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February 1, 2022, 9:05 am

Best Loan Options for First Time Home Buyers

by: The Financial Blogger    Category: Personal Finance,Properties

When it comes to buying a home, there are several things to consider, and financing is one of them. Luckily, there is a myriad of financing options that first time home buyers can access to make home-owning easier. If you’re thinking about owning your first home, this guide will help you select a suitable financing option:

1.  USDA Loan: Excellent for Low-Income Earners in Designated Areas

The United States Department of Agriculture provides USDA loans at low-interest rates to help people buy homes without making down payments $1000 loan today . This financing option primarily targets rural areas. The USDA guarantees your lender-issued mortgage and allows you to access very low mortgage rates with zero down payment.

2.  FHA Loan: Suitable for Home Buyers With Poor Credit History:

Unlike most other home financing options that only serve buyers with impressive credit scores, Federal Housing Administration (FHA) loans are available to buyers with low credit scores. With an FHA loan, you can make a small down payment (as low as 3.5%) and own your home. However, you’ll be required to pay mortgage insurance which includes annual premiums and a 1.75% upfront fee. Nevertheless, it’s a home financing option worth considering.

3.  VA Loan: For Military Members and Their Families

If you’re actively in military service or have retired honorably and are looking to buy a home, VA loans backed by the U.S. Department of Veteran Affairs are an excellent choice. They have lower interest rates, no mortgage insurance, and do not require a down payment. Also, a Veteran Affairs loan won’t restrict a homeowner from selling their property partway into their loan term or impose prepayment penalties or exit fees.

If your prospective home buyer is VA eligible, you can transfer your existing VA loan to that person. Nevertheless, you’ll need to pay a funding fee based on your loan cost and other factors.   

4.  EEM: Great for Home Buyers That Care About Energy Efficiency

An energy-efficient mortgage (EEM) allows you to buy a home that meets specific energy-efficiency requirements. Usually, it is backed by the U.S. Department of Veterans Affairs (VA) or the Federal Housing Administration (FHA). The downside of this financing option is that you must obtain an energy assessment to qualify. If you qualify, you can get up to 15% of your home’s appraised value for upfront energy-efficient upgrades without additional down payments. 

5.  Good Neighbor Next Door Program: For Home Buyers in Specific Public Service Professions

This financing option allows firefighters, emergency medical technicians, law enforcement officers, and teachers employed full-time to buy homes at significantly discounted rates. It is sponsored by the U.S. Department of Housing and Urban Development and can allow homebuyers to get up to 50% discount in a ”revitalization area.” If you get this loan, you’ll have to live in it for at least three years, and it must be your sole residence.

6.  Freddie Mac and Fannie Mae: For Home Buyers With High Credit Scores but Small Down Payment

Freddie Mac and Fannie Mae are home mortgage companies created by the U.S. Congress and backed by the federal government. They don’t service their own mortgages but buy and guarantee mortgages given through secondary mortgage market lenders.

It is suitable for first-time homebuyers with high credit scores of at least 620. These programs allow buyers to get their homes with a 3% minimum down payment. But if you are making a down payment of less than 20%, you’ll need private mortgage insurance (PMI). 

7.  FHA 203(K) Loan: For Buyers Interested in Homes That Need Fixing

An FHA 203(K) loan is a government-backed mortgage that allows a first-time buyer to take out a loan for purchasing their home and renovating. This type of loan centers around repairs or rehabilitation to a home that will serve as the borrower’s primary residence.

This is best for middle and low-income families buying homes in old communities. Therefore, house flippers and real estate investors do not qualify for this loan. The repairs must not extend past six months. The renovation amount is placed in an escrow account, and when the work is completed, it is disbursed to the contractors. The repair budget is capped at $35,000.   

