Step 1 to Financial Freedom – Buy Real Estate

Owning real estate. That’s the way to go. But you may not have the $100.000 sitting in your bank account to pay for such a hefty downpayment on your mortgage. The better choice here is to invest in an apartment. Below we take you through the full process, from where to start, to where it ends and moving into your brand new own apartment. These apartments may be lofts, penthouses, single-bedrooms, or shared flats. The same process goes for all these types of residences in the USA.

Advantages of Buying vs. Renting

You may not be sure about whether you want to buy or rent an apartment. Real estate gurus everywhere will either swear that you have to rent, or that you have to buy. In the end it’s not such a simple decision, and what the best choice in your case is, depends on many factors, such as your income, financial reserves, the location of the property, etc. The number one factor is likely how long you intend to live in the property.

Calculate your Finances

When making this decision, the most important calculation is comparing rent to mortgage payments. Let’s say you find your dream property, and you want to live here for the next 10 years. If you can rent this property for e.g. $1.000 a month, or you can buy it and pay $1.000 a month in mortgage for 10 years you can do the math yourself. You will live there either way, but when you buy it and pay mortgage you are building equity, and once you move out, you can sell it for profit. Ownership as opposed to renting also comes with a number of tax deductions which lower the amount of money you actually invest.

When you Should Rent

Of course you shouldn’t forget the fact that a purchase always includes a downpayment. If you are strapped for cash, and cannot afford this downpayment, or it would force you to take out another loan. Then you are better off renting, and avoiding high interest. This side also has tax perks, such as not having to pay property taxes.

Top Reasons to Buy an Apartment

There’s many reasons to buy an apartment. These are the top reasons which should motivate you.

• Attractive returns on Investment
• Danger of Depreciation
• Perfect Preparation for Retirement
• Flexibility
• Safe Investment
• Safety rom Inflation
• Tax deductibles

Preparing Property Purchase – Before Buying

There are a few things to take care of before you even start looking for properties. Of course, feel free to scope out the market before doing these things, but remember that it will be quite difficult to make a serious offer for an apartmentwithout these following things.

Of course, you have to decide what you actually want to invest in, let us help you with that:

• What Real Estate Should I Invest in?

Check your Credit Score – Financing an Apartment

This is the number one thing to do. Before doing going on the hunt for any real estate you should know whether you are even in financial shape to buy. Credit scores are compiled by three so-called credit bureaus: Transunion, Equifax, and Experian. They provide you a report, which can be turned into a score. This score will also play a role in deciding what type of mortgage you can get.

Contacts – Attorneys, Mortgage Broker, etc.

Before buying you need to have a few professionals by your side. It’s probably good to have an attorney set up beforehand, and in many places, e.g. when you buy an apartment in New York, it is even mandatory. Additionally, you may opt for a mortgage broker (especially when buying into a co-op, see below), and a real estate agent.

Mortgage Preapproval – Insurance for Loan

Before you go on the hunt for an apartment, you can (and should) obtain preapproval for a mortgage. This consists of a letter which certifies that you are in fact capable of obtaining the mortgage. In a sense it is the bank telling the agent and seller, that they will lend you the necessary funds to buy a property worth x dollars. This is a vital part of the process, as most real estate agents and brokers will refuse to do showings or take up contact without such a preapproval.

Let us guide you through the confusing world of mortgage:

• Mortgage Explained Easily
• Mortgage Interest – Where it is most Expensive

Buying without Mortgage Preapproval – Paying Apartment in Cash

It is possible to buy without a mortgage preapproval, given that you are paying everything upfront. This is of course not a common case, but given that you will not get a mortgage for the property you are going to buy, you can approach brokers and sellers without a mortgage preapproval. In this case though, you must present proof of funds to view properties.

Now What? More Apartment Search Tips

Now that you’ve taken care of these things you can start to look around. It is best to first get an orientation of the market and how you want to buy. This is best done by taking frequent looks at real estate listing sites and going to open houses. Also, despite internet being pretty much everywhere by now, it’s never a bad idea to go in person to smaller real estate agencies in neighbourhoods which you are interested in. Some more old-fashioned shops may not be putting their listings online.

Readying Purchase – Costs Preparation

When you are preparing to buy your apartment, there are a few things to straighten out beforehand. Planning is as always key, and should include all additional costs. Note that of course these things differ in different areas. Buying an apartment in Chicago is very different from when you buy an apartment in L.A.

Taxes & Property Tax Rates

Of course, when thinking about finances you will have to consider the taxes. There are three different kinds. Three taxes you pay when buying property, which includes property tax. This property tax you also have to pay repeatedly when owning said property.

