Real Estate as a Wise Long-term Investment – if Your Credit Scores are High

Investors with high FICO scores and a little money in the bank are right now living in the land of opportunity.

With prices in many areas plummeting, good homes can be purchased for pennies on the dollar. Add the Fed's decision to keep interest rates at an all-time low, and investors willing to stay in for the long haul can expect high profits in years to come.

Not everyone has the personality to deal with investment real estate – it involves hard work and persistence, and a good dose of patience when dealing with tenants who don't always uphold their end of agreements.

But consider the rewards, as compared to an investment in the stock market.

With $50,000 you can buy $50,000 worth of stocks – or use the magic of leveraging to buy a $200,000 home. Assuming that both appreciate at 5% per year for the next 30 years, the stock will have grown to $197,000. That's not bad. But look what the house will have done...

Appreciation will have affected the entire $200,000 – not just your $50,000 investment, so your house is now valued at $784,000. In the meantime, your tenant has been furnishing the money for payments, and hopefully, a bit of cash flow on top of it.

AND - you've been able to depreciate the house, which has lowered your tax on other income.

Even more impressive – at the end of the 30 years the only way you'll see a cash return from your stocks is to sell them, but your now "paid for" house can keep right on giving you rental income every month. And, since rents are tied to value, those rental payments will be 3 or 4 times higher than they were when you first purchased the house.

On the other side of the coin, investors need to remember that real estate is not a liquid investment. While they could sell their stocks in a day if need be, a house may take many months to turn into cash.

Also, as we see in this housing crisis, real estate has its up and down cycles. That makes it an investment for the long haul, even though some ambitious entrepreneurs do have the ability to "fix and flip" houses when the market is right.

Experts say that money is made in real estate at the purchase – not the sale. That means finding the best bargains on the most problem-free homes and not buying a house just because you fell in love with it. Smart investors are extremely knowledgeable about construction issues and know the red flags that say "stay away" from some houses.

Investors who are persistent and patient in hunting for bargains can find properties that offer a large cash flow – and in those cases can escape the day-to-day management by hiring a rental manager. This is often the best choice for investors who own large portfolios of homes, especially when they are located over a large geographic area.

The first key to becoming a profitable real estate investor is to have the credit scores to qualify for low interest loans. Without that, all the real estate knowledge in the world won't get you a bargain. So check your credit scores today, and push them to the top before approaching a bank or mortgage lender for your first purchase of investment real estate.


CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

What First Time Home Buyers Need to know

The hard way always seems to be the better way. I have been told there are two ways to do things in life, “The hard way and the easy way.” I think most want to do things the hard way. When it comes to buying a house for the first time, there is process to follow so your buying experience is not done the hard way. The easy way may not seem the best way in the eyes of a buyer, but I assure you it’s the correct process. I have seen more problems with mortgage loans following apart because someone led the cart before the horse. Here is the easy way to buy a home.

Get approved first
The first step in the home buying process is to get your finances in order first. Get your credit reports pulled and your income verified to see where you stand. If you don’t do this first I guarantee that you will have problems. Most want to go and look at homes first and then apply for a mortgage. This is why all the nightmares you hear about happen in the lending industry.

Meet with reputable lender
After you have been approved for a mortgage meet with the lender to review what type of loan they have approved you for. You need to understand the loan and your estimated payments with your credit. It is important that you understand all aspects of your loan and monthly payments. Mortgage payment can be an issue as well, because you thought you payment might be lower. Some of the on-line calculators don’t estimate your entire payment, which causes confusion in lending. The calculators on-line usually estimate your principal and interest payment only, which does not include your taxes, MIP, and homes owners insurance with the payment. So make sure your review all of this with a reputable lender.

Meet with a seasoned realtor
After you have met with a lender and have been approved, the next step is to get a realtor to find homes in your price range. I would recommend that you find a full-time realtor, not one that is part time. The reason is if there is a problem during the day, you will have issues getting a hold of this realtor because they are at work. There are a lot of part-time realtors out there, and as far as I am concerned should not be allowed to have their license. Real Estate is a fulltime career and requires someone that has experience. If you are working with a realtor that does not have experience you could have issues as well.

If this process is followed and the people you are working with are experienced, then your home buying process should be a good one. Buying a home is a big step in life and needs to be handled by experienced real estate professionals.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness