Florence, AL Real Estate Investments

Florence, AL Real Estate | Good Investment?

While at a closing last week I was speaking to a couple who was purchasing some Florence, AL real estate to build their home on. Our conversation moved towards accumulating and investing money. They were of the mind of investing their money into CD’s and interest bearing accounts which is a very safe and smart thing to do. But, as of this writing these types of investments pay very poorly with inflation almost exceeding your moneys growth. Upon learning their investment ideals and understanding I suggested that they look into investing into some Florence, AL real estate.

Here’s some of my quick and simple suggestions to Florence, AL real estate investing. These are a few things I’ve learned while acquiring real estate over the past 11 years.

Florence, AL Real Estate | Multifamily Property Strategy

Invest in something that pays a return either now or over the life your Florence, AL real estate. I suggest multifamily property. Why? Because everyone needs a place to live. Plus, your tenant pay your mortgage and pays into your future retirement.

For example. Say you find a $55,000 home near the University of North Alabama, which is prime Florence, AL real estate for those attending college. You can expect to put down about 5% to buy the home. Here’s how it works:

Purchase Price: $ 55,000
Down Payment: $ 2,750
Financed: $ 52,250
Monthly Payment: $ 407
Including Property Tax and Insurance: $ 457
Market Rent: $ 575
In Your Pocket: $ 118

Yearly Gross Income: $ 1,416

This particular scenario allows for a positive cash flow. Having a positive cash flow allows for you to either make:

1. Extra payments to your loan
2. Money for repairs and maintenance
3. Extra spending money

Florence, AL Real Estate | Tenant Builds Equity + Property Appreciation

REMEMBER! This allows the tenant to PAY YOUR MORTGAGE while you BUILD EQUITY in your Florence, AL real estate. ALSO, while the tenant is building the equity in your property, you’re able to recognize appreciation in the properties value.

Let say that in five years your Florence, AL real estate value has appreciated to $60,500. How much equity do you have in the property?

Property Value: $ 60,500
Loan balance: $ 39,000
Equity: $ 21,500

You would have made $21,500 for an investment of only $2,750. Thats a very reasonable return on your Florence, AL real estate investment. Much better than a CD or interest bearing account. PLUS, you get to depreciate the value of the home over a period of time set by the IRS. Here’s how depreciation works in very simplistic terms:

Purchase Price: $55,000
Yearly Depreciation Amount: $ 2,000

Say you net $1,416 at years end, not including your principal payments, this is what your net would look like to the IRS.

Gross Income: $ 1,416
Depreciation: $ 2,000
Net Income: $ - 584 NEGATIVE

Florence, AL Real Estate | When A Loss Can Be A Gain

You may think, why would I want to loose money on my Florence, AL real estate investment? This is only a loss on paper and not in your pocket book.

The IRS looks at and treats a properties depreciation as an expense. Which means this yearly depreciation amount of $2,000 will be written off at the end of the year which means less tax dollars out of your pocket. These dollars can be used to improve your piece of Florence, AL real estate or even begin looking for another property.

This particular scenario does not take into mind the recapture of a properties depreciation upon its sale or raising your rents over the life of the property. That’s a completely different conversation.

This information is based on my opinion and experience only. There are multiple situations and scenarios that can come into play while investing in Florence, AL real estate. Thats why I suggest you consult with a professional who’s done this type of investing before, specifically one who makes his or her living doing it, and even more so, if their expertise in in Florence, AL real estate.



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How a Seller is affected by paying a Buyers closing costs

While ironing out some details on a contract for some real estate in Florence, Alabama, the sellers had a question about how assisting the buyers with their closing costs would affect their bottom line.  If you're a seller then that's what's important; what you're going to walk away with at closing. Well, let me explain how you, the seller, can open up your home to an additional set of buyers and how it affects your bottom line.

In today's market there isn't as many buyers with a surplus of cash in the bank to apply towards their dream of home ownership. Therefore, sellers need to be creative in order to reach this group of buyers and stay ahead of their competition. Here's an example of how this works.

