Home inspections--to get one or not to get one...that is the question.

Many people are unaware what a home inspection is, what it does, and what it's all about. When buying or selling a home, there's an option to hire a home inspector to find out if there are any issues that need to be taken care of prior to closing.

Most home inspectors will charge for a home inspection based on the square footage of the property. The average price in this part of Florida is about $250-$300. The home inspector will inspect the entire home, including the electrical system, A/C, heating, plumbing, roof, and if any appliances are part of the sale, they will inspect those as well. With current technology, they are now able to take pictures of any problems they find and add them to their report findings.

While it is not mandatory to get a home inspection, I recommend it to all my buyers. Some buyers have bought homes before, and are confident they know what to look for and choose not to pay for a professional home inspection. It is definitely a personal decision.

In an home that's being bought "as-is" (a fixer-upper) it's a good idea to get one so there are no surprises. Even though, in a case like this, the seller will not make any repairs, if you find the repairs will cost you too much, you can choose not to buy the property.

So is it a good idea for a seller that's getting ready to put their home on the market for sale to get a home inspection? Once again, that is a personal decision, however, the advantage of doing this is that, as the seller, you can fix any problems ahead of time. Once completed, you can make this inspection available to your potential buyers, and show receipts/work orders where any issues were taken care of. If the buyer chooses to also get another home inspection, that is their decision, and they would have to pay for it.

How about getting an inspection on a newly built home? As always, it is a personal decision, but just like with older homes, an unbiased inspector can uncover issues that were forgotten or neglected--minor or major, so that the builder can take care of it quickly. While the assumption is that newly built homes have no problems, there is still that possibility that something wasn't finished or connected or attached properly, and if you're not sure what to look for, an inspector should be able to find it.

The home inspectors I've also worked with have also are very good about educating those at the inspection about things they look for in their new home.

I remember years ago when I bought my first house I'd "heard" about a program for first time homebuyers. The realtor I used to buy my first home didn't know anything about them, so I didn't have the benefit of using one of these programs. Things do change, though, and there are programs now that can help first time home-buyers in to home ownership.

The first assumption is that a first time homebuyer is someone who has "never" owned a home in their name. Well, when it comes to using Bond Money, the requirements for being a "first time home-buyer" is that you can not have owned a home within the last three years. Other requirements include income limits based on family size (a family of one can qualify as well) and limits on the price of the home ($281,137 in Okaloosa County, FL; $237,431 in Santa Rosa County, FL; $429,619 in Walton County, FL). Income limits in Okaloosa County are $62,600 - $77,700, and in Escambia, Santa Rosa, and Walton Counties, they are $54,800 - $63,020.

Depending on your qualifications, Bond money, or SHIP Funds (State Housing Initiatives Program) can both provide funds to help with down payment and/or closing costs. Also, depending on the location of the home, it may qualify for a Rural Housing loan. The benefits to using a Rural Housing Loan are that you can borrow up to the appraised value of the property (usually you can only borrow the contract price, regardless of appraised value). This is a way to roll your closing costs in to the loan and have to pay less at the closing table. Ask your lender or Realtor to check the address of the house you are interested in to see if the home is considered Rural Housing.

So how do you know if you qualify for any of these programs? First, by talking to a lender about what you are qualified for. Not all lenders will be signed up to use Bond Money, so be sure to ask the questions. Also, keep in mind that using SHIP Funds or Bond Money may require a longer process than the normal loan process (usually approximately 30 days from the contract date), so keep that in mind when considering your time frame to move.

With all the real estate shows on TV like "Flip This House," "Flip That House," "Design on a Dime," "Extreme Home Makeover," and the plethora of others available, I've heard the questions "is it really possible to make that kind of money?" Well, it depends (don't you hate hearing that?). With all the books out there, the bottom line of so many of them are that "The Key to True Wealth is to Buy and Hold" when it comes to real estate--just ask Donald Trump. Most times that means you become a landlord, or you're holding vacant land for future sale. Of course it's harder to sell it quickly than if you were to sell stocks or bonds.

But that option may not be for you, and the thought of making $50,000+ in one flip transaction can make anyone's mouth water. So how do you know if there's money to be made in your local area? While there is a lot involved, I'm going to outline what you need to look at here to give you an idea of what to consider before making that step.

Before you buy an investment property, the first thing you need to think of is multiple exit strategies. While your intent may be to flip it, what happens if you have more money in it than its worth by the time you're finished? Or the market takes a serious downturn before you're finished. Hopefully you prevent this by coming up with a budget and time frame and sticking to it, but having an idea of maybe renting it out, or various ways to sell it (maybe seller financing could be an option), will help you adjust quickly if you need to.

That said, you need to compare your "target house" with similar others in the area that aren't fixer uppers and see what they are worth "now" on the re-sale market, as well as the rental (in case that becomes an option you need to use).

