Our vehicle can allow us to get out of trouble at any given time without having to do without it and even though our financial situation may make us believe that it is impossible. This is how a credit granted from a vehicle as collateral works.

Sometimes, we can find ourselves in a situation where we urgently need money and circumstances make it impossible to get a traditional bank loan. A solution may be to use the car as collateral or, in other words, pawn our vehicle.

Currently there are companies that grant loans of more than 1,000 euros to clients included in ASNEF (list of the National Association of Financial Establishments that identifies unpaid debts), as well as to pensioners, unemployed or self-employed . To do this, we will use our vehicle as a guarantee of payment, but what does the guarantee or pawn of the car consist of?

How does a loan with a car as collateral work?

The first thing we must bear in mind is that, although the car acts as a payment guarantee or guarantee, we can continue using it without having to pay rent or similar. Simply, we will receive the agreed money with the condition of repaying it with interest. If this were not the case, then the borrowing entity would keep the car in property to compensate for the debt incurred.

Therefore, although it is also called a pledge, we can continue using the car as long as we meet the repayment installments of the loan. It is also true that if the requested amount is very high, we can access it by giving up the use of the vehicle and giving it up during the loan repayment period.

How much money can I get?

It is important to know that we can only access a loan of these characteristics if we own a vehicle that is less than 10 years old. If so, and regardless of whether we carry a history of delinquency due to non-payment, the usual thing is that the borrowing entity grants us a maximum of 80% of the appraised value of the vehicle.

For example, if we have a Ford Focus 1.5 TDCI Trend 95 from 2015 with an estimated market value of 16,400 euros according to the BOE, we can have a maximum of approximately 13,120 euros. In any case, at Motor.es we offer you a more precise and complete tool to appraise your vehicle online and thus get an idea of ​​the loan you can get:

Regardless of all this, we must make sure that we can repay the loan or we will lose the car. In addition, we must be very clear about the interest applied to it, as well as the rest of the financing conditions and that these are not actually a contract for the sale of the vehicle with a change of ownership.

How long will it take to receive the money?

These operations are usually faster than the traditional ones, but in any case it will be necessary to go through the appraisal of the vehicle first so that the financial company establishes a maximum loan amount. Once the data has been verified, it will be time to sign the contract, which can take between 48 and 72 hours.

What requirements must I meet?

Although the conditions are less strict than in the case of a conventional loan, the truth is that we must meet a minimum to be able to access this type of credit:

• Be the owner of a vehicle less than 10 years old that is free of charges.
• Have updated and valid documentation (DNI, NIE or passport).
• Have the car documentation in order (technical sheet, road tax or IVTM and ITV ).

The usual thing, as we have already mentioned, is that financial institutions do not accept a car that is more than 10 years old as collateral due to its low market value. However, there are some that specialize in this type of case and if the vehicle is high-end it will be easier for the entities to accept it as a guarantee of payment.

On many occasions, the online forms reject vehicles over 10 years old by default, so in these cases it is advisable to call and present the situation so that a commercial agent assesses the feasibility of the operation.

Do you want to buy a car? Aside from paying in cash, you have other options. Whether you’re financing your car or leasing it, here are a few things to keep in mind.

Before buying or acquiring a car in the leasing mode

• Get a copy of your credit report before you visit the dealer. Visit AnnualCreditReport.com or call 1-877-322-8228 for a free copy. Your credit report contains information that affects your chances of getting a loan, and how much you’ll have to pay in interest to borrow money.
• Before you visit the dealership and before you discuss financing, get a written turnkey price for the car you’re interested in. That means you have to ask the dealer to send you the full price of the car, without calculating the financing, including fees and taxes. Having this information in writing before you go to the dealership can help you compare other dealership offerings apples to apples and more easily spot extra and additional charges the dealer may add to your deal, and can help you focus your attention on the total cost (not just the monthly payment).
• Know what the total cost is, don’t just look at the monthly payment. Low monthly payment offers can be tempting, but don’t focus solely on your monthly payments. For example, loans with lower monthly payments often have longer terms and higher interest rates, and that will add significantly to your total cost. When calculating how much you can afford, use the Budgeting Worksheet as a guide to make sure you have enough income to cover your monthly expenses and your car payment.
• Consider saving for a down payment first. The down payment reduces the amount of money you have to finance or figure into the lease agreement. That will reduce the total costs of the financing or the leasing agreement.
• Ask if you will need a co-signer. If you don’t have a strong credit history, you may need a co- signer for the financing or leasing agreement. The joint signatories assume the same responsibility with respect to the contract. If you can’t pay what you owe, your co-signer will have to. Any late payment will harm your credit and that of your co-signer.

How to calculate the trade-in value of your car

• Find out the trade-in value of your old car. Consult the National Automobile Dealers Association (NADA) guidelines and the Edmunds and Kelley Blue Book . This information could help you get a better price from the dealer.
• Wait to discuss trade-in until after you’ve negotiated the best possible price for your new car. You want to be sure the dealer isn’t going to adjust the car’s selling price to make up for a generous trade-in offer on your used car.
• Find out how much you owe. If you still owe money on your car, trading in your used car as a trade-in may not help. If you owe more than the car is worth, it is said to have a negative equity . If you want to trade the car in, ask what effect the negative equity will have on your new financing or leasing agreement. For example, this could increase the amount you are borrowing, the length of your financing agreement, or the amount of your monthly payment.