Say you have your home on the market and you're asking $250,000. A buyer comes along and offers you your asking price but wants you to pay $10,000 in closing cost. Do you net $240,000 or less? Less! Some sellers have thought that this $10,000 includes their closing cost as well. Not true! In this example the sellers should first add their costs associated with the sell while ignoring the $10,000 figure. This is what the sellers net would look like. For this example we assume that the real estate taxes are $1,500 and are paid in arrears. We're also assuming we close six months into the tax year.

         Brokerage Fee of 6%                   $15,000
         Title Insurance                                     725
         Title Search                                          125
         Deed Preparation                                  50
         Closing Company                                350
         Release of Mortgage                              50
         Prorated Taxes (1500 / 12 * 6)            750

                                     Total                   $17,050

         Buyers Closing Costs                    $10,000

                             New Total                   $27,050

        Sellers Net Proceeds                     $222,950

This is just one example of many how your bottom line can be affected while selling your home. There's so many ways to offer incentives and open the doors to these kinds of buyers yet still net what you need.

One other common thing is that sellers have had buyers add their closing costs to the offer in order to finance the buyers closing costs into the loan.  Be sure and ask your lender what the max amount a seller can pay in buyers closing cost because it varies with lenders and programs.  It's something every seller should consider in today's real estate market.

"Like" us on Facebook at www.facebook.com/pages/Bobo-Real-Estate-Company/102513233127228

If you're considering selling your home give us a call and we'll talk about all the ways we can help you get what you need in the sale of your home without shutting this door of opportunity. Bobo Real Estate Company has been helping buyers and sellers in the Florence, AL area since the 1950s. Whether buying or selling, call us! It doesn't cost it pays!

Visit us online at www.BoboRealEstate.com.

Follow us on Twitter at www.twitter.com/realtor_bobo 

To view homes in Florence, AL click the following:

Homes For Sale In Florence AL

Patiently waiting for a new addition!

Some of you may know my wife Kristen and I.  We’ll be married 6 years this May 28th and we have one son whose name is Noah.  He’s 3 1/2 years old and he’s a real sweet heart just like his daddy (actually more like his mother)!  Those of you who know us know that we’re expecting a new addition just anytime.  Kristen is 37 weeks pregnant this week and she’s ready to have him, as am I and Noah.  Noah’s been crawling around in his baby brothers crib saying “I love my baby brother”, “He’s my bestest friend” while hugging his brothers play toys.

This morning was like any other morning, get up, have breakfast, make a few calls on the way into work, etc.  Around 9:30 I get a call from Kristen.  Like any other call I get from her around this time, I sit on the edge on my seat when I answer.  This time she says she’s on her way to the hospital because of contractions 5 or so minutes apart.  I’m excited!  I’m so ready for Ethan Michael to get here!  I think waiting is the worst part.  Knowing he’s here and everyone’s okay is such a Great feeling.

Anyway, Kristen tells me that her water HAS NOT broke and she’s going to get monitored for a bit.  After about an hour they tell her that she’s dilated to 1 and her contractions are about 7-8 minutes apart.  That being so they send her home.  After she leaves her and Noah come to eat lunch with me at Ricatoni’s, here in Florence, AL, one of the best Italian restaurants in town.  Once we finished lunch, we’re walking back to my office, which is in downtown Florence, AL, and she mentions that a friend of hers said that she had climbed some stadium stairs and went into labor an hour later.  That said I looked at her and asked if she’d like to climb the stairs of a 6 story building.  She’s looks at me with a grin and says “Sure!”.

Next thing I know we’re climbing up 6 stories of stairs, back down, then up again, with Noah on my shoulders and his monkey backpack on his back.  As you can see, we’re ready for him to get here.  It’s about 4:00 now and nothings changed.  They say the second usually comes quicker than the first.  Noah was born at 37 weeks.  She was in labor with him for 12 plus hours!  Not fun!  Anyway, Nanna’s on standby in Michigan.  She’s getting ready to use her Delta SkyMiles for a free rush flight to Florence, AL.  The Fourth Generation Realtor is on his way!

