First-time homebuyers are a declining group. Historically, 40% of homebuyers have been first-time buyers, but that percentage continues to shrink, even as millennials continue to show more interest in becoming buyers (eventually). If you’re already a homeowner, your wheels might be spinning right about now — if people aren’t buying starter homes, then the rental market has to be booming, right? It is in many areas, particularly where unemployment is low, the population is high, and homes are not overpriced. But before you start searching for a home for sale in Austin, TX to rent, you should think about the responsibility that comes with being a landlord — and learning by trial and error is not the best way to go about gathering intel (or a steady income).
Selling an inherited house can be draining. Coldwell Banker gives 4 tips on how to successfully prepare, organize and sell your inherited house.
One difficult topic real estate agents routinely have to discuss is about selling an inherited home from a parent when they pass away. It is a situation that is an overwhelming experience, one filled with emotions and many questions. While talking about it is difficult, it is smart to be prepared. This includes having conversations as a family to determine who will be included in the will to inherit the home, where the deed to the home is kept and where other paperwork is located.
After the estate has been settled and the home received as an inheritance, deciding to sell, rent or keep the home is the first step which will help determine what to do next. For those who decide to sell the home, it is a good idea to work with a team of professionals including a lawyer and a real estate agents who can offer advice and guidance throughout the process.
Although each situation is unique, the professionals at Coldwell Banker have provided the following four tips to help prepare to sell an inherited home:
Assemble a strong team of professionals. Working with a real estate agent, lawyer and potentially a tax specialist can help make the process of selling an inherited property go more smoothly. A team of professionals can give the guidance necessary to prepare the home for sale and get all of the affairs in order. A real estate agent can offer crucial, local market information that is especially helpful if the heir does not live nearby. Lawyers and tax specialists can help put all of the processes in order to ensure that selling the home is as easy on you and your family as possible.
Do a home walk through and get organized. Going from room to room and looking at everything from the condition of the floors to how fresh the paint looks can help determine what may need to be done to the home to help it sell more quickly. If the inherited property is older, a home inspection is important before making any decisions as there may be certain systems that need renovations. Equally important is to gather all of the necessary paperwork such as the deed to the home as well as researching whether there are any mortgages on the inherited property that need to be paid. Even if the original mortgage was paid off, a reverse mortgage may have been negotiated to help cover expenses. Also looking into local property taxes and when they were last paid is important.
Have the home appraised and price it correctly. Property received as an inheritance is not considered to be income by the beneficiary. The adjusted basis of a home is its fair market value at the time it was inherited, so it is important to get an accurate appraisal of the home. A real estate agent can also provide counsel on an appropriate listing price to match market value. Out-of-town beneficiaries can also find it difficult to select competent appraisers, inspectors and other professionals to assist in the home selling process, all of which a real estate agent can assist with.
Consider staging or other cosmetic improvements. Although not necessary in all markets or price ranges, home staging can be the difference in getting a home sold in a price-competitive market. An inherited property may not be furnished in the style of other local homes on the market selling at a similar price. A real estate agent can help determine whether or not home staging is a good fit for a specific situation. They may also suggest making home design improvements such as repainting rooms and/or landscaping the yard or other parts of the property. Make sure the lawn and landscaping look good and that the exterior of the house is in good condition. Low curb appeal can keep potential buyers from researching a home they may otherwise love. Perhaps most importantly, having an experienced real estate agent to answer questions quickly and accurately frees up time to devote to other activities and events.
Find more information on selling your home on the Coldwell Banker Blue Matter blog.
Source: Coldwell Banker Blue Matter blog
Thinking about investing in a rental property? Here are some great tips that will get you started!
Ideally, you want to live near your rental property
Living close to your property allows you to check on it periodically (after giving your tenants proper notice), take care of repairs yourself, and show the property when it’s time to list it for rent again. Research the best investment areas — but even if you don’t live in a prime rental region, you can still invest in one by hiring a property manager to take care of day-to-day details.
