How To Manage Investment Property While Working Full-Time

How To Manage Investment Property While Working Full-TimeIn 2017, upwards of 75 percent of independent rental property owners in the U.S. reportedly worked another job on top of being a landlord. That means the overwhelming majority of landlords are attempting to juggle more than they can handle at times.

There are organizational and strategic concepts that can maximize efficiency and profitability.

Consider the following tips that bring property management tasks under three basic headings: organization, automation and outsourcing.  

Organization Matters

One of the things that tends to overwhelm landlords is thinking about the rental properties as an extension of home ownership. The rental seems like it involves many of the same tasks such as maintenance and repair.

By rethinking rentals in terms of a small business, the way these and other tasks are approached can become radically different. If this were a Mom and Pop store or a corporation, the necessary resources would be brought in to handle niche labor. Organize all of the tasks that the rental unit(s) require under categories that may include the following.

  • Rental Advertising
  • Applicant Interviews
  • Background Checks
  • Legal Documents (leases)
  • Maintenance and Repairs
  • Rent Collection and Bill Paying

Accounting

With a defined set of tasks organized under specific headings, it becomes much easier to visualize the breadth of work involved and what supporting resources would be needed.

Automation Matters

Industries across the globe are moving to automation as a way to increase productivity and lower costs. There’s no reason landlords working other jobs cannot do the same.

While fixing a burst pipe may not be a good candidate for automation, there are numerous tasks property owners undertake that no longer require valuable time.

  • Advertising: Consider a process where an online advertisement is pre-written and posted when a lease expires.
  • Rental Payments: Consider automatic withdrawal from tenant accounts or having them direct deposit.
  • Bill Payment: Consider auto pay for every possible facet of the property, including utilities, taxes, insurance, mortgage and others.
  • Maintenance and Repair: Consider an online form for tenants to fill out that provides real-time notification.

These and other tools can streamline the amount of time required to manage a rental property without incurring significant expense.

Outsourcing Matters

People who work regular jobs and also manage rental properties are entrepreneurs by nature. That go-getter personality leads many to take on more tasks than there is time in the day. That’s why outsourcing is so important.

Outsourcing things like accounting or legal services are no-brainers because they require specialized knowledge. But other tasks such as applications, background checks and maintenance may be good things to put on someone else’s plate as well.

As noted in the beginning of this article, if a small business mindset were applied, many of these tasks would be assigned to a designated resource. Consider operating rental units in this fashion by running a cost analysis and outsourcing. Roll in the labor costs that make sense and take some time to binge watch a Netflix series while your investment turns a profit.

Contact your trusted mortgage professional to make sure that you have the most competitive financing on your investment property or to get pre-qualified if you’re ready to get started on this new real estate venture!

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What’s Ahead For Mortgage Rates This Week – June 18th, 2018

What’s Ahead For Mortgage Rates This Week – June 18th, 2018Last week’s economic reports included the post-meeting statement by the Fed’s Federal Open Market Committee along with readings on retail sales and inflation. Weekly reports on mortgage rates and new jobless claims were also released.

Fed Raises Key Interest Rate on Strong Economic Indicators

The post-meeting announcement by the Federal Open Market Committee of the Federal Reserve indicated that committee members voted to raise the target federal funds rate to 0.175 to 2.00 percent from the prior rate of 1.50 to 1.75 percent.

The post-meeting announcement cited strong economic conditions and stated that FOMC had altered their outlook from three rate increases in 2018 to four increases. This news is significant to consumers as banks and credit card companies typically raise lending rates in response to Federal Reserve actions.

Committee members were closely divided on interest rate forecasts for 2018. Eight members said that the Fed rate would likely increase four times in 2018 while seven members said three rate increases would be appropriate. The post-meeting statement also cited concerns over inflation and Fed Chair Jerome Powell said that raising interest rates too fast could increase the risk of recession.

Consumer Price Index, Retail Sales Rise in May

The Consumer Price Index rose from 0.10 percent in April to 0.20 percent in May according to the Commerce Department. The Core CPI, which excludes volatile food and fuel sectors, was unchanged at 0.20 percent against expectations of 0.20 percent growth and 0.20 percent in April.

Retail sales rose 0.80 percent in May as compared to expectations of 0.40 percent growth and April’s growth rate of 0.40 percent. Retail sales excluding the automotive sector rose 0.90 percent in May; analysts expected a reading of 0.50 percent based on April’s reading of 0.40 percent growth.

Mortgage Rates Rise, New Jobless claims Fall

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage averaged eight basis points higher at 4.60 percent; the average rate for a 15-year fixed rate mortgage rose six basis points to 4.07 percent.