"Like" us on Facebook at www.facebook.com/pages/Bobo-Real-Estate-Company/102513233127228

If you're considering selling your home give us a call and we'll talk about all the ways we can help you get what you need in the sale of your home without shutting this door of opportunity. Bobo Real Estate Company has been helping buyers and sellers in the Florence, AL area since the 1950s. Whether buying or selling, call us! It doesn't cost it pays!

Visit us online at www.BoboRealEstate.com.

Follow us on Twitter at www.twitter.com/realtor_bobo 

To View Homes in Florence, AL click:

Homes For Sale In Florence AL

How are we going to sell THAT!?!?

Today, I’m helping a new friend prepare to close a property that needed IMMEDIATE attention, according to her.  This is how it all came together...............

Last Wednesday I got a call from a duplex owner in Florence, AL expressing interest in selling her property.  We spoke of the services that my company, Bobo Real Estate, offers but she wasn’t interested in my assistance in selling it for her.  She wanted to know if I would be interested in buying it.  I told her that I’d like to see the property so we arranged to met the next day, Thursday, and preview the duplex.  The duplex was nice but there were some cracks around the crawl space which told me there might be some foundation issues.  Later that evening we agreed on a price with some inspection contingencies and agreed to close on the property the following Wednesday.  

She was SO EXCITED that she didn’t have to worry with this place anymore.  She told me how big of a pain in the neck this place had been and at her age she didn’t need the worry anymore.  After leaving, I immediately started calling to order what needed to be done before closing like termite inspection, title search/insurance, inspection, etc.  

The termite inspector has the inspection scheduled for Friday morning.  Later Friday evening I get a very urgent message from the inspector letting me know they need to speak with me immediately.  Expecting termites, I return their call.  The inspector tells me that not termite infestation is present but we have MOLD and MOISTURE issues in the crawl space and that it’s going to cost $1600 to rip the old insulation out, spray the mold and lay down a new 4 mil poly to replace the old.  This would get rid of the mold but still wouldn’t guarantee it’s return nor would it cover the cost of the insulations replacement.  The seller calls, after speaking with the termite company, very worried that the deal will fall through.  Having seen these issues before I felt comfortable moving forward with the sale and assured her there was nothing to worry about. 

Saturday morning I met a foundation specialist on the property to make certain I wasn’t getting in over my head in foundation repairs.  The inspector quickly notes that the crack are major and starts to work.  After inspection he says it’ll cost around $25,000 to remedy the issues.  WOW!  $25,000 worth of foundation issues?!?!  Really!?!?  Once we left inspection I called the seller to see if I could come by and talk about what we found.  She asked if something was wrong and I said I’d like to speak with her in person about the inspection.  

Later that evening I meet with the seller to let her know that I was no longer interested in buying the property but that I felt like I could find a buyer for her property, even with the existing issues.  She immediately started crying!  What do I do?  After long reassurance that everything would be okay, she still wants me to take the property.  “Make me and offer” she says.  “PLEASE, just take it.  I don’t want it” she begs.  There’s NO WAY I’m going to TAKE real estate from anybody, no matter what the issues.  I reassured her not to worry and that I’d work hard to find her a buyer.  She eventually agrees and said “What are you waiting for?  Pick up your phone”.

So here we are today and its Tuesday, two days later and we’re getting ready to close tomorrow morning.  We FOUND a BUYER and she didn’t get ripped off!  Of course, we disclosed the MAJOR issues and still FOUND a BUYER!  I felt terrible for this lady Saturday evening.  She felt like she was cornered by her own property with no way out.  I know that tomorrow morning is going to be a GREAT RELIEF for her.  As she said “A huge burden has been lifted off my shoulders”.

"Like" us on Facebook at www.facebook.com/pages/Bobo-Real-Estate-Company/102513233127228

If you're considering selling your home give us a call and we'll talk about all the ways we can help you get what you need in the sale of your home without shutting this door of opportunity. Bobo Real Estate Company has been helping buyers and sellers in the Florence, AL area since the 1950s. Whether buying or selling, call us! It doesn't cost it pays!

Visit us online at www.BoboRealEstate.com.

Follow us on Twitter at www.twitter.com/realtor_bobo


To View Homes in Florence, AL click:

Homes For Sale In Florence AL