How to finance a car

You have two financing options: a direct loan or dealer financing .

Direct loan: means you are taking a loan from a bank, finance company, or credit union. When you take out a loan, you agree to pay back the amount financed, plus a finance charge, over a set period of time. Once you’re ready to buy a car from a dealer, you use this loan to pay for it.

With a loan, you can:

• Obtain the credit terms in advance. If you get pre-approved for financing before you buy a car, you’ll be aware of the terms, including the annual percentage rate (APR), the length of the loan (number of months), and the maximum amount you can borrow. Use this information to negotiate with the dealer. The APR is the cost of credit in terms of an annual basis. This rate depends on several factors, including your credit score, the amount of your loan, the interest rate and fees you are being charged for the credit, and the length of your loan.
• Comparison between different dealers. With pre-approval in hand, it will be easier for you to ask dealers to provide you with written turnkey prices for the cars you’re interested in, allowing you to negotiate the best price and financing without having to lose money. time at the premises of different dealers.

Dealer Financing – Means you are applying for financing through the dealer. You and the dealer enter into a contract that states that you buy a car and agree to pay, over a period of time, the amount financed plus a finance charge. Typically, the dealer sells the contract to a bank, finance company, or credit union that will manage the account and collect payments.

Dealer financing can offer you:

• Multiple financing options. Since the dealership may have relationships with a wide variety of banks and finance companies, you may be able to access a wide variety of financing options. But keep in mind that the dealer usually makes a profit on the financing and may not always offer you the best deal for you.
• Special programs. Dealers sometimes offer manufacturer-sponsored incentive programs or low-rate programs. These programs may be limited to certain cars or have special requirements, such as a higher down payment or shorter contract length. These programs may also require a high credit score. Find out if you qualify.

Find the best financing deal

Compare financing offers from various lenders and the dealer. Remember that you don’t have to focus solely on the monthly payment as the total amount you end up paying will depend on the negotiated price of the car, the APR and the length of the loan.

Many lenders offer long-term loans, such as 72 or 84 months. Although these loans can lower your monthly payments, they may have high interest rates. And the longer the loan period, the more expensive the loan will be overall. Cars lose value quickly once they leave the dealership; So with long-term financing, you may end up owing more than the car is worth.

Some dealers or lenders may require you to purchase credit insurance that will cover your unpaid balance in the event of your death or disability. Before you buy it, consider the cost and whether or not it’s worth it. Review your existing insurance policies to avoid having duplicate benefits. Federal law does not make credit insurance mandatory . In fact, the law prohibits a lender from deceptively including credit insurance on your loan without your knowledge or permission. If your dealer requires you to purchase credit insurance to finance your car, it must be included in the APR. 

Be sure to ask the dealer questions about the following:

• The additional or complements.The extras are not free. They are extras that you buy and finance along with the car. Some of the more common add-ons are gap in coverage policies, window glass etching, and extended warranties and service contracts. [Link to revised article.] It’s okay if you say no to extras and ask for the price. It’s not okay for dealers to add extras to your offer or lie to you about it. Know exactly what you are buying and protect yourself. Ask the dealer to list the prices of all the add-ons he proposes before you visit the dealer’s location. If you finance the purchase, you’ll want to know how much each additional will cost you over the term of the loan. Ask if there are any limitations or conditions on add-ons. They may not cover what you expected. If it’s something you don’t want or need, say no.
• Incentives granted by the manufacturer. Your dealer may offer you manufacturer incentives, such as lower financing rates or cash back on some makes or models. Be sure to ask your dealer if there are any special financing offers available for the model of car you’re interested in purchasing. These discounted rates are generally non-negotiable and may be limited by your credit history. Ask the dealer to give you the answers in writing.
• Sales, discounts or special prices. Ask in advance if you qualify for available offers. Dealers that offer rebates, discounts or special prices must clearly explain what the requirements are to access these incentives. Please check carefully if restrictions apply. For example, sometimes you have to be a recent college graduate or service member to access these deals, or they might apply only to specific cars. You should not assume that rebates are already included in the price or terms offered. Remember that it is in your best interest to have your questions answered in writing.
• Your Annual Percentage Rate (APR). You can negotiate the APR and payment terms with the dealer the same way you negotiate the price of the car. The APR you negotiate with the dealer usually includes an amount that compensates the dealer for handling the financing. Negotiations may take place before or after the dealership accepts and processes your credit application.

Ask questions about the terms of the contract before you sign it. For example, before you drive away from the dealership, ask, Are the terms of the contract final and fully approved? Does the price on your contract correspond to the price the dealer sent you in advance? And if the dealer tells you he’s still working on approval, that means the deal isn’t final yet. Consider waiting to sign the contract, and stick with your current car, until the financing is fully approved.

“The New Rules for Mortgages” by Dale Siegel provides a fantastic understanding of everything you need to know about mortgages. For many, a home is the most important purchase of their lives, and a mortgage is a necessary tool to make dreams of home ownership come true.