Rates for a 5/1 adjustable rate mortgage were nine basis points higher at 3.83 percent on average. Freddie Mac analysts said that demand for homes is holding steady despite higher mortgage rates.

First-time jobless claims fell by 4,000 new claims to 218,000 new claims filed. Analysts expected 225,000 new claims to be filed based on the prior week’s reading of 222,000 new jobless claims filed.

Whats Ahead

This week’s scheduled economic reports include NAHB Housing Market Indices, Commerce Department readings on housing starts and building permits issued and National Association of Realtors® reports on sales of previously-owned homes. Weekly readings on mortgage rates and new jobless claims will also be released.

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Is Buying A Short Sale Right For You?

Is Buying A Short Sale Right For YouIf you have been looking for a new home, and you find one offered under a short sale, this may be to your advantage. While some buyers are wary about buying a home that needs to be sold with the approval of the lender, it’s a great way to get a bargain on a home that you love.

A short sale may be a perfect way to buy a home, as long as you are able to wait until the offer is approved.

The Basics Of A Short Sale

A short sale occurs when the homeowner is facing a foreclosure and trying to avoid it. The true owner of the property, is the lender who provided the money to purchase the home. The borrower owes more on the home than it is worth, and many stop making mortgage payments. Instead of allowing the home to sit there and go to a foreclosure, the lender tries to cut their losses through the process of a short sale.

Additionally, there may be other liens on the home that have to be satisfied by the sale of the property. Anyone that holds a lien on the property has to negotiate the money they are willing to accept for the deal to be finalized.

Why A Short Sale Benefits The Buyer

When you make an offer on a home that is selling under a short sale, you can usually offer less than what the home is worth. The homeowner is eager to sell the home. The homeowner will want to accept an offer fast to get the process started and avoid a foreclosure.

While you may have to wait longer for a short sale to go through than a traditional sale, the savings on the price of the home are usually worth it. Lien holders understand that a short sale is usually the best option to get most of their money, so they are anxious to settle the deal fast.

A short sale is right for you if you aren’t trying to buy a home fast. When you are a savvy buyer, you can make an offer less than the asking price, but you’ll have to wait for all lien holders to accept it. If your current living situation provides you with the opportunity to wait, a short sale will give you more house for your money.

Contact your trusted mortgage professional to secure your financing pre-approval, a necessity prior to negotiating this type of transaction. 

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Questions to Ask When Buying New Construction

Questions to Ask When Buying New ConstructionBuying a new home is exciting. Buying a brand new home can be even more so with the realization of being the first owner and possibly being able to choose your own layout and finishes.

The prospect of owning new construction is definitely exciting, but it doesn’t come without its own set of questions. If you’re in the market for a new home, and considering new construction, make note of the questions below when you begin your property search.

What are the long term plans for the community?

Unless you’re looking at custom homes on acreage, it’s likely new construction in your area will be located in a new development or in a master planned community. With this in mind, feel free to ask about the plans for the community. If it’s a large area, find out if any subdivisions are planned.

If there are only a few houses built so far, it’s likely to mean lots of construction in the months to come – which means a lot of noise and construction traffic. Also ask about the builder – if they’re well known and respected, it’s unlikely they’ll lose funding and the community will likely continue on as planned.

What are the homeowners association’s rules and regulations?

Many new developments and master planned communities come with a set of rules and regulations set by a homeowners association. If you’ve never lived in a community with a HOA, it’s important to find out the rules before investing in it. The bylaws and the CC&Rs will let you know what is and isn’t allowed in the community (especially when it comes to the exterior of your home).

You’ll also want to find out when the HOA fee begins – in some communities, it can start before the home is even finished.

Do you offer any buyer or financial incentives?

If the community or development is still in the early stages, there might be incentives (like a buyer discount, builder upgrades or other financial incentives or freebies) for buyers. Sometimes these offers come with a catch – where something is expected from the buyer in return for the incentive – but it’s important to ask about any offers that may be available, especially if the community is still up and coming.

Do you provide warranties?

New homes often come with different warranties. Ask if a workmanship and structural warranty come with the home. A workmanship warranty (or builder’s warranty) is a warranty for newly constructed homes that offer limited coverage on workmanship and components of the home like windows, siding, roofs, doors, plumbing, electrical and HVAC.

Traditionally, a workmanship warranty will cover a one or two year period; another likely warranty is a structural warranty, which covers the structure of a home. If a warranty is provided, make sure you know exactly what is and isn’t covered and how much you’re responsible for in case of any issues.

Can you connect me with some current homeowners?