8.  Native American Direct Loan (NADL): Suitable for Native American Veterans

Nave American Veterans and their spouses can access NADL to build, buy, or improve a home on federal trust land. Unlike other VA (Veteran Affairs)-backed loans, the VA is the mortgage lender in this case. NADLs offer low-interest rates and limited closing costs. If you’re using this funding option, you won’t require private mortgage insurance or a downpayment. Nevertheless, you must have an impressive credit score and meet specific eligibility requirements

9.  State First-Time Homebuyer Programs: Best for Buyers Needing Down Payment Support

Several states and local governments offer low-interest mortgages and grants to first-time homebuyers. If you’re thinking about buying your first home, find out the financing opportunities in your area so you can take advantage of them. Most state programs have income limits; that is, they are reserved for households with a specified maximum income. They also require buyers to attend counseling courses and present certificates of completion.

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January 14, 2017, 11:43 am

6 Traps to Avoid For First-Time Property Investors

by: The Financial Blogger    Category: Properties

Investing in property is an expensive and complex process, so it’s important to get it right first time. As your experience and knowledge grows, so the rules become more like “guidelines” to consider, but for the first-time investor it’s critical to maximise your odds of the success.

What follows are some of the more common mistakes made by inexperienced real estate investors, in order to help your first experience of buying investment property a successful and enjoyable one…

Lack of Research

Knowledge, as they say, is power. Never is this more true than when stumping up for your very first property investment. In general, it’s better to carry out thorough, detailed research on any area, market or property type before you push the button.

Better to miss a few good deals along the way, and approach your very first purchase with confidence, than to find yourself saddled with a dud that is haemorrhaging money and nobody wants to buy off you.

But what should your research entail? Here some smart ideas to get you thinking…

Property Prices – How much are properties in your target area worth? What factors are affecting these prices, what can be done to increase the value of a property and what is the ceiling on rents?

Each area will typically have these market limitations – your goal should be to educate yourself enough that you can spot a well-priced property, you can quickly identify effective ways to increase the properties value, and you have a fair understanding of how much rental income you can expect.

Marrying these elements together ensures you go into a purchase with your eyes open, confident that you’re buying a property that stacks up financially.

Local Audience – Who is renting properties in your target area? Are these young professionals or families, for example? Investigate other rental properties, asking yourself what these potential tenants may like to see in a property.

Also, consider the specific location; will your tenants need access to transport routes, for example, and are those trendy bars down the road a good thing or a bad one?

Predicted Market Conditions – The property market is never static. Areas rise and fall in popularity. New employers and urban regeneration can rapidly turn a less-appealing place into a property hotspot. Just as importantly, interest rates can (and do) go up. While it is impossible to predict the future with any degree of certainty, it does make sense to run a number of models to see how you could be affected.

Investing Close to Home

While investing close to where you live may cut down on the research necessary, it’s important to realize that rental yields can vary massively across the country. In the UK, for example, 2016 saw a 2.2% drop in London property, while investment properties in Manchester offer far better rates averaging 6.2%.

The same pattern plays out in each country, at various scales. Even within a single city the yields can vary dramatically from one area to another. So while doing your research don’t just limit yourself to the area in which you live. Instead, be willing to think “outside the box”, using local agents if necessary, to source and manage properties wherever your returns are likely to be greatest.

Not Considering Interest Rates

Just as each area experiences oscillations in property prices, so too do interest rates. While these rates have been held at a historically low rate for the last few years, this is unlikely to last much longer.

Sadly, as interest rates rise, so too do the costs of variable-rate mortgages, leading to home-owners getting squeezed. It’s all too easy in the good times to stretch yourself too thinly, only to have a nasty surprise as rates rise.

Do your calculations so that you are confident you can weather interest rate changes without discomfort, and hold onto your investment property for the long term.

Failing to Calculate Running Costs

No property is free to run. While your tenants may pay all the utilities, as well as their rent, you also have a range of ongoing costs. From managing agents fees, to routine maintenance and taxes, the income you enjoy is unlikely to be 100% profit. Also, don’t make the mistake of assuming that your rental property will be tenanted every month of the year; tenants move out and it can take some time to find a suitable replacement.

When investigating your first property investment, therefore, don’t just consider your finances in terms of rental income minus mortgage payments. Instead, take a more intelligent and nuanced approach to your business plan, and only take action if you’re confident it still produces reliable, positive cashflow.

Ignoring Inspection Reports

You might think it was foolhardy to buy a property without not only an inspection but also a thorough surveyors report. Yet all the same, every year investors get stung for their lack of research.

Arguably even worse are those who request the necessary surveys, then largely dismiss the findings. All too often, this ends in tears, as the buyer is obliged to fork out large sums of money to return the property to a suitable state.

This is arguably the easiest mistake of all to avoid. Seek the qualified guidance of a professional before purchase, and discuss indepth any potential issues that they have highlighted.

Poor Financing

Since the financial collapse of 2008, banks have slowly tightened up their financing options for landlords. There are now fewer choices than ever before, and it’s all too easy to end up paying far more than you need.

From deposits to interest rates, from paperwork requirements to insurance, each lender is different. So don’t jump at the first offer you get, but instead shop around in order to find the very best deal possible. Sometimes an unprofitable deal can suddenly become financially viable with the right financing. Of course, in contrast, the opposite is also true.


It’s worth re-iterating here that many investors – both large and small – have made considerable sums of money from property. Whether the choice is flipping a property in cosmetic distress, or buying to rent out, everyone from teachers to train drivers are preparing for the future by growing their savings through property.

This article, therefore, is not intended as a source of scare-mongering. It’s also not intended to knock property as an investment vehicle in any way. Instead, the goal here is to better prepare you for selecting the right investment from the outset – and helping you leapfrog over less experienced investors.

With a little time and effort, anyone can become a successful property speculator. All you need is the grit and motivation to get started.

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December 19, 2016, 5:00 am

Micro-apartments: the hottest new trend sweeping the German real estate market

by: The Financial Blogger    Category: Properties


Three takeaways:

  • Students, commuters and soaring numbers of singles ensure that insatiable demand for micro-apartments is here to stay
  • Tenants love the low rent, high quality and customizability of micro-apartments
  • With 100% occupancy rates practically guaranteed, micro-apartments are an attractive option for risk-averse investors


Micro-apartment fever has taken Germany by storm.


As the name implies, micro-apartments are small flats – typically between 20 and 30 sq. m each – that contain only the bare essentials, i.e. a sleeping space, a bathroom with a shower and a kitchenette. Most micro-apartment buildings contain self-storage units, laundry facilities and communal lounge areas to accommodate for the lack of space in each flat.

Despite their Spartan conditions, micro-apartments have proven incredibly popular among a certain demographic in Germany – so much so that developers are scrambling to expand the market.

German newspaper Frankfurter Allgemeine Zeitung reported there are presently about 25,000 micro-apartments in the country, and several thousands more are set to be built by the end of 2018. The projects will receive state support: the federal government plans to invest €120M in the micro-apartment market expansion.


Where is the demand for micro-apartments coming from?

The German micro-apartment market targets over 30 million people, including students, singles and tenants whose primary places of residence are far from the big cities they work in.

In recent years, one-bedroom flats have proliferated; between 2011 and 2014, their growth rate was double that of the country’s total apartment growth rate.

The increased popularity of small residential properties is likely attributable to a notable uptick in one-person households over the past several decades.

In 1961, flats occupied by one tenant accounted for 21% of all German households; by 2012, that figure had nearly doubled, reaching 41%. This trend is attributable to a declining birthrate, decreased marriage rates and a general increase in the popularity of living alone.

Though micro-apartments traditionally targeted students and commuters who only live in the city on weeknights, their target demographic has expanded to include singles of all age groups who wish to reduce their monthly rental costs.

Due to their minuscule size, micro-apartments in large German cities rent for an average of €400 per month. For comparison, according to cost of living database Numbeo, a one-bedroom apartment in the center of Berlin typically rents for nearly €700 a month, and the same in Munich typically goes for nearly €1,000.

Because of their relative affordability, micro-apartments are very popular among prospective tenants from all walks of life.

They are particularly appealing among tenants looking to rent on a short- to medium-term basis.

In Germany, tenants traditionally face considerable obstacles when trying to rent for anything less than the long term – such as the obligation to pay a security deposit equal to three months’ rent and heightened credit history scrutiny. To the contrary, micro-apartments tend to cater to short- to medium-term renters.

They also boast a plethora of comforts that are tougher to find in standard apartments. Most are newly built and fully furnished and equipped. What’s more, a range of apps now exist that enable tenants not only to choose their apartments, but to outfit them with a custom selection of dishware, home appliances and furniture – all from their mobile phones.

Micro-apartments also offer creature comforts that hotels and other types of short-term rentals lack, such as private kitchens and bathrooms.

For all of these reasons, demand for micro-apartments is high across Germany, and is only expected to soar further in the future, particularly in such cities as Berlin, Hamburg, Munich and Frankfurt, whose populations are growing at rates of some 1-2% each year.


Why investors and developers love micro-apartments

Micro-apartments aren’t just a smash among tenants; more and more property investors and developers are flocking toward the trend.

More than 50% of’s clients have expressed an interest in

Micro-apartments in major Germany cities sell for as little as €100,000. As German banks offer non-residents up to 50% LTV loans at 2% p.a., foreign investors can pay just €50,000 upfront to cash in on this trend.

Financial institutions are offering such low interest rates for micro-apartments because they have observed their growing popularity and relative liquidity.

Micro-apartment owners also take comfort in relatively high turnover rates. Though rental terms vary broadly, a typical micro-apartment lease runs for a period of three to six months. This minimizes the eviction-related risks typically associated with standard apartments and long-term or perpetual rental contracts.

Furthermore, high-demand and low rental rates all but guarantee 100% occupancy, minimizing the risk that the owner will lose rental income during lengthy vacancy periods.

The short-term nature of micro-apartment lease agreements also empowers owners to increase rent in order to keep up with market demand.

Traditional landlords often face significant limitations in this regard. For instance, local regulations in Berlin prevent landlords with long-term tenants from raising rates by more than 10% above the average rental price in a given district, or in general by my more than 20% over the course of any three-year period.

And for foreign investors, as well as local investors that don’t wish to actively manage their rentals, the German market boasts numerous property management companies that can resolve all tenant-related, administrative, payment, insurance and maintenance issues. Some such companies even offer renovation services.

This option enables owners to reap all the benefits of a rental property without having to take on the grunt work traditionally associated with being a landlord.

Developers also have a great deal to gain from micro-apartments as they can sell them at higher prices per sq. m. than they can larger flats. This boils down to a basic tenet of the property market: the smaller the flat, the higher the price per square meter.

New developments tend to sell out well before they hit the market. Investors purchasing micro-apartments in 2016 will likely have to wait until 2017 or 2018 for their purchases to materialize.

In short, everyone has something to gain on the German micro-apartment market: tenants get inexpensive and quality accommodations, investors can earn solid yields with a low market entry threshold, and developers can earn excellent revenue per square meter.

By: George Kachmazov, managing partner at


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February 6, 2014, 6:46 am

Realtor Bashing; They Are Very Good At Something

by: The Financial Blogger    Category: Properties

Last week, I enjoyed a very interesting discussion with Pawel, a Real Estate Agent, after answering the famous question “Should I Get a Real Estate Agent?”.  I truly enjoyed this discussion as Pawel defended his points without saying I’m a total lunatic. I like when two people can debate without telling the other party he is a lost cause. After all this back & forth conversation, I thought I “owed” it to cover the other part of realtors’ job. While I would never take a real estate agent to sell my house, I think they are very good at something else!




When you sell your house, this is usually 50% of a bigger transaction. Most people sell their house to buy another one. Therefore, once you sold your house, you are only always done with your transaction. The other half, probably the most important part, is to buy your new home. I think this is the most important part of the transaction since you usually make more money buying the right asset at the right time than selling it.


If you can buy the right house at the right price, it will be easier to make a healthy profit when you will sell it.




First of all, by definition, realtors are in the real estate business every day. They see what is put up for sale, what drops in price and what is being sold and the price it is being sold at. The fact they have easy access to this data is definitely a plus when you are looking to buy your new home. If you look for a house in Montreal for example, you are better off with an agent that keeps a Montreal home listing up to date like this one.


The agent can quickly find the type of house you are looking for and the listing you would likely waste a few hours to find on the internet by yourself. Plus, you don’t see everything on the internet. An agent will know the neighborhood better and might have already visited the house so he knows what pictures are not showing.


I also like the fact that he knows how long a property has been for sale and what has been sold recently. This is crucial information when you enter into negotiations. Unless you look at the Real Estate market on a weekly basis in the months prior to buying a house, you will not be able to know how long a property is being listed. The agent knows. He can also show you comparable properties that have been sold lately. There is always a difference between the price you pay and the price the house was listed at. This is why it is important to know how much the house is really worth. You can always find this information on your own, but it is more complicated and requires a lot more time.


Finally, the last aspect why I truly enjoy dealing with a Realtor to buy a property is the fact that he will book all your visits for you. You don’t have to do anything, he does it all. When I hunt for a house, I usually visit ten properties that fit my criteria. It helps me to see what is offered on the market and I can compare houses to make the best choice. I don’t know if you have ever tried this, but booking 10 visits with 10 different agents is quite a lot of pain. Most of them are working when you call them so you hit the voicemail 80% of the time. Then, you may be able to book 1 or 2 appointments the same day but it’s hard to have them one after the other. When you leave the agent do it for you, you can easily visit 5-6 house during the same day as you only need your agent availability to buy the house, not 10 agent’s agenda.




During my last article about real estate, I might have left the impression that realtors don’t do much and that you can easily put your house up for sale on your own. It is true that you can put your house up for sale without the help of a realtor but it’s not true that the guy doesn’t work. The main problem is more linked to the amount of commission you must pay to sell your property. The seller is basically paying 2 agents (the seller and the buyer), he pays also for the banner and for the office rent agents are charged monthly. This is why the 5% can hurt a lot on the sale price of your house.


But when you deal with a real estate agent to buy a house, there are no commissions to be paid! As I just wrote; the seller is paying for everything. As a buyer, the use of an agent is completely free. This sound like the perfect deal for me: you benefit from professional advice, get access to more data and have a private secretary to book your visits. Then, once you have bought your house, the cost of this service is a big fat ZERO.


This is so good that I think it’s a distortion in the market. At one point, it would even make more sense to have a seller paying a 2% or 2.5% commission fee and have the buyer paying also a finding fee to his agents. This would balance everything out and make more sense. But then again, I’m not sure I would be prepared to pay 5K-10K to an agent just to buy a house. I find their service awesome, but I would not even pay $1,000 for such support. I’m not sure there is a solution to this dilemma. In the meantime, I would still rather sell my properties myself and then use an agent for free to buy my next home.


What do you think? Do you use real estate agents when you buy?

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January 23, 2014, 6:53 am

Should I Get a Real Estate Agent?

by: The Financial Blogger    Category: Properties



Our feet are still stuck in two feett of snow but it’s time to think about what happens each spring: the largest number of real estate transactions. But here’s the catch; housing transactions conclude in spring, but they start in February. The best time to sell your house is definitely in February and March. This is when most people put their house up for sell in the hopes of finding a buyer quick enough to move in the spring or early summer time. As we approach the crucial moment to put a “for sale” sign in front of your home; the $20,000 question is: Should I Get a Real Estate Agent?

If you have read this blog in the past, you know that I’m not a big fan of realtors. However, I’ll put my assumptions aside and look at the reason why you should use a realtor and how you can put $20,000 worth of commissions directly in your pocket.




By definition, a real estate agent will take care of selling your house including all the tasks involved such as:

Assessing the property value: researching for comparables and establishing the value of the property according to the current market.

Marketing the property: completing the listing on the internet, newspaper advertising, taking pictures, writing an attractive description).

Visiting the property with potential clients: arranging visits, answering questions, using his network to attract more potential clients.

Negotiating: receiving the offer of purchase from the buyer, negotiating with both the seller and the buyers. Offering support and facilitating the sale.

Legal protection & paperwork: technically, the real estate agent is not responsible for the legal aspects of the transaction. However, he uses proven legal documents drafted by his banner. He takes care of all paperwork including certificate of localization, offer and counter offer, conditions, seller’s declaration, etc.