Know landlord-tenant law
Most states have specific landlord-tenant provisions that cover issues such as security deposits, level of access to the property, and how much notice you need to give your tenants when you want them to leave. There also are federal laws you need to know, such as habitability and anti-discrimination laws. “Many landlords gloss over housing discrimination laws because they assume that as long as they’re not racist or sexist, they needn’t worry about fair-housing violations,” says Ron Leshnower, real estate attorney and author of Fair Housing Helper for Apartment Professionals. But fair-housing liability traps can arise in many ways, so it’s important that you fully understand the law and ensure that you aren’t breaking it.
Make sure you can enforce that the rent is paid on time
This seems like a no-brainer, but believe me, if you get too friendly with your tenants, you might just let them slide a couple of weeks beyond the first of the month, or allow a partial payment when they’re between jobs. Before you know it, your tenants are six months behind and you’re struggling to make the mortgage payments. But being firm doesn’t mean you shouldn’t treat tenants with respect. Cultivating a good relationship with your tenants often goes a long way to ensure rent will be paid on time and that repair requests will be easier to deal with.
Screen potential tenants
It’s worth the time to do a background and credit check on all potential tenants: online tenant-screening services are convenient, and you should be sure to check potential tenants’ credit scores. A credit score alone shouldn’t be the sole reason to accept or deny an applicant, but it is a useful screening tool: For instance, if your renter is fresh out of college with a solid job offer, they may not have enough credit history to warrant a good score—but could be a great rental candidate.
You should also conduct an interview to make sure you’re comfortable interacting with them, and check references, especially from employers or past landlords. But be advised, it’s hard to find the perfect tenant. According to Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage, it’s important to have a thick skin, and advises people not to buy rental property if tenant shenanigans will “drive you crazy.” Case in point: Fleming once had an evicted tenant break into the house, change the locks, and move back in!
Customize the lease
If you don’t hire an attorney or a property manager, you can use a standard lease form from Nolo, for example, but you should tweak it to fit your situation. For example, if you allow pets, specify how many, what kind, and any rules that apply. Your lease could state that tenants should leash their dogs when outside the fenced-in yard and stipulate that pets should not become a nuisance to neighbors.
Inspect the property regularly
“Have language regarding inspections clearly written in your lease documents,” says Timmi Ryerson, CEO of Smart Property Systems. She suggests taking pictures to establish a baseline (and document the move-in condition) and conducting an inspection at three months. If you find problems, Ryerson recommends that landlords “issue a notice to comply and set another inspection in one week.”
Understand this is not a get-rich-quick scheme
Being a landlord is not just sitting around collecting a big wad of cash each month. You’ll need to spend some money to ready the property for tenants, buy landlord insurance, and pay property taxes. If you’re taking out a mortgage, be prepared to fork over at least a 20% down payment. Think of being a landlord as part of your overall investment strategy and be realistic about your goals — most landlords aim for about a 5% return on their investments.
Source: Trulia Blog
You may know someone who did very well during the market crash in 2008 purchasing fixers. Its a complex issue that you need to study up on before you even consider taking that plunge!
When shopping for a fixer-upper home, some properties have potential beyond their appearance. Keep the following tips in mind as you look for that home.
When shopping for a new home, be aware of properties that have potential beyond their current appearance. Home buyers often overlook a great property because they are too focused on the cosmetic appeal, which can be easily altered. Keep the following tips in mind as you search for your perfect home:
- Finding the Best Neighborhood for You
Location is one of the most crucial factors to consider as you look for possible homes. Unlike the style and even structure, no amount of time, effort, or money can change a home’s location. To find the best neighborhood for you, it can help to visit the area multiple times at various hours. This will help reveal the local culture and activity to be expected from neighbors.
- Identify a Cost-Efficient Fixer-Upper Home
Look for a home with sound fundamentals and an appealing floor plan. Cosmetic improvements like new paint, lighting fixtures, and flooring are relatively cheap and easy to change, while work on plumbing, electrical systems, structural walls, or cabinets are more difficult and expensive. Typically, the most expensive change involves altering a home’s structure.
- Hire a Contractor Before Buying a Home
You may want to hire a contractor in your search if you know you want to make changes to a home you plan to purchase. A contractor can help you better understand what kind of commitment a given home will require. Many remodelers will visit a potential purchase at no charge to give an estimate of how much the work would cost. This is valuable information when comparing different homes with one another.