Want to learn more about property tax? We’ve got you covered

• Property Taxes U.S. – Explained

Important Extra Details

There’s a ton of details you may forget about when buying a property, which bother you a lot later on. Think service charges, which you will pay to the owners of the building. Also important here, who takes care of these services, and is this company performing the services good? Also pay attention to any restrictions, like e.g. whether pets are allowed, and noise restrictions. There may also be difficult-to-detect issues in the neighbourhood, like a large shopping center opening very nearby which increases traffic, or a night club nearby which means noise at night. Or perhaps building issues are prevalent in the area because the ground is unstable. Many of these things will be highlighted by your solicitor, so make sure to listen well. The location is key, meaning New York will have different details to look out for than L.A. or Miami.

Buying Apartment – Process from Negotiation to Close

To buy the apartment finally, you will want to start negotiating.

Make an Offer – How to Negotiate Sales Price

So you decide that this is your dream apartment. What now? Well now it’s time to make an offer. That means approaching the seller with an offer. There are two sides on which to negotiate, and you must pick one or the other. Either you try to reduce the size of the sale price. I.e. buying a property for $800.000 as opposed to $850.000. The other option is to negotiate the closing costs, e.g. agreeing on the sales price, but asking the seller to pay some of the additional costs, including real estate purchase taxes. These tactics of course mean either having more money in your bank account at that moment, or reducing the amount of montly costs in the future. You can typically expect to negotiate 5%-10% of the sale asking price.

Next Steps – Building Inspections

Your lender will most certainly require you to have an inspection of the apartment building, as well as the unit itself. This usually shows slight flaws, such as necessary maintenance in the future, or e.g. structural flaws.

Reducing Sales Price on Real Estate

Now you can renegotiate. You have found flaws in the building, and now have a strong negotiation stance. Let the seller know your concerns, and they will likely be more lenient in their negotiation.

There’s also a ton you can save on the many slight additional costs which come up when buying real estate, we give you the full guide

• All Additional Costs when Buying a Home

Final Important Step! Walk-through

Don’t forget the walk-through! This is one of the most frequent beginner mistakes. After moving out, things may change, the previous owner may have broken something, or a cabinet may have been covering up a flaw. Not doing a final walk-through can be your number one regret later on. It doesn’t take that long, and will most certainly be worth it, at least for the peace of mind.

Co-op Apartment – Buying Shares not Property

Co-ops are slightly more challenging to get, with a complicated and time-consuming process, but the time investment is worth the reward, with typically lower property taxes, the possibility to build equity, and more.

What is a Co-op Apartment? Meaning, Definition, Explanation

A co-op apartment is an apartment which is administrated by a housing cooperative. If you buy a co-op apartment, you are not actually buying the property, i.e. the four walls which you intend to live in. Rather, you are buying a share in a legal entity. The shares you buy entitle you to use a specific part of the building. Therefore, you are not the owner of real property, but rather a membership which allows you to use the apartment you live in. This also means of course that you do not take out a mortgage, but rather share loans, i.e. a loan to pay for the shares.

Why you Should choose a Co-op – Advantages

Because you are not the owner of the property itself, you do not have to pay property taxes. Rather the cooperative pays the property taxes for the whole building, and these are divided among the members, i.e. residents. The main advantage of a co-op is that it is cheaper. The property taxes which each resident pays are lower, and any additional fees are also lower, because the co-op is not intended to make profit. Lastly, residents in co-ops, despite not actually owning the property, are entitled to many tax deductions which real estate owners are entitled to.

How to buy a Co-op Apartment – Step-by-Step Explanation

There are a few steps to go through before buying into the cooperative. Before approaching a co-op, or identifying an apartment which you are interested in, you have to gather an attorney, a mortgage broker, and an engineer. Although this is not necessary, it greatly increases your chances of getting the apartment you want. This is because, once you’ve identified the apartment you want, you apply. Your application is decided upon by the board. This board obviously wants the best possible residents, therefore it’s important to present yourself as a serious buyer. All co-ops have a certain list of requirements, which include the amount of downpayment you need to pay, and how much financial reserves you have. Following this, you contact the seller, begin the title search and mortgage application, and close the purchase.

Special – Buy Apartment New York

New York, the city of dreams. You too can live your dream of owning real estate, and that in one of the top cities worldwide in everything from fashion to finance to art and food. Buying an apartment in New York certainly isn’t the easiest of tasks, but one that is likely to leave you happy you took the risk. But! New York has a complicated real estate system as everyone knows. Buying an apartment here means many different things than it does in other parts of the U.S.A.