Just as you would check reviews before buying an item online or booking a service, the same can be said for a home builder. Just because the product that’s being offered is a shiny new home doesn’t mean you shouldn’t do your due diligence and check references before making a large investment.

While it’s likely that the builder will provide glowing reviews, checking reference and review websites and even knocking on the doors of current homeowners will provide additional information and give you a wider understanding of the builder and its practices. Talking to current homeowners will provide information about the actual community.

New construction is exciting, but you want to make sure you have all pertinent information before you go through with a home purchase.

Contact your trusted home loan professional to get your pre-approval started today.

 

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Fix and Flip: Forget What You See on Television

Fix and Flip Forget What You See on TelevisionThe drama of home and garden TV shows may be fun to watch, but no matter what you think, reality shows are not at all like real life. If you think it’s easy to buy a house that needs updating and turn it quickly for substantial profit, you might want to think again. 

That doesn’t necessarily mean, though, that you should shy away from the idea of buying a “fixer-upper” — just that you should approach such a home purchase with eyes wide open.

Here are some valuable tips:

  • Buying a house that needs cosmetic updates can make financial sense, particularly if you’re handy with a paintbrush, or don’t mind tackling DIY projects in your spare time. The willingness to make a house your home through ongoing TLC can be rewarding in terms of both dollars and good sense, if the structure is sound and all systems are in working condition.
  • Modern appliances, updated lighting and water-saving plumbing fixtures and faucets — even new carpeting and tile — are all items that can be replaced over time as your budget allows. But if the existing home systems aren’t in working order, you may be in for big surprises that can be hard to handle.
  • Buy a house that needs a new roof, major structural work, new HVAC or major kitchen renovation only if you can roll the work into a home improvement loan and, preferably, complete the rehab before you move in. If a house isn’t habitable, it’s really not a bargain!
  • Always pay for a home inspection prior to making an offer. While an independent inspection is not a guarantee that all systems are “go,” it should allow you to plan the next move. The best strategy might be to walk away and look for another well-priced property.
  • Remember that homes are priced under market for a reason. Sometimes the reason has nothing to do with physical problems and everything to do with the seller. Older homes in stable neighborhoods often represent great deals for sellers and buyers alike!

The best way to find a great deal, though, is to work with a professional realtor who is familiar not only with the local market, but who can advise you about real estate trends, financing options and the best ways to realize an appropriate return on your investment.

If you have dreams of becoming the next HGTV phenomenon, take the words of Chip and Joanna to heart: Their book confirms that they worked long hours, faced plenty of discouragement and experienced a fair amount of luck. In fact, as they note, their “overnight success” took many years!

After all, owning your own home, even if it does require some fixing, is still the American Dream!

Unless you are fortunate enough to have cash on hand, one of the most crucial steps before realizing most real estate dreams is to get pre-approved for mortgage financing. Contact your trusted mortgage professional to find out how much of a dream property you can be ready to invest in!

 

 

 

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Buying A Foreclosure: 5 Things To Know

Buying A Foreclosure 5 Things To KnowBuying a property out of foreclosure can be a very smart move, financially. But it can also be complicated, expensive, and stressful.

Here are 5 things to keep in mind before you take a first step in that direction:

Cash Or Preapproval Required

Buying a house that has been returned to the lender through foreclosure means dealing with bureaucracy rather than with a motivated seller. Large lenders are notorious for taking their time to approve a contract, even if the offer is for the exact amount specified.

Then there’s the paperwork, which can seem endless. Most lenders require that prospective buyers have cash on hand, or a pre-authorized loan in place in order to even submit an offer. 

There’s Little Room For Negotiation

Although in certain circumstances there may be an opportunity for some discussion about the price, that is not the norm in a foreclosure. The minimum price is usually written in stone, even during an on-site property auction, and the only direction is up! The days of buying foreclosures for a song are long past, if indeed they ever really existed. 

As-Is Condition Means Just That

Some buyers specialize in foreclosures while other investors run the other direction. There are pros and cons, of course, to every transaction. Sage advice is to always pay the fee for a property inspection on a foreclosed property, even if you have experience. A third-party evaluation is especially valuable if the home has been vacant for an extended period of time, if the utilities have been turned off, or if there are extensive visible defects.

Foreclosures can be like icebergs: What you see may be nothing compared to what lies below the surface. Also, with the findings in writing, always confirm that your loan commitment and insurance quotes will be honored in spite of the existing condition.

