Did you know that there are literally thousands of dollars HIDDEN in your real estate purchases that don’t show up on the contract when you make and the buyer accepts your bid? If you haven’t planned for them, you could lose all your profits in the shuffle. I’ll tell you about the three most common, and most deal-deadly costs in just a minute, but first I want to mention something a little less deadly and a little more HAPPY: the happiest towns in the country, to be exact! You won’t believe where two of the top three are located. I’ll give you a hint: it’s COLD! Check out this report in our News and Networking section at www.REI.Today and see if your hometown made the Happiness List.
Now, back to making you happy by making sure you don’t lose money! (You’re welcome!) According to CBS MoneyWatch, there are three different fees and expenses that buyers almost always end up paying when they buy a home but usually do not plan to pay ahead of time. Depending on the property, these fees can run into the thousands of dollars. Certified Boston financial planner Eric Roberge told CBS Money that in his experience, first-time investors and buyers tend to get the worst of it when it comes to these line items. “That first time…it’s a really emotional experience,” he said, adding that new investors, like new homeowners, “tend to just overlook certain things or say, ‘I’m just going to get into the home and figure it out.’”
There are three things you can’t overlook, though, and here they are:
First, don’t forget about the FEES. This means attorney fees, appraisal fees, application fees, recording fees, homeowners insurance fees, and property taxes and HOA fees. You’ll have to pay up and settle up with all of these fee payees before you take title to the property.
Second, you need TITLE INSURANCE! Don’t decide not to get this. It’s huge! It’s so huge, we probably need a separate episode just on title insurance, but that is not today. Suffice it to say that title insurance protects you from the chance that the previous sellers – any of them – did not have the right to sell the property in the first place.
Finally, you may want to invest in a home warranty. Not all investors use them, and there are strong opinions on both sides about whether they’re necessary or a good investment. If you do decide to get a home warranty, it will protect you from having to pay replacements or repairs on items in the home – for example, it might protect appliances, the roof, and even the insulation or wiring. It just depends on the warranty. These warranties tend to run a couple hundred dollars, but some are more expensive than that.
Now, if all these hidden costs have you worried about your future in real estate investing, don’t be! Now that you have the list, you can make sure you factor them in ahead of time when you’re evaluating any deal! And if you feel like there might be more hidden costs that you could be missing well…you’re right. Check out a complete list of the things that the National Association of Realtors and the Motley Fool say most buyers forget to factor in when they purchase a home in our REI Today Vault. It’s labeled with today’s episode number, 38, and it’s at the top of the Vault library. And if you’re not yet a member, no worries! text REITODAY no spaces, no periods, to 33444 I’ll provide you with fast, immediate access to all sorts of great trainings, news coverage, interviews, and lot more timely information that will help make your investing safer, faster, and more profitable.
And remember, when you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country. Text REITODAY no spaces no periods to 33444 or head over to www.REI.Today/Vault right now.
REI Nation, thanks for listening in and always remember this:
Your best investment is your own education.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.