We take care of all questions you could have in our full guide on buying an apartment in New York

Buy Apartment New York

Special – Buy Apartment Los Angeles

Los Angeles, where dreams come true. The home of celebrities, hollywood, a sprawling cityscape, beach and surf, and everything else you can imagine. From Malibu to Bel Air, Silver Lake and Venice Beach. It’s worth the traffic and chaos of the metropolis, to experiennce the unique atmosphere of this city. So you want to live in Los Angeles, but don’t know where to start? It’s certainly not easy wrapping your head around where and how to live. Do you choose Mid City or and a retail paradise, or Silver Lake, and hang out with the young students? We give you the full run-down below. The Los Angeles real estate market, like so many of U.S.’ super cities, is doing well. Los Angeles is neither a sellers nor a buyers market. Prices are also increasing, taking single-family residences, by over 16%.

We take care of all questions you could have in our full guide on buying an apartment in Los Angeles

Buy Apartment Los Angeles

Checklist – Overview of Process: Buying Apartment

These are the most important things you need to do before and as you buy your apartment. Don’t neglect these steps, as they are each important in their own right.

Preparation Steps for Buying an Apartment

The most important things to be certain of before buying an apartment are:

1. Check Credit Score
2. Gather Professionals
3. Mortgage Preapproval
4. Remember the Details!

Remember When Buying the Apartment! Important Final Steps

During your purchase, or slightly before or slightly after, there are important things to do. These include:

1. Make an Offer
2. Negotiate Smart!
3. Inspect
4. Renegotiate
5. Walk-Through (Important!)

Avoid Mistakes: This is What you Have to Consider

Finding the right property often proves to be more difficult than expected. Especially in big cities there is a real battle for the best properties in inner city locations.

In order not to make any mistakes that in retrospect have become your downfall, there are a few things to consider. From the important first impression at the viewing appointment, to the good organization of all documents. So that you don’t forget anything, and can move into your dream property soon, here are the 11 most important tips.

The First Impression Must be Right

No matter whether you have a single viewing appointment with the landlord or agent, or whether you view the apartment with further applications, the first impression must be right! But this requires more than a broad smile and a firm handshake.

Your appearance should appear neat and professional. No jogging pants, no T-shirt with food leftovers. You don’t have to wear a suit either, but a well-groomed appearance will make you look immediately likeable and take you one lap further down the list.

In addition, they should always appear friendly, but also determined. Insecurity can quickly be misinterpreted. Therefore, be clear beforehand what you want and appear confident but natural. Probably the most important thing at an inspection appointment is that you arrive punctually at the appointment at all costs. This shows that you are reliable and well organized. This is a big plus point that you can collect right at the beginning.

Good organization is, as so often in life, the be-all and end-all of an inspection appointment. You should be well prepared and, above all, have all the necessary documents at hand. This is a one-time organizational effort, because once you have collected everything together, you can reuse the documents for each viewing appointment.

Documents: Checklist

To these documents, there is a lot to it, for example:

1. Identity card
2. Self-assessment
3. Income statements
4. Employment contract
5. Certificate of the previous landlord’s freedom from rent debt
6. Schufa assessment
7. Possible references of the previous landlord
8. Possible rent guarantee (in case of insufficient income)
9. Eventual curriculum vitae (required in a few cases)

Self-Assessment, Schufa and Sympathy Points

To give the self-disclosure directly at the inspection date provides a good impression and a relationship of trust with the landlord. It is usually requested only later, to seize it beforehand does not harm however, but shows its commitment.

Also the Schufa self-disclosure is not demanded, but shows openness on its part and saves the landlord work. In general, the documents requested for the inspection date are communicated in advance. If this is not the case and you still turn up with a complete folder full of documents, this may give you an advantage over other applicants and sympathy points.

Know What You are Looking For

Usually you go directly to an apartment search, looking for a certain number of rooms or a number of square meters. However, before the viewing appointment, you should think carefully about what you really want and above all what you really need.

You should be clear about how many rooms you need, the approximate size of each room, on which floor the apartment should be, what you expect from the kitchen and bathroom, whether you want a balcony or a garden, whether the apartment must be suitable for pets and how much you can plan for renovation work. Of course, you should also be clear about the budget and how much the additional costs per month can be.

You should always remember your needs during the appointment, because you will soon lose yourself in dreams of a great, big apartment, which you don’t really need and can’t afford. Try to think practically and rationally and not to be distracted from your search.

Do not be afraid to ask questions during a viewing appointment. If you ask the right questions and thus show serious interest in the property, the landlord or agent will be better remembered as a potential tenant.

Interest is completely normal in the search for the dream property and this should be shown calmly. It is important to ask the right questions, which are also related to the property and thus to be able to better assess whether the object fits his ideas.