Some fixer-uppers only need a coat of paint and new flooring--which considering how much is done on some (just watch any of those TV shows I mentioned!), is not bad. If it's possible prior to buying or closing on the property, the best thing to do is to get a professional inspection on the property, and then have people come out to give you estimates on work that's required. A general contractor can do just about anything that's required, however, they can also be quite expensive. Sometimes it is more cost effective to hire the different subcontractors yourself or do the work yourself, depending on your time constraints and personal experience. The best thing to do is get 3 estimates--or more if you're not comfortable with those three. In this area, estimates can vary greatly. Don't be afraid to call around, and ask a lot of questions. The things you need to consider are the electrical and plumbing (if the house is older, it may need to be brought up to code for the best benefit). What about the A/C system? Pulling out old carpet and painting will get rid of most smells (especially if previous owners/tenants had indoor pets and/or smoked inside). Just make sure to wash down walls and floors before painting and putting new flooring down to help eliminate those smells. What is the overall condition of the walls (1970's paneling? or holes to be repaired?) as well as the condition of the bathroom(s) and kitchen. Some updating can be done by just putting a coat of paint on it, others require complete replacement. And as the new owner of this property, that choice is up to you. The point is that you want to market your home to the highest number of buyers possible--so while thinking of what needs to be done, keep that in mind.

Of course, as you are getting your estimates together, you add up what your budget should/will be, and add that to what you are paying (or planning to pay) for the property. If the current fair market value is well above what those costs are, then it looks like you'll be able to make money. But keep in mind what your holding costs will be as well. If there's a loan, there are loan payments. As always, property taxes and insurance will need to be paid.

And, as always, there are taxes on the profit you do make. Everyone's situation is different, so it is best to contact your tax professional--one that deals with real estate. If you hold a property for over a year, then your capital gains on it is 15%, however, in the case of fixing and flipping, it may be considered "ordinary income" and get tacked on to whatever your earned income is for the year--so depending on your tax bracket, you may pay higher taxes than that 15%.

The bottom line? When buying any property for an investment, make sure you do all of your homework first. Ask a lot of questions, do a lot of research. The information is out there for everything you need, but it does take time to find it, put it together, and then to fix up the property. Many people like the idea of doing something like this "on the side" in addition to their day job, however, there is a lot of work involved, whether you choose to do it yourself or hire someone else to do the work. If you're serious about it, there is money to be made, but you need to have a plan and go from there.

The question always comes up as to when to buy real estate, and it's always that the best deal in real estate is the one you bought yesterday. Let's face it, as much as we'd all like to have a crystal ball, and KNOW that now is NOT the time, or IS the time to buy or sell, that's not going to happen. It's kind of like life...just like when you have a baby---you don't know if this screaming little bundle is going to grow up to be president (of the U.S. OR their own company), work in a factory all their lives, serve in the military, or just choose to live with you "forever." So how do you decide when the best time to buy is?

Look at your personal situation. Are you planning on staying in the area or the job you are currently at for more than 2 years? Look at your financial situation. Lenders look at your debt-to-income ratio as well as your credit rating--unless, of course, you can pay cash for the house you plan to buy. You also need to look at family size and what is necessary--you don't want to buy a small 2 bedroom house if you have 3 kids and one on the way. These are situations based on your personal life and decisions.

As it is, too many buyers assume they'll "wait until the prices drop" however, Jim Svinth, chief economist at Lending Tree says that may not be the best idea--especially now. Jim says "As the economy recovers, finance costs will rise. Waiting for the perfect time to get into the market may cost prospects, especially renters, more in the long run."

"The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Svinth. Any savings you might incur by a further drop in prices might be offset by rising financing costs."

Svinth goes on to use the example of buying a $250,000 home in today's market at 6% on a 30 year fixed rate mortgage, 20% down payment, the monthly payment is $1199.10 (principal and interest only), however, if you choose to wait a year, and prices drop 10% to $225,000 on that same home, but interest rates are at 7%. The same 20% down payment and 30 year fixed rate mortgage, your monthly payment is $1197.54...a savings of only $1.56 a month.

The entire article is available at http://www.floridarealtors.org/NewsAndEvents/n1-030308.cfm

Meanwhile, waiting that year, a renter continues to pay rent (or rather, the landlord's mortgage), and is unable to reap the benefits of writing off interest and taxes paid on their tax returns.

Buying a home is one of the biggest decisions a person makes in their life and can be daunting. I've bought and sold many of my own personal properties so am quite familiar with the process on a personal level. If you have questions about the process of buying or selling, feel free to contact me at Valerie@ValerieSullivan.net, 850-803-8446 or visit my websites at www.ValerieSullivan.net, www.ValerieSellsTheBeach.com, or www.TheBeachRealEstate4U.com.