- Know What to Check Before Buying an Old Home
Examining a home can be a complex process, and looking for one with unused potential can make it more difficult. Keep in mind that homes older than 50 years are likely to have similarly aged plumbing, electrical, heating, and other systems. The home may also be worn out or too outdated to remodel.
- Real Estate Agents Can Help
Real estate agents are valuable resources. They can help you understand a home in the context of its neighborhood and area, and may be able to offer advice on how to increase the value of the property after purchase.
Source: CB Blue Matter
With this terrific checklist, you, too, can be on your way to being a savvy investor!
Everyone wants a magic and immediate path to wealth. The bad news? The path doesn’t exist. Wealth is attainable through more conventional means. If you come to understand the real estate industry and if you deepen your own firsthand experience as you buy and sell investment properties, you’ll be on the road to success.
Along the road, there are six core principles that will make or break each real estate investment deal. They are the most important concepts you will learn. I call them the Big Six. With each successive deal I negotiated, I grew to recognize the common elements. The Big Six are part of a sequenced step-by-step formula that enables you to identify and purchase the right income property at the right price.
The elements of the Big Six Formula that will guide you into the basics of buying income properties are the following:
Location is the single most important component of any real estate deal. It is crucial in determining your investment success. Look for properties that are situated in an “A” location. Such locations include the socioeconomic levels of the people who live or work in a particular neighborhood, its proximity to shopping centers, public transportation, crime levels, the nearness of prestigious universities and medical facilities, traffic congestion, zoning restrictions, the quality of schools, fire and police protection, and even the reputation of the local government and its officials.
Building Quality and Design Efficiency
Design efficiency interfaces with building quality. When you find an investment property you’d like to buy, you will need to scrutinize both elements. Look for properties that far exceed minimum construction requirements and that have useful and innovative design elements. This will not only make the property attractive to tenants but will add value to the property in the future. Design features on apartment complexes that stand the test of time include walk-in closets, large kitchens with windows, and his-and-her bathrooms. In an office building, a common area factor of 15 percent is desirable as well as a ratio of four parking spaces for every 1,000 square feet of rentable space.
Tenants can represent either an asset or a liability in an investment. When you invest, your mission is to make sure your tenant profile is the former and not the latter. Just as you want a well-constructed and well-designed property, you’ll want stable tenants who are a good match for your property and have appropriate lease agreements. Find out how much rent is generated and whether it is at market rate or under market. You want to focus on finding an income property that offers the opportunity to increase rental income and, by doing so, multiply the value of the property so that you can resell it at a substantial profit.
This fourth element refers to the cash flow growth possibilities offered by a particular property along with the likelihood that the property will increase in value. A property may cost $1,500,000 to construct, but if it brings in only the income of a $900,000 property, then it is worth only $900,000. The key to increasing value lies in buying a solid Class B property in an “A” location where the rents are under the market, the leases are short term, and there are no options to renew the leases.
In the musical Cabaret, there is a song with the lyrics “Money makes the world go around.” It could just as easily be used to describe real estate’s role in the economic landscape. The free flow of money and access to credit is what adds vibrancy to property investment. Before you get started, you’ll need to get a number of finance-related items in order. The first thing you should do before applying for a mortgage loan is to review your credit reports and your credit scores. Also, learn the terms, understand the components of a mortgage and how they interact, and be open to the full range of financing options available. Banks and other financial institutions make money from mortgages. They are willing to negotiate. Be creative—you may be surprised at the terms you’re able to obtain from a bank or insurance companies, especially in today’s low interest rate environment.
The successful evaluation of a property’s price has to do with how much information you can gather about a seller and the property than it does about the price tag on the real estate deal. You must look at the value of the property, which is not the same thing as its price. The crucial concern is not just how much the property costs, but what kind of income it can generate for you. A property may be architecturally perfect and engineeringly sound, but if you’re locked into long-term, under-market lease rates, the value will be eroded.
If you master these principles, wealth will be within reach. However, it’s not enough to just understand and utilize the Big Six. You must execute them in order. That’s because they all fit together snugly to form your customized real estate formula.
Getting ready to buy a home this spring? Make sure there aren’t any cracks in your credit. A good credit score is essential when it comes to securing a mortgage.
