RESIDENTIAL PURCHASE AND SALE
Congratulations, you have decided to purchase a home. There is never a bad time to purchase a home for you and your family. Purchasing a home is what we thrive for after all the hard work that we put out. Purchasing a home is the American Dream. Whether you are a first time home buyer or looking to upgrade from a coop, condo to a single family house or from three (3) bedroom to a four (4) bedroom house, or down grading, the process of home buying is always a big investment and importation decision for you and your family. Although the process is and can be simple, due to various outside factors and parties involved, the process can get complicated, if the matter is not addressed and handled properly. That is where Trivedi Law Group P.C. and it is experienced support staff comes helpful. At Trivedi Law Group P.C., when you call during normal business hours from 9:00 a.m. to 5:00 p.m., there will be always someone answering the phone to answer all of your questions. Although Mr. Trivedi relies on his team to communicate and handle some of the duties of the transaction, however, Mr. Trivedi is always involved in the process and is overseeing the transaction. At any given time, Mr. Trivedi is reachable and you can have access to him for any of your questions. During the time of contract signing, Mr. Trivedi will personally discuss in detail the process of purchasing your home and advise you on the do and don’t and will make the process as seamless as process. Purchasing a home should be a good positive feeling and Mr. Trivedi along with other parties involved, ensures that you are properly protected and you achieve your American Dream. Below are some of the steps to purchasing your home.
Researching home a process and more homes that you see, the more define and refine your search will be. In today’s market, there are many sources of information that one can obtain in order to find a home that you are interested in. You can start with the Websites, newspapers and real estate maganize that has listing of home for sale in your area. You have to pay particular attention to the asking price and obtain a sense of idea how long the house has been on the market and why, and have to get a feel of the houses in the area.
It is important to learn and find out what is the price range that you can afford to purchase a house. Thus before looking for a house on the market, it is important to visit a lender, such as a bank or a private mortgage broker to determine how much house you can afford to purchase based upon your salary. If you are married and your joint account and salary will determine how much house that you can afford. This will allow you to realistic search for a house in the area that you are desiring for the price that you can afford. Once you know the house price that you can afford, then you will search the house in the area that you desiring for the purchase price that you can afford.
Before you start looking for a home, you will need to know how much you can actually spend. The best way to do that is to get prequalified for a mortgage. To get prequalified, you just need to provide some financial information to your mortgage banker, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much we can lend you. This will tell you the price range of the homes you should be looking at. Later, you can get preapproved for credit, which involves providing your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit
Real estate agents are important partners when you’re buying or selling a home. Real estate agents can provide you with helpful information on homes and neighborhoods that isn’t easily accessible to the public. Their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in can be extremely valuable. And best of all, it doesn’t cost you anything to use an agent – they’re compensated from the commission paid by the seller of the house.
Start touring homes in your price range. It might be helpful to take notes on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home.
Make sure to check out the little details of each house. For example:
- Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
- Try the electrical system by turning switches on and off
- Open and close the windows and doors to see if they work properly
It’s also important to evaluate the neighborhood and make a note of things such as:
- Are the other homes on the block well maintained?
- How much traffic does the street get?
- Is there enough street parking for your family and visitors?
- Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?
Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the Agent will have a binder signed by both the parties. Once a binder has been signed, Seller’s attorney will draft the contract and your attorney will review.
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. However it is advisable to conduct a home inspection prior to signing the contract, unless of course, there are many potential bidder on the house, in such case, it is advisable to sign the contract and then conduct the inspection. Normally, there is a contingency of a house inspection in the contract, this contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage. Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.
Lenders have a wide range of competitively priced loan programs and a reputation for exceptional customer service. You will have many questions when you are purchasing a home, and having one of our experienced, responsive mortgage bankers assist you can make the process much easier.
Every home buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years.
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!
COMMERCIAL PURCHASE AND SALE
At Trivedi Law Group, P.C., we help you navigate through the process of buying, selling, leasing, financing, and investing in commercial real estate. Commercial real estate is all around us, and includes apartments, offices, retail space, hotel/motel, and more. In general, commercial real estate is more associated with commercial properties, which is investing in properties that general income. Income and appreciation are the two ways commercial real estate earns money. Upon investing money into a commercial investment, income is produced and generated, while appreciating the value of the property over time. Just investing in commercial investment could be very lucrative. While not all investing in commercial properties can but lucrative and there are many hidden and challenges that an investor must overcome.
First, investing in commercial real estate normally requires more capital, expertise and time than purchase of a residential property. Second, lender willing to lend funds to an investor are less compare to lenders for residential and their requirements are more difficult.
Trivedi Law Group P.C. has the necessary knowledge and expertise for any investor who is interested in investing in commercial market place. It is a great way for any investor to diversifying his/her portfolio. Trivedi Law Group P.C. has worked with large and small lenders, such as TD Bank, Capital One Bank, HAB Bank, Bank of America, People’s United Bank, First Fidelity National Bank and others in order to be familiar with the banking requirements, so that your closing can be completed successfully.
Below is some information on how and what to look for when investing in commercial real estate and requirements of a commercial lender. If anybody is thinking of investing in commercial real estate, please do not hesitate to contact Mr. Trivedi.