Qualifying for a mortgage is daunting, but it doesn’t have to be less than Dale Siegel’s Guide. After all, who is better at giving directions than the president of your own mortgage company?

It is important to note that Dale is really trying to educate readers about mortgages and is not using his book as a sounding board for his company. The book is like a secret weapon for first-time homebuyers who dare to tiptoe past enemy landmines. The enemy is the industry that has cleverly eliminated many addendums through exotic phony loans and overly high fees.

The new rules for mortgages

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Dale prepares you to be as mortgage ready as possible by discussing the importance of your FICO Score and discussing what your income and finances can provide in terms of qualifying for debt.

The most helpful chapter for me, and perhaps many readers, is Chapter 5, which discusses which mortgage is best for you . As you can imagine, there are many different types of loans, and it’s important to match the right mortgage for your income and length of home ownership.

First-time homebuyers will feel comfortable with Chapter 7 , which guides buyers through the loan process . There’s a lot of paperwork, and just like a good college application, you need to have your paperwork to make yourself as presentable as a candidate. Good preparation means money saved!

In short, “The New Rules for Mortgages” is an excellent read for anyone looking to buy a home in today’s strong housing market . Dale’s book will probably save you a lot of heartache and a lot of money because believe me, after buying several properties and going through many refinances over the years, I know!

Invest wisely in real estate

If you’re looking to buy a property as an investment or reinvest the proceeds from the sale of your home, check out Fundrise , one of the largest real estate crowdfunding platforms today. They allow everyone to invest in mid-market commercial real estate deals across the country that were previously only available to institutions or very high net worth individuals.

They are the pioneers of eREIT funds and are creating an Opportunity Fund to take advantage of tax-efficient Opportunity Zones. Thanks to technology, it’s now much easier to take advantage of the lowest-value, highest-net-rent properties across the United States.

If you’re thinking about getting a home equity loan or home equity line of credit, shop around and compare options. Compare financing terms offered by banks, savings and loans, credit unions and mortgage companies. Shopping around and comparing different options can help you get better terms and a more affordable deal, which is important when financing is secured by the value of your home.

Using your home as collateral

What does it mean to use my home as collateral?

You use your home as collateral when you borrow money and “guarantee” the financing with the equity in your home. This means that if you don’t repay the financing, the lender can keep your home to pay off your debt.

Refinancing a home, getting a second mortgage, taking out a home equity loan or a home equity line of credit (HELOC) are common ways people use their home as collateral to obtain home equity financing. But if you can’t repay the financing, you could lose your home and any mortgage amortization you’ve accumulated. The accumulated amortization on your home mortgage is the difference between what you owe on your mortgage and how much money you could get for your home if you sold it. High interest rates, finance charges, and other credit and closing costs can also drive up the cost of borrowing money, even if you use your home as collateral.

How can I reduce the risks of taking out a loan by putting my house up as collateral?

Consider your options and your budget. Be aware of the risks involved in using your home as security or collateral. If you can’t pay the money back, you could lose your home to foreclosure. Talk to a lawyer, financial advisor, or someone else you trust before making any decisions. There are dishonest lenders trying to target seniors, low-income homeowners, and credit-challenged borrowers as clients. They offer them financing based on their mortgage amortization, and not based on their ability to pay the balance owed. If you fall behind on your payments, the lender may try to declare your financing delinquent and send you a notice of delinquency, which is usually the first step in the foreclosure process .

What are the warning signs that you are dealing with a dishonest lender?

Dishonest lenders may contact you to offer you a supposedly convenient financing deal. They might say that your credit history doesn’t matter. They will try to pressure you into accepting more expensive deals with less favorable terms and will pressure you to commit before giving you a chance to investigate and consider other options. You need to know that legit lenders will give you the time you need to review the terms of the offer in writing, and they want you to understand them. They will never ask you to sign blank documents or hide key facts and terms from you.

Here are some general rules for spotting and avoiding dishonest lenders:

• Avoid any lender who wants you to borrow more than you need.
• Do not deal with any lender who wants you to obtain financing with higher monthly payments than you can comfortably afford.
• Never deal with a lender who wants you to lie on a loan application, for example, saying you have more income than you actually do.
• Avoid lenders who tell you to sign blank forms. If they fill in the blanks later, you won’t know what data they entered.
• Never deal with a lender who tells you that you can’t get copies of the documents you signed. Of course he can.
• Don’t deal with any lender who tells you not to read the financing information document. The law states that you must receive a document disclosing the details of the financing agreement, so make sure you get it and also make sure you read and understand it before you sign the financing.
• And be sure to avoid any lender that promises you one deal when you apply but gives you different terms at the time of signing without any explanation for that change.

Home Equity Loans

What is a home equity loan?

A home equity loan, also known as a second mortgage, is a loan that is secured by your home . You receive the loan for a specific amount of money and must repay it over a set period of time. Typically, you repay the loan by making equal monthly payments over a set period of time. If you can’t repay the loan as agreed, you could lose your home to foreclosure .

The amount of your loan, and the interest rate you’ll pay to take out the loan, depends on your income, credit history, and the market value of your home. Many lenders prefer that you borrow no more than 80 percent of the mortgage payment on your home.

How do you find a home equity loan?

Consider contacting your current lender to see what type of home equity loan they offer. They may be willing to offer you convenient interest rates or fees. Ask your friends and family for recommendations of lenders. Then, do some research on the various lender offerings and be prepared to negotiate the deal that best fits your situation. Use the Home Equity Loan Worksheet.

• Ask each lender to explain the loan plans available to you. Read the FAQs on shopping, comparing, and choosing a mortgage for tips on how to talk to lenders and brokers, and how to compare the terms of their offers. If you don’t understand the terms and conditions of the loan, ask questions because it could mean higher costs. Some of the important factors you should learn more about are:
  • The APR: The Annual Percentage Rate (APR) is the most important factor to compare when shopping for a home equity loan. The APR is the total cost you pay for credit, expressed in terms of an annual rate. Generally, the lower the APR, the lower the cost of the loan. The APR includes the interest rate, but also includes points, broker commissions and other charges, expressed as an annual rate. Each point is a fee equal to one percent of the loan amount. Knowing the APR will make it easier for you to compare “apples to apples” when considering different offers.
  • Balloon Payment: This is a payment that is usually due at the end of the loan and is often much higher than your usual monthly payment. Balloon payments are common in so-called “interest only” loans where your monthly payments go toward paying interest and you don’t pay any of the principal. Find out if the terms of your loan state that you’ll need to make a balloon payment. If you can’t pay it off when the time comes, you may have to get and pay off another loan to meet that balloon payment, which means you’ll start the mortgage process all over again and pay costs, points, and fees again.
  • Prepayment Penalty: Some loan agreements include a penalty if you pay off your loan early or if you refinance. If the penalty is too high, you may have to keep a loan with a high interest rate because it would be too expensive to pay it off.
  • Credit insurance: If you buy credit insurance, the insurance will pay your loan payments in the event you become ill, disabled, or die. But if you already have life or disability insurance, then you already have similar protection. Lenders must tell you if credit insurance is required for your loan; Otherwise, they can’t be included in your loan unless you volunteer, they give you a statement of the credit insurance costs, and you sign the papers to buy it. If you don’t want to take credit insurance, don’t buy it; if it’s already included in the loan document when it’s presented to you for your signature, tell them to drop that fee.

• Ask about your credit score. Credit scoring is a system used by credit grantors to help them determine whether or not to give you credit. Information about your bill payment history, the number and type of accounts you have, late payments, collection actions, outstanding debts, and the age of your accounts are data used to predict how likely you are to repay the loan and do it on time.
• Negotiate with more than one lender. Don’t be afraid to create competition between lenders and brokers by telling them you’re looking for the best deal. Ask each lender to lower your points, fees, or interest rate. And ask them to match—or better—the terms and conditions of other lenders.
• Before you sign, read the loan closing documents carefully. If the loan isn’t what you expected or wanted, don’t sign it. Negotiate to have the changes you want made or walk away. Generally, you also have the right to cancel a home equity loan for any reason (and without penalty) within three days of signing the loan documents. For more information, see The Three-Day Cancellation Rule .
• Don’t transfer money in response to unexpected emails. You could receive an email, purportedly from your loan officer or real estate professional, saying there was a last-minute change. You may be asked to transfer money to cover closing costs to a different account. Don’t do it: it’s a scam. If you receive such an email, contact your lender, broker, or real estate professional using a phone number or email that you know is genuine and tell them what happened. Scammers often ask for payment methods that will hinder your chances of getting your money back. Regardless of how you paid a scammer, it’s best to act as soon as possible. See more information on how to get your money back .

Three Day Cancellation Rule

What is the Three Day Cancellation Rule?

This federal rule gives you three business days, including Saturdays but NOT Sundays, to reconsider a signed credit agreement that is secured by your primary residence and allows you to cancel the agreement without penalty or penalty. The Three-Day Cancellation Rule applies to many home equity loans (and also applies to home equity lines of credit, see below).

You can cancel for any reason, but only if you are using your primary residence as collateral. It can be a house, condominium, a mobile home or a boat that you use as a home. The right to cancel does not apply to a vacation home or a secondary residence.

Under the Rule, how much time do I have to cancel?

You have until midnight on the third business day to pay off your loan. The first day starts running after all three of the following events occur:

• You sign the loan at closing.
• You receive an information form required by the Truth in Lending Operations Act that contains key information about the credit agreement, including the APR rate, finance charge, amount financed and payment schedule.
• You receive two copies of a Truth in Lending Act Notice explaining your right to cancel.

If you did not receive the information form or two copies of the notice, or if the information document or notice contained errors, you have up to three years to cancel.

How do I determine the third business day?

You can receive the information document and the two copies of the notice of your right to cancel at the closing of the loan transaction. In that case, the first day starts counting from the closing. But if you receive the information form and both copies of the notice before or after the closing, the first day begins when the last of the three events occurred. For example, the closing occurs on a Friday, and that was the last event, you have time to cancel until the following Tuesday at midnight. But if you received the Truth in Lending Act information form on a Tuesday and you signed for the loan on a Friday, but you did not receive the two copies of the notice of your right to cancel until Saturday, then you have time to cancel until midnight of the following Wednesday.