“If (your score is) below 600, you’re probably not going to buy a home in the short term,” says Mike Sullivan, director of education at nonprofit credit and debt counseling agency Take Charge America.
Given the slew of stringent regulation introduced following the housing crisis, most lenders simply won’t risk extending this demographic credit. In fact, even consumers with good scores should polish up the ol’ credit report.
Qualifying for the best mortgage rates starts at a 740 credit score. Scores below that threshold will likely have higher interest on their home loans.
So if you plan on hitting up the housing market this April, make sure to pull a copy of your credit report and check to see where your score stands.
Check Your Status
Under the Credit Card Accountability Responsibility and Disclosure Act of 2009, or Credit CARD Act, everyone is entitled to one free credit report from each credit bureau every year.
Obtain a copy of this report from AnnualCreditReport.com. It won’t come with your score—you can purchase that for a nominal fee. But there also are websites that offer free versions of your score year-round.
A recent version of your credit report will show you where you stand in terms of creditworthiness. The report should also spell out what you need to do to improve your score.
“You don’t have to entirely guess,” Sullivan says. “You simply look at what (the score) takes into account and you deal with those issues.”
You’ll definitely want to address any delinquent accounts on your record.
“If you are behind, you want to bring those up to date as soon as possible,” says Kathryn Moore, a certified consumer credit counselor with GreenPath Debt Solutions. Delinquent accounts are a huge red flag to mortgage lenders because they demonstrate a lack of ability to repay debts.
They’re also the quickest way to tank your credit score. A missed payment—particularly following an extended period of good credit behavior—can cause a drop of 70 to 90 points.
Sadly, you won’t immediately recoup all those points once the account is reported as up to date.
Instead, “you need to be patient and make all of your payments on time and slowly build your score up” again, says Stephen Brobeck, executive director of the Consumer Federation of America.
The role that time plays in building stellar credit is why it’s ideally “a good idea to look at your credit at least a year out” of shopping for a mortgage, says Bruce McClary, a spokesman for the National Foundation for Credit Counseling.
Getting a Quick Boost
If you are behind this timeline, there are a few steps you can take to potentially give your score a quick boost.
For starters, scan your credit report for accuracy. An error—such as an old, bad debt; incorrect account balance; or worse yet, a phantom foreclosure—could be needlessly weighing down your score. Have these errors corrected by contacting the credit bureau in question.
“There’s a link (on your credit report) to dispute any inaccurate information,” Moore says. “The credit bureau from there will have to resolve that dispute within 30 days.” Once a negative error is removed, your score should improve.
You can also engineer a quick boost by paying down existing debts, particularly high credit card balances. This move improves your credit utilization rate—essentially how much debt you are carrying versus how much credit has been extended to you — and should bolster your score.
Experts generally say to keep your credit utilization below 20 to 30 percent of your collective credit. However, “you really want to get that ratio down to rock bottom if you’re looking for a house,” McClary says.
Clearing out existing balances will also improve your debt-to-income ratio, which a “lender looks at” closely during their mortgage decision process, Moore says.
Lenders typically say the “back-end” debt-to-income ratio—or the amount of your income that is needed to cover all your monthly debt obligations, including credit card bills and other loans—should be 36 percent or lower.
Finally, if you recently missed a loan payment because you, say, didn’t know about the bill, try calling up the issuer (or lender) to see if they will refrain from letting the credit bureaus know about your faux pas.
What to Avoid
Once you have your score in the upper echelon, make sure it stays there. Avoid running up your credit card balances again, which will help keep your credit utilization in check.
Also avoid applying for other loans, including store credit cards, particularly in an attempt to improve this aforementioned credit utilization rate. Applying for new credit generates hard inquiries on your credit report, which could ding your score.
And “if those inquiries don’t necessarily show up as approved accounts, that sends up a red flag” to lenders because it could look like you were turned down for a credit line, McClary says.
Not to mention that you’re more likely to miss a payment when you have multiple cards at your disposal, Brobeck says.
Conversely, don’t close any accounts while you are looking for a mortgage, as the closure could send your credit utilization skyrocketing in the wrong direction.
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