties without all the hassles
* Minimize, defer, and transfer more of your tax liability
* And much more!

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Product Details

  • ISBN-13: 9780471466413
  • Publisher: Wiley
  • Publication date: 2/20/2004
  • Edition number: 1
  • Pages: 312
  • Sales rank: 1,354,288
  • Product dimensions: 7.58 (w) x 9.26 (h) x 0.65 (d)

Meet the Author

ANDREW JAMES McLEAN is the coauthor of the Wiley bestseller Investing in Real Estate, which has sold more than 100,000 copies. He is currently an active investor in the Las Vegas and Mississippi Gulf Coast real estate markets. He holds a BA in business administration from Michigan State University.

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Table of Contents

Acknowledgments xiii
Introduction xv
Part I The Preliminaries
Chapter 1 Why Buying a Home Is a Great Investment 3
Reasons Why Real Estate Outperforms Other Forms of Investment 3
Other Benefits of Real Estate Investment 7
Why Home Prices Rise and Fall 11
The Realties of Home Ownership 15
Is Real Estate Right for You? 16
When You Decide Real Estate Is Right for You 18
Chapter 2 Basic Guidelines for Successful Home Buying 19
Establishing Your Investment Objectives 19
Ways to Save for the Down Payment 21
The Wise Use of Credit 23
The Basic Dos and Don'ts of Successful Home Buying 25
Achieving Your Goals 29
Part II Finance 101--How to Get the Money You Need
Chapter 3 The Mortgage Alternatives 33
The Cost Is in the Mortgage 33
Financial Terminology: Learning the Basics 34
Buying and Selling Mortgaged Property 35
Types of Repayment Plans 38
The Loan Choices 45
30-Year or 15-Year Mortgage? 46
Loan Prequalification versus Preapproval 47
Special Types of Financing 48
Sources for Home Buyers with Poor Credit 52
Important Answers about Mortgage Alternatives 53
Chapter 4 Getting Financing 55
How Much Can You Borrow? 55
Maximize Leverage with Owner-Occupied Financing 56
Alternative Financing for Cash-Short Buyers 57
Shopping for a Mortgage Loan 60
The Loan Application Process 64
How to Overcome Common Mortgage Problems 65
Part III Choosing the Ideal House
Chapter 5 Which House Is Right for You? 71
Choosing a Location 71
City or Suburbs? 73
Consider Your Present and Future Lifestyle 74
Three Principles to Maximize Your Investment 76
What Exactly Is a Home? 78
The Wisest Choice 85
Chapter 6 The Resale House 87
The Pros and Cons of a Resale House 87
Features to Look for in Resales 88
Choosing a Floor Plan 95
Chapter 7 Other Home Choices 96
New Homes 96
Having a Home Built for You 98
Modular or Manufactured Homes 102
Adults-Only Retirement Community 103
The Ideal House 103
Part IV Team Members, Guidelines, and Valuation
Chapter 8 Selecting Your Real Estate Team 109
Building a Winning Team 109
The Real Estate Agent 110
The Mortgage Lender 112
The Property Inspector 113
The Escrow Officer 113
The Lawyer 113
Chapter 9 Key Guidelines to Making a Superior Investment 115
Introduction to the 11 Key Guidelines 115
How to Spot a Real Estate Lemon 121
Chapter 10 Appraisal--How to Determine Value 125
The Four Methods of Evaluation 125
Reproduction Cost Approach 125
The Comparable Sales Approach 126
Capitalization Approach 129
Gross-Income Multiplier Approach 133
Conclusions 133
Part V The Sources
Chapter 11 Where to Find Your Diamond in the Rough 137
Newspaper Advertisements 137
Working with a Realtor 138
Dealing with the FSBO 138
Internet Shopping 139
Federal Government Auctions 139
Sheriff's Sales 140
Probate and Estate Sales 140
Auctions 142
Lease/Purchase Option (for Investors) 143
Chapter 12 How to Buy Foreclosures 145
Reasons for Foreclosures 145
The Three Phases of Foreclosure 146
Buying from Distressed Owners 150
Chapter 13 How to Buy HUD Homes and VA Repossessions 157
HUD Homes 157
VA Repossessions 162
Part VI The Middle Game
Chapter 14 How to Negotiate a Winning Deal 167
Secrets of Successful Negotiating 167
Your Initial Offer 169
Contingency Clauses 171
Amount of Earnest-Money Deposit 172
Chapter 15 Protecting Your Home 173
The House Inspection 173
Home Inspection Checklist 173
Evaluating the Problems 176
Insuring Your Home 178
Title Insurance 180
Chapter 16 The Closing and Escrow 181
Reviewing Closing Costs and Your Closing Statement 182
Taking Title to Your Home 184
Attending to Closing Day Tasks 185
Dealing with Buyer's Remorse 185
Celebrating 186
Chapter 17 Wise Things to Do after You Buy 187
Rebuild Your Cash Reserve 187
Plan Your Allocation for Furniture and Future Renovations 188
Consider Electronic Mortgage Payments 188
Avoid Premiums for Mortgage Insurance 188
Ignore Prompts for Faster Mortgage Payoff 189
Refinance Your Mortgage If Rates Fall 189
Know the Difference between Improvements and Repairs 190
Ignore Homestead Solicitations 190
Take Time to Enjoy Your New Home 191
Chapter 18 Fixing Up the Fixer-Upper 192
Is Renovating a Home Suitable for You? 193
Finding a Fixer-Upper 193
Developing a Market-Sensitive Improvement Strategy 194
Improvements to Consider 194
Required Improvements and Repairs 198
Hiring a Contractor 200
Doing It Yourself 201
Summary 203
Part VII The End Game
Chapter 19 Profitable Holding Strategies 207
Why Real Estate Is a Better Long-Term Investment Than a Short-Term One 207
Long-Term Holding Strategies 210
Summary 216
Chapter 20 Property Management 217
Showing and Renting Vacant Units 218
Rent Collecting 222
Evicting Tenants 223
Managing Multiunit Buildings 224
Renting Furnished versus Unfurnished Units 228
Obtaining and Maintaining Appliances 228
Paying for Utilities and Trash Removal 229
Budgeting 229
Keeping Records 230
Handling Repairs 233
Points to Remember 234
Chapter 21 Selling Your Property 236
Broker Services 236
Timing the Sale 237
Price It Right 237
Necessary Documents and Information 238
Home-Selling Tips 238
Property Information Sheet 241
Open House and the "For Sale" Sign 241
Advertising 243
The Sales Agreement 243
Summary 245
Chapter 22 Pay Less Tax 246
Home-Owner Tax Savings 246
Rules for Vacation Homes 248
Passive Loss Rules 248
Reporting Rental Income and Deductions 249
Capital Gains 250
Depreciation Expense 251
Deductions from Rental Income 252
Answers about Income Taxes and Real Estate 254
Chapter 23 Advanced Investment Strategies: Your Second Property, and Beyond 256
Advanced Investment Strategies for Higher Yields 256
Land Banking 257
Renting Out Part of the Home 258
Subdividing and Building Another Home 259
Rolling Over a Short-Term Purchase 260
Converting Property to Another Use 262
Pyramiding Your Investments 265
How to Retire on the House 265
Conclusion 266
Appendix A Useful Forms 267
Appendix B Web Sites 276
Bibliography 279
Index 281
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