During this three-day waiting period, the lender cannot take any action related to the loan directly or through another person. The lender cannot deliver the loan money (it can only do so to an escrow account), nor start providing services. If it is a home improvement loan, the contractor cannot deliver any materials or start work. The lender may start charging finance charges during the waiting period.

What steps should I take if I want to cancel?

You must tell the provider in writing that you want to cancel:

• You must deliver or mail your notice in writing by midnight of the third business day .
• You cannot cancel over the phone or in person with the lender.

Will I owe anything on the contract if I cancel it during the three-day waiting period?

If you cancel the contract, the lender’s title or lien on your property is also cancelled, your home is no longer collateral and cannot be used to pay the lender. You do not have to pay anything, and you should be reimbursed for any amounts you would have paid, including the finance charge and any other fees, such as application, appraisal, or title search fees, whether you paid them to the lender or to another company that was part of the credit transaction. After receiving your notice of cancellation, the lender has a period of 20 days to return all the money or goods that you had given him as payment as part of the transaction and to release any property or pledge interest in your house as warranty; and must do both

If you received money or property from the lender, you can keep it until the lender proves your home is no longer used as collateral and returns any money you paid. Then you must offer to return the lender’s money or property. If the lender doesn’t claim the money or property within 20 days, you can keep it.

Under the Rule, can I waive my right to cancel the contract?

If you have a personal financial emergency, such as home damage from a storm or other natural disaster, you can waive your right to cancel. That waiver eliminates the three-day waiting period so you can get the money sooner. To waive your right:

• You must send the provider a written statement describing the emergency and stating that you waive your right to cancel.
• The statement must be dated and signed by you and anyone else who shares ownership of the home.

Your right of cancellation gives you a little more time to think about putting up your home as collateral and can help you avoid losing your home to foreclosure. If you have a personal financial emergency, you can waive this right, but before you waive, make sure it’s really what you want to do.

Are there exceptions to the Three Day Cancellation Rule?

Yes, the federal rule does not apply in all situations where you use your home as collateral. Exceptions apply when:

• Apply for a loan to initially purchase or build your primary residence.
• You refinance your loan with the same lender and you don’t borrow any additional funds (but if you borrow more funds, the rule applies and you can cancel).
• The provider is a state agency.

What unites almost everyone who invests in real estate is that they buy a property and don’t sell it for long, if ever. This pattern is the number one enemy to obtain sustained high yields over time .

As in any business, when you buy well, that is, below market value, it becomes the key; and more in real estate investment that has high transaction costs, although it is true that it is very difficult to achieve it without being a sophisticated investor. But in the sale, a process that usually seems easier, is where investors often fall into the big trap, whose name is not selling at the right time. This error has a very negative impact on performance, even much greater than that of buying wrong.

There are several myths that have been taking root in investors that make it easier to fall into not selling. These are the most common:

1. Not measuring the performance achieved, its potential, or comparing it with other investment alternatives to decide what to do

The effort and hours of work that many people do in their different professions and activities to raise enough money to buy real estate is very great. But in most cases, after achieving it, the focus is not on maximizing the return on that capital . Instead, they think of generating enough money again to buy another good and keep the old one.

The impact of not taking care of maximizing it is very significant. By efficiently managing a real estate investment, the invested capital can be multiplied by 10 in 20 years . If passive management is done, that is, I buy and keep without selling, it is only possible to double it. Another interesting fact: with a passive investment it would take more than 150 years to multiply your initial investment by 10, while as we said, with active management it takes two decades.

The real estate investor seems only content to seek a refuge for his capital invested in real estate and hedge against inflation . Without monitoring the performance obtained year after year, as it does with financial investments.

When we ask an investor what was the net return of the portion of his assets destined for real estate investment in the last year or the last five years , he can hardly answer. One of the reasons is that there is no culture to do it.

It is very important to know that every 15 to 20 years, which lasts a cycle, a window of opportunity opens that usually lasts five years for each market and type of asset in which a property appreciates a lot, in some cases more than 10%. annual . Therefore, it is very important to be clear about what phase of the cycle one is in to decide whether to buy, hold or sell.

The key is to always take advantage of strong appreciation phases, but for that it is necessary to move from assets and markets. This allows turning a traditional cycle that always ends at the same point, into an endless staircase. As in any investment, the important thing is to buy low and sell high, and real estate investment does not escape this premise.

2. Believing that real estate always goes up and never goes down

It is shown that if a strong appreciation of a property is achieved for more than five years, it will hardly be maintained.

The problem is that when the property is at a very high price, and although it is easy to sell it since there is generally a lot of demand, most do not sell thinking that the value will continue to grow at the same rates, that is where the big mistake is made ; what has happened in Brickell is a clear example.

At times, one can make an exceptional trade, but when one considers that the price will continue to rise, a strong correction begins and everything gained can be lost.

3. Cultural and social issues carry enormous weight

This happens especially with Latinos and could be synthesized with what many grandparents used to say: “Never sell the real estate you buy. When you can save, keep buying but without selling”.

Social issues are highly relevant, from which arise the prejudices that make us make mistakes: “what will they say if I sell my apartment in Miami and low-value houses in Detroit?”