Questions During the Inspection: Checklist

Some of the questions that come in handy at every visit are

• What is the equipment / condition of the apartment? ( fitted kitchens, renovations, etc. … )
• What does the rental property include? ( cellar, garden, parking space, … )
• Are pets allowed, if so which ones?
• Who lives in the neighbourhood and what are the conditions there?
• How much are the additional costs and are they already included in the warm rent?
• Are there any shopping facilities / transport connections in the vicinity?
• What are my duties as a tenant? (cleaning the staircase, shovelling snow, taking out the garbage cans, … )

All these questions, show a serious interest in the property on your part and also help you to assess whether the property is really the right one for you.

Never go to a Viewing Alone

Whether it is an individual appointment or a group appointment, you should never go to an apartment viewing alone, even if you are looking for an object just for yourself. This has different reasons. Firstly, you have a second opinion, from a friend or family member, who can tell you again from a different perspective and as an outsider whether the apartment is really the right one. In addition, four eyes always see more than two, and your companion will notice defects or mistakes that you would not have discovered yourself.

If you are not looking for a property just for yourself, it is a good idea to bring the people who are moving in with you to view it, so that the landlord or agent can get to know everyone who would move into the property and so that they can also discuss with the other tenants whether the property is the right one.

Check the condition of the property

Deciding to buy a new property is a big decision that you should not rush into. Even if the apartment completely suits you at the viewing appointment, you should still sleep on it for one night to be able to think about it in peace.

It helps if you take pictures of the apartment at the viewing appointment, as a small reminder and to be able to look at the apartment again from your perspective, but also to show it to friends or relatives and to be able to obtain further opinions. Take the opportunity to take a close look at the apartment and look for small things that might be damaged or broken.

Defects: Checklist

• Is there modern wiring and enough sockets?
• What is the condition of the windows and doors? Can they be opened and closed easily? How do the seals look like?
• Where is the washing machine connection?
• Are there any mildew stains or wet spots?
• Is there a draught somewhere in the apartment?
• Are the exterior walls well insulated?
• What kind of heating is used?
• Is the apartment well-listened?
• Where is the TV connection and which one is available?

Take a Close look at the Surroundings

The environment and the location of the apartment is also a decisive criterion. First you should check if there are enough shopping facilities within walking distance, how the transport connections are and if there are schools, for example. This can be easily found out by taking a short walk through the neighborhood after the viewing appointment and taking a closer look at the surroundings. You should also check whether the surroundings might disturb you in your idyllic living.

• Is the apartment on a busy street and could the noise disturb you?
• Is the bedroom window facing to a street?

Even thin walls and loud neighbors could become a problem. If you are seriously considering the property, consider whether you really have everything to live in the area

Attend Viewing Appointments During the Day

A viewing appointment should always be made during daylight. This not only allows you to see and judge the apartment better, but you will also recognize blemishes much better in daylight than in the evening. It is also important to be able to judge how much daylight enters the rooms, where the sun comes from and when it shines in which room.

There should be enough windows to ensure daylight illumination during the day. Viewing appointments that are made in the evening are often not very professional, because good real estate agents know that you should see an apartment in daylight. So try to avoid such viewing appointments.

Convince the landlord / Broker of Yourself

If the apartment is right for you, all you have to do now is convince the landlord of your suitability. You can achieve this not only through a perfect first impression, good organization and the right questions, but also through little things that play into the landlord’s hands.

This can be that the desired moving in date fits exactly to your ideas, that you have possibly handicraft skills with which you can help with the renovation and perhaps even save a month’s rent or even small ideas with which you can accommodate the landlord.
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Be positive and always put yourself in the position of the landlord and ask yourself ‘ What would I expect from my future tenant instead of the landlord?’. Fulfill these expectations and the apartment is as good as yours!

During an inspection appointment not only you ask the questions, because if the landlord is really interested in you, a small interrogation is waiting for you, too, for which you should be prepared. Therefore, be prepared for questions concerning your financial situation and your professional activities.

The landlord naturally wants to make sure that you can pay the rent on time!

Therefore, if such questions reach you, don’t digress too much and explain precisely and to the point what you do for a living or what your financial situation might look like now and in the future. You should also be prepared for personal questions, such as the desire to have children or the like.

In any case, answer them honestly but do not digress too far. Your landlord would like to be able to assess you and not learn your entire life story. So be careful and think of good and precise answers beforehand.

The Right Farewell

Also the farewell at an inspection appointment should be well thought out. If you are seriously interested in the apartment, you should emphasize this clearly when saying goodbye.

If you notice already at the inspection that the apartment simply does not fit, you should be fair and tell the real estate agent or landlord so that you do not spoil anybody else’s chances.

Also clarify clearly if and when the landlord or agent will contact you. If you still receive a rejection, don’t be offended but ask the landlord or agent politely if they have a similar apartment on offer that is vacant or will be soon. This way you will keep the contact positive and maybe you will find your dream property this way.