The Need For An Experienced REALTOR

Navigating the landscape of property foreclosures is a specialty field, and caution is the name of the game. As a prospective buyer of a pre-foreclosure, a short-sale or a foreclosed home, an experienced REALTOR is your best resource. A real estate professional will help you deal with all timelines and requirements, and has the knowledge and expertise to recommend lenders, inspectors, insurance agents and contractors to help you make a decision.

Always Consider Future Value

Although the initial price might be right, there are additional variables at play in every real estate transaction. What can you expect in terms of appreciation over the short term? What is the long-term outlook for the neighborhood? Will needed repairs and improvements add to the home’s value, or simply bring its condition up to standard? Do you plan to live in the home, or is it strictly for resale?

Contact your trusted mortgage professional to get your pre-approval today!

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What’s Ahead For Mortgage Rates This Week – June 11th, 2018

What’s Ahead For Mortgage Rates This Week – June 11th, 2018Last week’s economic reports included analyst assertions that U.S. housing markets are overvalued in over 50 percent of markets. Weekly reports on mortgage rates and first-time jobless claims were also released.

CoreLogic: Over Half of Top 50 U.S. Housing Markets Overvalued

Rapidly rising home prices are causing some U.S. markets to be overvalued, which means that home prices are higher than a community’s ability to sustain. What goes up must come down in such scenarios, but home prices continue to grow in many areas.

While Boston, Massachusetts and San Francisco, California continued to see rapidly rising home prices, analysts said that residents of the two cities had incomes sufficient to meet the cost of homes. Examples of cities where home prices were overvalued in April included os Angeles, California, Denver, Colorado and Washington, D.C. Supplies of available homes have fallen over the last three years.  Real estate pros and analysts continue to cite building more homes is the only solution to the shortage.

The National Association of Realtors® said that although supplies of new homes have increased in recent months, most newly built homes are priced for move-up buyers. Moderate-income and first-time buyers haven’t seen much improvement in available affordable homes. Rising mortgage rates in recent months also presented an obstacle to finding affordable homes.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week. Rates for a 30-year fixed rate mortgage fell two basis points to 4.54 percent; rates for a 15-year fixed rate mortgage were five basis points lower at an average rate of 4.01 percent. Rates for a 5/1 adjustable rate mortgage averaged 3.74 percent and were six basis points lower. Discount points for 30-year fixed rate mortgages averaged 0.50 percent; discount points for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages averaged 0.40 percent.

First-time jobless claims fell last week despite predictions that they would rise. 222,000 new claims were filed as compared to expectations of 225,000 new claims and the prior week’s reading of 223,000 new claims.

What’s Ahead

This week’s scheduled economic releases include the post-meeting statement from the Federal Reserve’s Federal Open Market Committee, readings on consumer prices and retail sales. Mortgage rates and new jobless claims will also be released.

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Consumer Optimism Continues Despite Rising Home Prices

Despite declining consumer confidence about buying a home, Fannie Mae’s Home Purchase Sentiment Index® (HPSI) hit a second consecutive survey high in May. The Index, which distills some of the responses from the National Housing Survey, rose 0.6 points to 92.3. In May 2017 the Index stood at 86.2.

However, the company says consumer attitudes about buying and selling a home have continued to diverge as home prices have increased. While the net share of respondents who reported that now is a good time to sell a home increased to 46 percent in May, and is now up 14 percentage points year over year, the net share who said now is a good time to buy a home decreased to 28 percent, showing little improvement year over year.

Three of the six elements of the HPSI increased from April and all were…
Read More Here: Consumer Optimism Continues Despite Rising Home Prices

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Long-Distance House Hunting Tips

Long-Distance House Hunting TipsIt pays to start with a solid strategy when you have to house hunt from afar.

Hunting for a house is stressful enough even if you are moving to another part of town. However, when you are searching for a house from afar, it can make the task of finding the right home for your needs seem almost impossible. 

Fortunately, in today’s high-tech world, you have an array of tools available right at your fingertips that can make it easy to find the perfect house for your needs. So, even if you are looking for a home thousands of miles away, you can do so quickly and with minimal fuss.

Partner With The Right Real Estate Agent 

The first thing that you should do when looking for a house in an area that you are unfamiliar with is to find a local agent. Find someone who has the expertise of the local market and buying process. The information that you garner from choosing a local agent can be invaluable. They know the market intimately.

Additionally, a local agent knows the community as they likely live there as well. They know which schools and neighborhoods are best. They can get to know what you are looking for in an area and help you find the right community for your particular needs. They might also have information on local gems that are not yet showing up on online listings.  

Do Your Research 

After you find a home or two that you are interested in, thoroughly research the area. Search for information about local schools, churches, shopping centers and more. You want to make sure that the neighborhood will meet your needs. Research crime rates in the area.