For a certain period of time, possibly the best deal is to acquire a premium residential asset in an exceptional location such as Brickell, Punta del Este in Uruguay, Puerto Madero in Buenos Aires or Polanco in CDMX. However, throughout the cycle there will be times to acquire real estate in lower/middle class areas, as these too have strong appreciations.

Remember this: The real estate business is not “location, location, location” as those who promote and develop premium assets in these locations say . The business with real estate is “timing, timing, timing” and there are too many examples that prove it.

4. Not distinguishing between real estate investments and real estate for own use. In the first one you do it to earn money, in the second to enjoy

It is important to separate what are properties for own use from those for investment, since by mixing them it is very possible that you will make the mistake of acquiring properties that are supposedly for investment , but are not the most appropriate to generate high returns. These also usually have limitations to execute an active management, that is to say to buy and sell at the most convenient moment.

If it’s for your use, buy what you like, in the location you want, and keep it for as long as you want. If it’s for investment, get in and out when appropriate.

5. Believing that real estate investment is always local or always international

Another great enemy is seeing real estate investment only as local or international.

As many people consider it that way, they generally do not sell, because why would they do it if it is not a business to buy again in the same market ? That’s exactly where you have to set your sights. There is no point in selling to buy back in the same market and asset type without strong upside.

The key is to move between asset classes in the same market or go to different markets in order to continue building returns. For that, you will surely have to look for real estate advisors in different markets, since their scope is usually limited to neighborhoods and types of assets.

6. A matter of comfort and lack of knowledge: “What am I going to sell it for, what if I’m wrong?”

Generally it is uncomfortable to have to inform yourself, train and seek opinions from different real estate, financial and tax advisors , among others, in order to have an objective vision and be able to make a decision. But if you don’t, no one else will, and the cost of not doing it is very high.

7. Immobilize thinking about the exit cost: “If I sell, I will lose a percentage in commissions, writing cost, etc.”

When it is sold, you have to assume costs of deeds and commissions, this is often a limitation; but the issue is to think about how much you stop earning if you don’t sell. These costs must be taken as part of the operation.

8. Believing that the property has a higher value or trying to obtain a price that is not worth it: “If they don’t give me that much, I won’t sell. I don’t need to sell”

There are times when we have unrealistic profit expectations or sales values ​​that have nothing to do with what the market validates. This makes us keep the asset and, many times, we lose the possibility of leaving, at the best time at the best price .

Then, when the market adjusts, by not selling it we have to wait several years to get the same or less, to which we must add the lost opportunity cost. There are dozens of examples of this type, both in the US, Brazil, Panama, Costa Rica, Spain and Argentina.

It has been shown that the returns obtained by acquiring an asset and keeping it in a long-term portfolio are usually very low . This is because all markets go through different phases and by holding the asset permanently, the return is usually negative when the market falls. This punishes the positive returns that the investment could have had, leaving it at a very low average that generally only exceeds inflation.

That is why, to obtain the best profitability, it is necessary to have the property during the recovery and expansion phases of the markets, when the upward price curves are more pronounced. This happens in a window of around four or five years. After that, you have to sell before the price starts to stabilize on a plateau.

With the proceeds from the sale, another property must be acquired that, at that time, is in the recovery phase, usually in another type of asset or in another city and possibly in another country . Therefore, only active management will allow you to obtain good results for your real estate investment. Otherwise, buy the property you want, without thinking about its price and enjoy it without guilt, you will have time to invest.

By Mariano Capellino, CEO of INMSA

This is an article from edition 121 https://inmobiliare.com/inmobiliare-121/

*Editor’s note: The opinions expressed here are the responsibility of the author and do not necessarily reflect the position of Inmobiliare.

The real estate sector is one of the essential areas of the economy and, decade after decade, new records have been reached both in the number of transactions and in the price per square meter.

Therefore, creating a business within this professional sector can be a great option. aim!

8 ideas to undertake in real estate

We review some perfect business ideas to undertake in the real estate sector:

1. Real estate coaching

While in 2016 a third of sales were made between individuals, a new trade appeared to stay in this market niche: real estate coaching. The objective is to accompany individuals in the sale of their properties.

For example, if a client has real estate in Palma de Mallorca and wants to sell it, this professional profile is responsible for estimating the value of the property and developing the communication strategy to apply.

This trade is on the rise and is characterized by being flexible, human-focused and having numerous competitive advantages.

2. El home staging

Along the same lines, we find home staging . It comes from the United States and has been popularized in Europe through various television programs.

he Home Staging Advisor facilitates real estate sales through a makeover . With this type of intervention, the home stagers allow a reduction in the terms of sale and the negotiation range , which offers them an excellent lever to quickly sign numerous contracts.

3. Real estate hunting

Unlike the real estate agent or negotiator looking for buyers, the real estate hunter is the professional who looks for real estate that corresponds to the specifications of buyers who lack time for this task.

Therefore, it targets high-income households and must be able to produce precise specifications. Subsequently, you must conduct thorough research to find the property that corresponds to your clients. The job of real estate hunter is developed in particular in the basins that present a strong real estate pressure.

