Every Real Estate Investor Should Master

When you learn about something, when you are interested in new subjects, you also learn a whole new vocabulary you start using. Well, with real estate investing happens exactly the same. If you are a Real estate beginner or an experienced investor, you must understand and master all the terms and words of the investment vocabulary, especially acronyms, so here is a small list of every acronym a real estate investor should know:

1. PITI

Initials for: Principal (P), Interest (I), property Taxes (T) and Insurance (I). Essentially this means, the “bottom line” or the minimum amount needed when you estimate the acquisition of investment property with a loan. Frequently this is estimated monthly.

This amount is what you would might spend in the investment property over the life of the loan. Every and each month is the frequency of the PITI you have to pay in order to be in good standing. Thanks to this you will know how much rent you should pay.

2. GOI

GOI or Gross Operating Income, is related to the annual income that is collected from the property, including: laundry, parking, storage, etc. and consider any vacancies.

3. LTV

Initials for: Loan-to-Value, this is vital if you’re removing a loan on your investment property, it is estimated by dividing the loan by the property’s value; then, that number is expressed as a percentage. For example, to make it easy: if a loan is $200,000 and price of the property is $250,000, then the LTV is 80%.

You will have more equity in your property and negotiate more if the LTV is lower.

4. DCR

Initials for: Debt Coverage Ratio. This is referred to a commonly used term by lenders when they have to deal with underwriting loans for income-generating properties. How it is calculated? You need to divide the NOI (see below) by the total debt. If the ratios is 1.20 or higher, this is considered the average.

5. NOI

Initials for: Net Operating Income, this is the income left over from your rentals after paying all your monthly operating expenses. So, deduct your expenses from your GOI (Gross Operating Income) to get you the property’s NOI. For example, if you take in $20,000 in leases on all the units you have and spent $6,000 on maintenance including supplies, accounting, taxes, insurance, utilities and more, the NOI for the month was $2,000.

If you felt this information was useful and want to learn more about real estate. You can go to our Official Website and see all the incredible ways we have to offer to invest in real estate.

Real estate and how to avoid being scammed

 Last week, the California Bureau of Real Estate made an advisory to help consumers, especially senior citizens in order to avoid fraud on real estate for home loans, rentals, timeshares and property recordings.

Many people know how to trash unsolicited mail with official-looking seals that offer refinancing a home loan, take out a loan and find a place to rent or avoid foreclosure. But many people don’t know that exists a Department of Consumer Affairs where a consumer can recover accounts and present their cases on the California Bureau of Real Estate.

If you are an intentional fraud victim because of a California real estate licensee you can recover actual and direct losses up to $50,000 per business deal, with a total payout of $250,000 per licensee.

Want a tip? You can call the California Bureau of Real Estate at 1-877-373-4542 if you suspect you are a victim of real estate fraud.

In order to prevent those phone calls, we give you 10 fraud avoidance tips:

1) Be alert and don’t feel bad if you are suspicious of unwanted offers, suggestions and calls. Be careful with license numbers on mailings and websites.

2) Be in contact with the state business bureaus. Be smart and look for references. Do a research with the help of Google, Yelp or other websites to have important information about the company, and the most important: to see if they have a relation with other consumer scams or frauds.

3) Do not agree to pay money for a service, and always protect your personal info– specifically your SS number.

4) Avoid paying in advance for home loan or any foreclosure relief services.

5) If you can’t afford a property, never sign the agreement for that transaction.

6) Be totally suspicious if a real estate or home loan agreement is not clear, it is difficult to understand or encloses blank spaces. If an agreement has blank spaces it is easy to be manipulated for a scam artist.

7) Don’t sign your property over to somebody who claims such a transfer can and that he or she will help you with the reparation of your credit.

8) At no time sign a “power of attorney” to give any person or company the rights to your property if you don’t know them or trust.

9) Keep a track and always check the title to your real estate properties, if you detect something suspicious or fraud act immediately. Many signs can be related to: stop getting your property taxes, some real estate documents in the mail for operations you did not make or a notice of default of your home.

10) If you are the owner of an insurance policy on your property, contact the title company and check with them if you are protected against forged deeds or fictitious documents recorded after you bought the property.

Hope this tips help you, don’t hesitate to call if you see something suspicious. Check FCI if you are interested in real estate.

Loan or Mortgage?

When talking about mortgages, we talk about different loans that are secured with real estate or personal property.

A loan involves an association between a lender and borrower. The lender is the creditor and the borrower is the debtor. The money borrowed during this transaction is what we call a loan: the creditor has “loaned out” money and the borrower has “taken out” a loan. The initial amount of money is called the principal. When the borrower pays back the principal, an interest have to be paid also.  Loan repayments are frequently paid in monthly installments and the duration of the loan is pre-determined. By tradition, banks and the financial system take in deposits and use them to issue loans in order to facilitate the correct use of money in the economy. Loans are also used by organizations and even governments.

Since there are different loans in the market, most well-known type is a mortgage. Mortgages are secured loans that are tied to real estate property, such as land or a house. The property is possessed by the borrower in exchange for money that is paid in installments over time. This allows borrowers to use property earlier than if they were required to pay the value of the property upfront, at the end the debtor sooner or later comes to independently own the property once the mortgage is paid in full.

Loan and Mortgage Differences

If we referred about the loan, in the relationship between lender and borrower the lender is also the creditor and the borrower is the debtor. The money used in this process is known as a loan. When we referred to mortgages, these are secured loans tied to real estate property, it can be a land or a house. The property owned by the borrower is exchanged for money that is paid in installments over time.

About the types:

Loans can be: open-end and closed-end, unsecured and secured, student loans, mortgage and payday loans. Mortgages can be: fixed-rate, FHA mortgage loans, adjustable rate, VA loan, interest-only and reverse mortgages.

Financial and Legal Definitions

Financially, loans are structured in the middle of individuals, groups, and/or firms when one person or entity provides money to another with hope of having it repaid, usually with interest, within a certain amount of time.

How a loan is treated officially differs according to the type of loan, such as a mortgage, and the terms found in a loan agreement. Most of federal laws are set out to defend both creditors and debtors from financial harm.

People frequently borrow and lend a minor amount of money with no contract but it is prudent to always have a written loan agreement, as financial disagreements can be settled more easily and fairly with a written contract than with an oral contract.