50 Shades of Green

While the talk at the movies right now might be about 50 Shades of Grey, we thought looking at different ways to make might in real estate might be a hotter topping. Buying a home is usually the biggest purchase the average American makes in their lifetime. There are numerous ways in which you can save money on the home you buy, including:  how you find the home, the area you buy in, how you craft the offer, the type of financing you use and more. Likewise, when you go to sell your home there are several things to look out for to make sure you get the most money possible. Other ways to make money in real estate included becoming a land lord, flipping homes, developing land, buying options and more.

Our team has helped hundreds of buyers and sellers in the Arlington, VA, Washington, DC and surrounding real estate markets. We have developed several methods for helping our clients save and make money in real estate. Enjoy reading about 50 different ways we have helped our clients and if you would like to learn more contact us at [email protected] or 571-969-7653.

1. Higher EMD – Increasing your earnest money deposit is a good way to show the seller you are more committed to following through with the terms of the contract. I have often seen this result in buyers winning out in competitive situations or getting better terms in negotiations. If you are going to put that money towards the down payment anyway, this is a great way to get a better deal without giving up anything.
2. Higher Down Payment – A higher down payment signals to the seller that you have more resources to secure financing, which reduces their risk and often gets you a better deal.
3. Shorten Financing Contingency – Contingencies give a degree of uncertainty to sellers so the shorter you make them the less risk there is to the seller, which in turn increases the likelihood of getting a better deal. If a lender can get you approved in 14 days, there is no need for a 21 day contingency.
4. Eliminate Financing Contingency – What’s better than a short financing contingency for the seller? If you can get a reputable lender to approve you up front, you might be in a position to not have a financing contingency. Giving sellers this certainty will get you a better deal.
5. Shorten Appraisal Contingency – An appraisal contingency creates uncertainty for the seller and makes the contract price at risk. If you can find a lender that can turn around an appraisal in a week this will certainly make your offer more appealing than a 2 or 3 week appraisal contingency period.
6. Eliminate Appraisal Contingency – What’s even better to a seller than a short appraisal contingency? Eliminating it altogether. If you are confident of the property’s value, are using a great lender and have enough financial resources, eliminating the appraisal contingency is a great way to make your offer look even better to the seller.
7. Shorten Home Inspection Contingency – Home inspection contingencies create uncertainty for sellers so the shorter they are the better your offer looks, which increases your chances of getting a better deal.
8. Make the Home Inspection for Information Only – Making the home inspection for information purposes only still gives you the comfort of ensuring the home has no major problems and gives the seller the comfort of knowing that you are not going to nickel and dime them on small repair items.
9. Waive Home Inspection Contingency – Depending on the type of home you are buying you might be able to eliminate the home inspection contingency, or inspect the home before you buy it. Not having this contingency will definitely help you get a better deal as it eliminates uncertainty for the seller.
10. Eliminate the Home Sale Contingency – Making your offer contingent upon the sale of your home creates a whole lot of uncertainty for sellers. Eliminating this contingency will help you get a much better deal and save money. If you are concerned about your home selling then talk to our team. We can help you get bridge loan financing or you can take advantage of our Guaranteed Sale Program, where we buy your home if it does not sell.
11. Consider a Home Warranty – A home warranty can potentially help you eliminate the home inspection contingency. It can also limit your risk of having to spend a lot of money on repairs in the first year you own your home.
12. Close Quickly if the Seller Needs It – Before you make an offer find out the seller’s timeline. If they need to close quick and you have the ability to do close quick, it might help you get a better deal.
13. Give Seller a Rent Back Period if Needed – Sometimes sellers need to stay in there home after closing, either because they need more time to find their next home or they need more time to move out. Letting them have a rent back period after closing can help you get a better deal.
14. Write the Seller a Love Letter – Sometimes being sentimental and personal can help. It certainly never hurts to write a short letter about yourself and why you love the home and it might help you get the home you want.
15. Use a Reputable Lender – A great lender can help on many fronts. Not only can they offer flexible programs and great rates, but great lenders that provide you with superior service can help in many different ways, from closing quickly to getting approvals and appraisals done in shorter times.
16. Consider an Adjustable Rate Mortgage – The most popular mortgage in America is the 30 year fixed rate, but that does not mean it is the best one for everyone. The average homeowner lives in their home for less than 10 years. Adjustable rate mortgages offer a lower rate for an initial term (anywhere from 1 to 15 years) and then they float or adjust after the initial term. The money saved during the initial can often times outweigh the risks
17. Consider a Second Loan – A great way to put less money down and still avoid primary mortgage insurance (PMI) is to use a second loan.
18. Get a VA Loan – If you are eligible for a VA loan you can get 100% financing with very attractive interest rates and with no PMI.
19. Get an FHA Loan – Another low down payment option is FHA, which only requires 3.5% down payment. The PMI premiums were reduced dramatically in 2015 making this a much better choice than before for many people.
20. See if a Lender Credit is Available – Many times a lender can give you a credit which can help pay for closings costs.
21. Check Your Credit Score –The best interest rates and programs are available to people with the best credit. Check your score before you start house hunting to make sure you are not surprised later.
22. Find Seller Financing – Private lending from sellers can often be more flexible than loans available from traditional sources.
23. Consider a Home that Needs Updating – Buyers pay more for homes that are move in ready. If you can find a home that needs updating and do not mind doing the work yourself, you might be able to find a great deal and create value.
24. Buy in the Neighborhood Next to the “Hot” Neighborhood – Recent studies have shown that buying in the neighborhood next to the “hot” neighborhood can lead to higher rates of appreciation. Often times these neighborhoods simply have more room to grow.