4. The real estate diagnosis

Driven by increasingly demanding regulations and by an increasing number of transactions, the real estate diagnostics sector knows no crisis.

It is one of the most promising sectors. With real estate diagnostics franchises , project owners benefit from solid training and complete support to exercise.

5. Real estate negotiation

Another of the most prominent areas in the world of real estate is real estate negotiation. It is ideal for those professionals who want to update themselves within the sector.

The real estate broker is an independent commercial agent who acts on behalf of a real estate agency or franchise to market real estate and manage the relationship with the client .

6. The real estate agency

The real estate agency provides its clients with a variety of services : from the sale or rental of real estate to management , the search for financing or the preparation of administrative procedures .

7. The Wealth Building Council

The real estate sector is also an investment solution for many households that want to acquire assets. This is where the role of the wealth advisor becomes important. This is an expert in the market, who is capable of forecasting and has a great command of finance or tax regulation. 

8. Professional advice on real estate

The real estate sector is a sector that presents little competition , which is why it constitutes an excellent business opportunity for those who are attracted to this professional field.

From the point of view of human relations and contact with the client, as well as remuneration, the real estate sector is an area in full growth and expansion.

It is commonly said that investing in real estate is investing in a heritage that provides greater certainty to your loved ones. However, if said investment remains static, it will not generate the expected economic benefits to ensure the future of your family.

Almost everyone who invests in real estate buys a property and chooses not to sell it for a long time. There are even those who never put it on the market. And it is precisely this thought that prevents a real estate investment from achieving high sustained returns over the years.

Real estate investing is a business. Therefore, the key to buying well lies in the acquisition of properties below market value. However, it is difficult to achieve this without being a sophisticated investor due to the high transaction costs associated with real estate investment .

However, during the sale – a process that often seems easier – many investors often fall into the trap of not selling at the right time. This mistake has a profound impact on investment performance, far greater than buying above market value.

But this is not the only mistake investors make when they want to increase their returns. There are numerous myths ingrained among investors to avoid the sale of their real estate. We present the most common, those that have become the worst enemies of any real estate investment:

Do not measure the performance achieved or the potential of the investment.

Most people put in a lot of effort and put in many hours at their jobs to raise enough money to purchase a property. Once they do, instead of focusing on maximizing the return on capital already invested, they decide to save to buy another asset and keep the old one.

The impact of not maximizing that capital is very significant. The efficient management of a real estate investment can multiply its value 10 times in a period of twenty years. On the contrary, passive management – ​​buying without selling – only manages to double it.

Still not convinced to sell? Here’s another interesting fact: it takes about 150 years for a passive investment to multiply its initial value by 10.

Unlike financial investors, it seems that the real estate investor is content to seek a refuge for his capital invested in real estate, covering himself from inflation, and not tracking the performance obtained year after year.

When asked what the net return on equity allocated to real estate investment was during the last year, an investor can hardly answer. This is because there is no culture to calculate it and know it to compare it with other investment alternatives. Ignoring these indicators causes an investment to remain static and generate minimal returns.

The real estate market is characterized by cycles that last between 15 and 20 years. In each of them, a window of approximately five years is opened for each market and type of asset in which a property can appreciate with a value above 10% per year. However, it is important to have advice to know what phase of the cycle the market is in to define whether to buy, keep or sell the property.

Therefore, phases of strong appreciation should always be taken advantage of with a shift between assets and markets. In this way, a traditional cycle – which always ends at the same point – can become an endless staircase.

Remember that the key to any investment is to buy low and sell high. Real estate investment is no exception to this rule.

Believing that real estate always goes up and never goes down

It has been shown that it is difficult for a property to appreciate strongly for more than five years.

Brickell, a well-known financial district in Miami, is a clear example. Although the real estate in the area reached a high price and its sale was facilitated by the high demand, many owners chose not to sell their real estate thinking that the value would continue to grow at the same rates. Today, one cannot speak of the same development in the area.

Considering that the price of a property, especially those located in fashionable areas, will continue to rise is a risk since everything earned on the investment can be lost by not selling at the right time.

The weight of social and cultural issues.

“Never sell the real estate you buy. When you can save, keep shopping. But without selling!” Does this phrase sound familiar to you? Many have heard it from their grandparents and it is an idea that has been passed down from generation to generation among Latinos.

This traditional thought, as well as the importance that is socially given to the opinion of others, become serious prejudices that lead you to make mistakes as a real estate investor.

It is common to question what others will say if you decide to sell a luxury apartment in Miami to buy low-value houses in Detroit. It doesn’t seem logical. However, if you consider the real estate cycle that we talked about earlier, there are periods in which possibly the best deal is to acquire premium residential assets in exceptional locations such as Brickell (Miami), Punta del Este (Uruguay), Puerto Madero (Buenos Aires) and Polanco (CDMX). But in others, the best option is to buy properties in lower-middle class areas since they can get strong appreciations.

The real estate business goes beyond the location, location, location that developers of premium assets promote so much in this type of location. Actually, it is a question of timing, timing, timing following the phases of the real estate cycle.

Not distinguishing between real estate investments and real estate for own use.

As you might guess, a real estate investment is made to generate money through it, while a property for own use is bought to live in or enjoy it.