The question of ‘how to invest in commercial real estate’ has only one answer: with due diligence. Since commercial real estate involves different array of properties and investment, it is imperative that the investor perform necessary due diligence. Regardless of what sector or niche you are in, doing your homework and minding your due diligence is a critical element in ensuring your success in real estate. In addition to learning the ins and outs of commercial investing, make sure you understand the commercial real estate market and how it can differ from the residential real estate market. If you are ready to embark on your first commercial endeavor, be sure to abide by the following tips:
The first step as a commercial investor is understanding that commercial real estate is valued differently from residential properties. Unlike residential real estate, the income from commercial real estate is typically related to usable square footage. In addition, commercial property leases typically last longer than those of residential leases. These two factors help illustrate why a commercial real estate investor has a better potential to earn a higher income.
Location is an important factor regardless of your investing niche, with commercial investing as no exception. However, commercial investors also need to pay close attention to their tenant type. The location and intended tenant type are two factors that intersect closely when determining demand. For example, a space intended for corporate offices will likely have better performance in an urban center compared to a primarily residential neighborhood. Analyzing recent comparables can provide you with a better clue as to how your property of interest might perform.
The next step is to analyze comparables in the area and research future developments. Otherwise known as “comps,” these assets refer to prices paid for recently sold properties that are similar in location, size and style. Analyzing comps will help you determine the current market value of a property. A general rule of thumb when determining comps is to choose a property where the square footage does not go beyond 10 percent higher or lower than that of the property being evaluated. This will allow for the most accurate comparables possible. Read more on tips for pulling the most accurate comparable sales.
Commercial real estate investing involves a wide array of calculations, as well as an understanding of real estate finance. To be a player in commercial real estate, there are several formulas you should know.
- Net Operating Income: This is a calculation that equals all revenue and costs from a particular property. Configured before taxes, this number provides investors with an idea of how much they’ll make from an investment minus all necessary operating expenses. Operating costs typically consist of insurance, property management fees, utilities, repairs and janitorial fees, utilities and property tax.
- Cap Rate: Used to calculate the value of income producing properties, the “cap rate” — short for capitalization rate — will provide investors with an estimate of future profits or cash flow. This is essentially the ratio of net operating income to property asset value.
- Cash On Cash: Cash on cash is a metric that provides investors with a rate of return on their commercial real estate transactions. It’s typically used by investors who rely on financing to purchase their properties. Cash on cash measures the return on out-of-pocket cash invested relative to the portion that was financed. This will provide an accurate analysis of an investment’s performance.
The above formulas serve as an introduction to complement our complete guide to real estate calculators that every investor should know.
Understanding Commercial Investment Loans
Unlike a purchase of a residential home, purchasing and obtaining financing commercial real estate requires a skill investor and an experienced attorney as Mr. Trivedi, Esq.
There are a wide range of commercial investment loan types, and it is up to the investor to decide which financing option best fits their needs. Each type of loan has unique eligibility requirements, such as a minimum credit score, experience level and down payment requirement. These loans also have varying terms including the loan term, interest rate, and loan-to-value (LTV) ratio. For example, one investor may be in search of a loan that offers lower interest rates over a longer loan term, while another investor’s priority might be finding a short-term loan as a means of bridging a financial gap.
The idea of obtaining commercial real estate financing may seem intimidating at first, but investors who spend the time learning about the process and the different types of commercial real estate loans will find that they are completely attainable. Below are the main steps involved in obtaining a commercial investment property loan:
- Individual Vs Entity: Step one is to determine whether to finance a commercial property as an individual, or as an entity. Although the majority of commercial real estate is purchased by business entities such as corporations, developers and business partnerships, it can easily be completed as an individual investor. The lender essentially wants to make certain the borrower can repay the loan, thus requiring borrowers to provide financial track records in order to secure a loan. For newer businesses with no credit history, the lender will typically require the investor(s) to guarantee the loan.
- Mortgage Options: It is important for investors to recognize that residential and commercial mortgages are not the same. First, unlike residential mortgages, commercial loans are not backed by government agencies such as Freddie Mac and Fannie Mae. Secondly, commercial loans terms differ from those of residential properties. Commercial loans range from 5 to 20 years, whereas residential loans will typically range from 15, to 30 years. Lenders will typically make their decisions based on an investor’s financial and credit history. Although Commercial loans can range from 5 to 20 years term, but their payment can be based upon 10 to 25 years.
- Loan To Value Ratio: An important metric lenders consider when financing commercial real estate is a property’s loan-to-value ratio (LTV). This figure measures the value of a loan against the value of the property, and is calculated by dividing the amount of the loan by the property’s appraisal value or purchase price. For commercial loans, the LTV will range from 65 to 80 percent, with lower LTVs qualifying for more favorable financing rates. Also, the investor is purchasing property as an owner operated investment, then LTV will range close to 80 percent. In such case, lender will seek business financial of the operating company and a business plan of the investor seeking to operate the business and own the commercial.
- Debt Service Coverage Ratio: Lenders also look at debt-service coverage ratio (DSCR). This metric measures a property’s ability to service a debt. It compares a property’s annual net operating income to its annual mortgage debt service, including principal and interest. A DSCR of less than one percent reveals a negative cash flow. Commercial lenders generally look for DSCRs of at least 1.25 to ensure proper cash flow.
We hope that we have provided some initial relevant information for you to get started in pursuing investment in commercial. If you have any questions or concerns, please do not hesitate to schedule an appointment and discuss the matter with Mr. Trivedi.
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