As you can see, it’s not like the real estate agent doesn’t do anything to sell your house. He does some work and should get paid for it; I’m not arguing with that. However, I have a problem with the bill you have to pay. Since the realtor has to pay a commission to his banner and rent an office, the commission rate the seller pays is ridiculously high. For a house selling for $390,000 (which is about the average selling price in Canada according to the Canadian Real Estate Association), a 5% commission is worth $19,500. This amount is before taxes. When I look at my wallet with the seller’s perspective, it hurts to pay 20 grand for a single transaction.




The answer to the question “should I get a real estate agent? is answered  by another question: “can you successfully sell your house alone?. Since I’ve just outlined the main realtor’s tasks, let’s see if you can do all of them and keep the $20,000 in your pocket.


Assessing the property value: Assessing a property value isn’t that complicated. You look at your property in terms of neighborhood, equipment (central A/C, fireplace, central vacuum, garage, flooring, etc), number of bathrooms and general square footage. After a few hours, you will be able to find houses similar to yours and this will dictate the price you should sell at. Just ask yourself why someone would buy your house that is $20K higher than the neighbor’s house showing similar features. And don’t answer because your place looks better ;-).

Marketing the property: 85% of potential buyers look on the internet to filter properties. Therefore, if you are able to list your property on a few well-known websites, you can reach most of the market. Writing a description of your house is not rocket science either. Just read a few descriptions of houses similar to yours and you will see what is being highlighted.

Visiting the property with potential clients: This only requires that you answer the phone and schedule appointments. In fact, most potential buyers prefer to visit the house by themselves and will come to you if they have any questions. I don’t think I really need someone to tell me I’m entering the kitchen!

Negotiating: This is probably the part where taking a realtor seems appealing. In fact, it’s not. Most people hate negotiating and that includes you and your potential buyer. If you have done your research and pulled out valid comparables, you can simply sit down with your buyer and show him why you are selling at that price. Ask him to come with comparables that validate his rationale of offering you less. It is a bit painful, but keep in mind that you are doing this for $20K.

Legal protection & paperwork: Since the real estate agent is not legally responsible if there is a problem with the transaction, the legal protection is not as important as it may seem. Then, sites like By The Owner offer legal support and a set of drafted documents where you only have to fill in the blanks.




I’ve sold two houses already. The first one was done with a realtor and the second one was sold on my own. I was only 23 when I bought my first house and dealing with a real estate agent was a complete nightmare.

#1 He confused both parties on the moving date (while insisting to be the middle man between the buyer and seller).

#2 He didn’t verify the certificate of localization (which was wrong and I had to run through various hassles to get it fixed).

#3 I didn’t sell my house at a higher price than the regular market (after doing my own research, I would have come up with the same price anyways)

#4 He cost me slightly over 10K (5% commission about 10 years ago)


But, I would be lying to you if I told you that selling my property by myself went smoothly and without hassles. After I saw the kind of service I had gotten using a Realtor, I decided to sell my second house by my own means and put in on the market with two different websites.

#1 I sold my house at the price I wanted (my house was listed in the same range as many other properties in my neighborhood)

#2 It took me 10 days to sell it (compared to 6 months with my previous house with a real estate agent)

#3 I went through rounds of irritating negotiations (the ugly part of selling on your own is when you come upon a fierce negotiator. The guy came back at each step of the sale to negotiate the price lower and being very negative about my house. It was irritating and I almost lost my temper at one point).

#4 No confusion with regards to moving, the transaction went smoothly (in the end, both the buyers and seller got their house on time and we all moved with smiles on our faces).


Overall, the process went relatively smooth in regards to the transaction but I had to deal with a tough buyer several times. It is true that I had to spend a few more hours to sell my house, but what is 20 hours compared to $18,000?


And this is my point: I understand the job done by a real estate agent but even though he works hard, the pay check is just too big for my pocket. What he does can definitely be done yourself without too much hassle. And if you hit a few road bumps in the process, ask yourself if they are worth 20K.


What do you think, should you get a real estate agent? Tell me about your story.

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