It is important to separate the properties for own use from those for investment. If they are mixed, the chances of acquiring a property under the investment assumption increase when it is not the most appropriate for the generation of high returns. This makes active management difficult , that is, buying and selling at the most convenient time.

If you buy a property for your use, don’t limit yourself: buy what you like best, in the location you want and keep it as long as you want. If you make an investment, enter and exit when appropriate: don’t get ahead of the market cycle or wait any longer than necessary.

Believing that real estate investment is always local or international

Another great enemy is thinking that real estate investment can only be local or international.

Unfortunately, many people see it this way and avoid selling their properties. They do not find a reason to sell because they believe that it is not a business to buy in the same market. And they are right: it makes no sense to sell the same type of asset in the same market because it is difficult to obtain great advantages.

The key, then, lies in displacement. To increase the profitability of your real estate investments , you must buy different assets in the same market or go to a different one to continue building profitability. For that, it is recommended that you look for real estate consultants in the markets that are attractive to you since they know about neighborhoods and types of properties.

Comfort and lack of knowledge: “Why do I sell? What if I’m wrong?”

Researching real estate investments in depth to make an objective decision can be uncomfortable. It is important that an investor be informed, trained, as well as seek the opinion of different real estate, financial and tax advisors in order to create a realistic context for the potential of their alternatives. Don’t forget that if you don’t do it, no one else will do it for you and the cost of ignorance is very high.

Immobilization for the exit cost: “ If I sell, I will lose…”

In the sale of a property, the selling party must bear the costs of the deeds, commissions and other expenses. These exit costs are often seen as constraints among owners because instead of thinking about how much they can gain from the sale at the right time, they focus on the loss. To avoid this, we recommend integrating the additional costs in the operation.

However, you must be careful with your calculations. Believing that your property has a higher value than it really has can lead you to think that it is not necessary to put it on the market. Those unrealistic expectations will only cause you to miss out on getting out of the investment at the best time for the best price.

Remember that real estate markets adjust in long cycles. Therefore, by not selling, you must wait several years to obtain a value similar to the current one. To this waiting period, the cost of the lost opportunity must be added.

There are dozens of examples of this phenomenon in other countries and even in Mexican cities such as Mexico City, Toluca, Querétaro, Puebla, Guanajuato, Guadalajara, Zapopan, Zacatecas, Durango, Gómez Palacio, Torreón, Saltillo, Monterrey, Chihuahua, Tampico, Tijuana. , Mexicali, Hermosillo, Obregón, Los Mochis, Culiacán, Mazatlán and Tepic. Many investors have obtained low returns by holding an asset in their portfolio for the long term. The markets go through different phases and the permanence of an asset punishes the positive returns on investment when its market falls, so a very low average is obtained, only surpassed by inflation.

To obtain greater profitability, the property must be maintained during the recovery and expansion phases of the markets, since at those times the upward price curves are more pronounced. This stage lasts approximately four or five years. After that wait, it must be sold before the price stabilizes at a plateau.

With the profit from said sale, acquire another property that is in a recovery phase at that time. Normally, it can happen in other types of assets, in other cities and in other countries. In this way, an active management of real estate is given way that allows high returns on real estate investment to be obtained.

Keywords: investing in real estate, how to avoid real estate investment risks, real estate investment risks, real estate investment, how to invest in real estate, real estate investment myths, real estate cycles, what is a real estate cycle, active real estate management , passive real estate management, real estate business, efficient management of a real estate investment

Everyone these days is trying to rank their site content in Google Search Results. There are marketing agencies earning good amounts thanks to the most popular digital term lately, “SEO”. In this article I will explain the different aspects of SEO or “On Page SEO”, and how to handle it in WordPress with one of the best free plugins: WordPress SEO by Yoast .

This is a series of tutorials, in the first part we will configure and understand the different sections of the WordPress SEO by Yoast plugin. In future tutorials in the series, we’ll cover different aspects of SEO, how to use Tags and Categories on your site, the concept of rel='canonical', a practical example of an SEO optimized post, and finally we’ll discuss what else you need to do after setting up the plugin.

Our objectives

This tutorial will help you optimize your WordPress website with the most popular aspects of SEO On Page. Today our goal is to configure the WordPress SEO plugin and understand the implications and meaning of each step.

Search Engine Optimization  or  SEO  (Search Engine Optimization) is the process of affecting the visibility of a site or web page in the “natural” or unsponsored (“organic”) search results of search engines. In general, the earlier (or higher the page’s link position in search results), and the more frequently a page appears in the results list, the more visits it will receive from search engine users.– From Wikipedia, the free encyclopedia

Why choose the WordPress SEO by Yoast plugin? I think it is the best and most complete free SEO plugin, although it is not as simple as AIO SEO, it includes certain vital modules for SEO that are the result of the extensive experience of Joost de Valk – the elite WordPress developer who has created this plugin.

Control Panel

To get started, go to your WordPress admin panel and install the WordPress SEO by Yoast plugin  (Go to Plugins > Add New > Search for  WordPress SEO By Yoast  > Install >). After activating the plugin, if you look at the menu on the left, you will see a new panel with the name SEO , the same as the one in the image below.