Also, determine how long your commute from work to home will be each day. Even if you don’t have children, research local school rankings. The rating and quality of local schools is paramount when it comes to the resale value of your home.

Visit In Person 

There is just no amount of research that can substitute for an in-person visit to a potential home. If you are planning to hunt for a house from a distance, be prepared for the travel. Make sure that you have the money and time to visit. It is best to prepare for longer house-hunting trips so that you can take your time when walking through each showing.

Also, make it a point to pay a visit to local restaurants, parks, and businesses to get a feel for the local community. 

Whether you are buying local or at a distance, one of the most important things to do first is to get a pre-approval in order. Contact your trusted mortgage professional today to get the ball rolling.

 

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What To Know When Looking At Active Adult Communities

What To Know When Looking At Active Adult CommunitiesFor many Americans, retirement age is fast approaching or already here: Baby Boomers account for nearly 75 million individuals in the United States.

Retirement can present a lot of opportunities, especially when it comes to relaxation, activities, and the enjoyment of life with those of a similar age. More and more Americans are looking to 55+ communities to fulfill those wants and needs.

Active Adult Communities

55+ communities, also known as an active adult or age-restricted communities, are becoming increasingly popular throughout the U.S. because of what they offer and can provide. Traditionally thought to be only in warmer climates, active adult communities can be found in almost every state, and with more people retiring, new communities are being added every year.

Just like buying in a regular neighborhood or a master-planned community, there are a number of things to know or understand when it comes to investing in an active adult community and lifestyle. If you’re considering selling your current home and relocating to a 55+ community, here are some important things to consider before the big move.

Location

Location is an important consideration. Active adult communities can be found all throughout the U.S. While Florida and Arizona are known for their 55+ communities, it’s very likely there’s a community close to where you currently live.

Location is more than just where the community is located – location includes the proximity to towns or cities. Some may want a community that is cut off from large cities; others may want to be close to large metropolitan areas for what they can offer.

Location also includes things like local taxes – some states are much friendlier to retirees than others when it comes to taxes.

It’s also important to note the community’s location relative to an international airport if you plan on traveling a lot, medical centers, and other amenities that may be frequented daily or weekly.

Size

The size of the community is an important part of the community experience for residents. Communities will range in size, from just a couple hundred residents to thousands. The larger the community, the more residents.

Larger communities may offer more activities and amenities while smaller ones may be able to offer more comfort and relaxation with the reduced number of residents. If you’re interested in maintaining an active lifestyle and making friends, a larger community may be a better choice than a smaller one.

It’s also important to note that a larger community may offer more deals or incentives to those looking to buy within the community.

Amenities

Amenities are incredibly important when considering buying a home in an active adult community. A larger community will likely have a number of amenities and events while a smaller community may be limited in terms of what it can provide to homeowners. 

When looking at communities, ask about the amenities provided within the community: is there a golf course, tennis courts, clubhouse, rec center, or arts and crafts studio?

Are there any clubs, group activities, or social events?

Does the community provide ample amenities to maintain an active lifestyle?

It is important to ask whether a membership is required to partake in any activities (especially with things like golf, tennis or the use of a clubhouse or rec center). If so, a membership structure within the community may add extra costs to the community.

HOA

Homeowners Associations have become increasingly popular within planned communities, and 55+ communities are no different. An HOA may have additional say on things within the community than in a regular neighborhood.

While maintaining the general areas, an HOA in an active adult community may also dictate whether a homeowner can grill outside, park a car on the street rather than in a garage, and some may go as far as to dictate the time of day a homeowner can have a conversation on a patio or deck.

While an HOA helps maintain the look and feel of a community as a whole, an overbearing HOA or homeowners board can possibly make living in a retirement community not very enjoyable for some individuals.

Living In Place

Another option to consider is whether the community offers a “living in place” option. This is still a relatively new concept but it is becoming more and more popular.

Living in place options offer homeowners the ability to buy a home in a community when they’re still active and able to live without accommodations. Then, should one’s health change or it becomes more difficult to live independently, the homeowners are able to move to a fully furnished apartment or condo within the community where cleaning, cooking and other services are provided.

These options allow homeowners to stay in one community through each phase of their retirement. More expensive than traditional active adult communities, they are a viable option for those planning for the long run.

Retirement is an exciting time. Finding a community that supports retirees and provides a place for relaxation is important for many people. If you’re looking at active adult communities, reach out to your trusted real estate agent to get more information about local communities in your area.

A 55+ community can be a great choice for those looking to enjoy retirement with other retirees. Happy hunting!

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