25. Become a Move Up Landlord – Owner occupied financing usually comes at better terms than investor financing. If you do not mind moving, a great way to increase your rental returns is to buy a house, live in it for a year and then buy a new house and rent our your old one.
26. Make Improvements that Will Increase Your Rent – One way to make your rental property more valuable is to make improvements that will increase the rent you can charge. The increased rents will help pay for the improvements over time and get you more money when you sell eventually.
27. Lease a Property with the Right to Sublease – Although it is not what most people would think of as a way to make money in real estate, getting a lease with the right to sublease to someone else at a higher rate is a way to make money without having to put money down or use a loan.
28. Fix and Flip – buying a fixer-upper and selling it after a renovation at a profit is a way to make money faster than a long-term investment, but can be more risky.
29. Use a 1031 Exchange – If you own an investment property, you can sell it and buy another property and defer the taxes on any gains until the new property is sold.
30. Consider a Vacation Home – A second home is generally considered a personal residence if you live in it for more than 14 days out of the year, and rent it out to others for a fair rental price for the rest of the year. Most of the expenses associated with the vacation home can be deducted from the rental income.
31. Refinance to Lower Your Rate – With mortgage rates at record lows, it can be very tempting to refinance to a lower rate. You should talk to a reputable lender, because there are upfront costs associated with refinancing, and this also means that you’ll reset the clock on a 30 year mortgage.
32. Get a Cash Out Refinance – A home equity loan is a different loan on top of your first mortgage, a cash out refinance on the other hand replaces your first mortgage and allows you to take some equity out of your home and use the cash for other things.
33. Get HELOC – A home equity line of credit is like a credit card where the equity in your home is the collateral for the loan.
34. Ask for a Seller Subsidy – During the purchase of your home, you can ask the seller to pay for certain costs associated with the purchase or bring cash to the table to lessen the sale price and your mortgage, or just to cover closing costs. The seller may offer a subsidy to entice offers from buyers.
35. Go Commercial – big business sometimes don’t want to own the buildings due to tax purposes, but they will rent it out on a long term lease, offering the chance for passive income.
36. Primary Residence Tax Deduction – if you don’t mind moving often, the IRS allows you to not pay capital gains taxes on the sale of your primary residence. If the market is on the uptick, this can be a great way to upgrade and make a profit.
37. Land – buying land, particularly land that can be subdivided into smaller lots and sold, with or without improvements.
38. Multi-Family Units – duplexes, etc., can be an excellent source of income for someone who wants to manage a property and get the hands on experience.
39. Wholesale – is probably one of the toughest, but most effective ways to make money in real estate. Simply, you hunt for a bargain, whether it’s a foreclosure, REO/bank-owned, for-sale-by-owner, or a property that’s been on the market for awhile and buy it. Hold the property until the market rises again and sell for a profit. Tough because there are a lot of people looking for a good deal, and the costs, including taxes and finance charges can add up quick.
40. Interview Top Agents – Not all realtors are the same. Top agents are knowledgeable professionals who will guide and educate you throughout the transaction, in addition to bringing their experience and connections to bear from the moment you list your home or begin your home search all the way to the settlement table.
41. Stage Your Home Before Selling – You may love your home the way it is, however, a professional stager will help to show a potential buyer why they should love it too. They might not need to bring in fancy, contemporary furniture to do it, they could just help you de-clutter and rearrange to achieve a whole new modern organic look. Some studies have shown that a well-staged home will sell faster than one that isn’t.
42. Use a Great Photographer – A great photographer can make a huge difference in whether or not a potential buyer decides to visit your home, and ultimately make an offer.
43. Ensure Your Home is Marketed Properly Online – Perhaps the hardest part about the real estate search is finding the property you’re looking for because it’s on one website and not the other. A top agent will market your listing on every avenue available, ensuring you get top dollar.
44. Use the Right Words in Your Listing Descriptions – Buyers will search for the details they want in their home such as a fireplace, great views, or hardwood floors. They won’t find your listing if it doesn’t have the right keywords in the description.
45. Make Your Home Easy to Show – If you’re still living in your house while it’s on the market, you don’t have to hold a 24/7 open house, just set hours around your schedule during the week and the weekend when agents can bring potential buyers to see the property.
46. Price Your Home Right – A good agent will help you get top dollar for your home even if it’s priced below market value. A home that’s listed below market value in a desirable neighborhood could entice more buyers to make offers, starting a bidding war where you, the seller, profits. A top agent knows the market and how to control it, rather than let it control you.
47. REIT – A real estate investment trust is a form of stock ownership where the company or trust pays dividends directly to their shareholders. With major players far outperforming the market (2014: Vanguard REIT ETF 30.3%, iShares Cohen & Steers Realty Majors Index Fund 34%, SPDR Dow Jones REIT ETF 31.7% vs S&P 500 13.7%) this means an awesome price-to-earnings ratio. However, these funds are more on the risky side, as volatility can be subject to interest rate hikes by the Fed, as well as other market factors.
48. Form a Partnership – Generally speaking, a partnership between two or more investors means more money pooled together to make investments and a better allocation of risk, resulting in better returns.
49. Buy an Option – An option is a contract where one party offers to buy or sell something at a set price at a later date for certain up front consideration, usually cash at a far. A typical option is a lease with the option to buy: the lessor grants the lessee the option to purchase the property at the end of the lease at a set price, in exchange for a dollar amount up front. While the lessee has the option to buy or sell something, the lessor is obligated and required to follow through.
50. Get Creative – If you have a property in the city and don’t have a car, you could sell or lease your parking space. You could rent out the spare room in your home, or combine your money and buying power with other investors to buy commercial property. If the market permits, sell your home and buy it back at a lower price. There are countless ways to make money with real estate.