SJ Real Estate

The Risks And The Rewards Of Buying Homes In An ‘As-Is’ Condition

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The Risks And The Rewards Of Buying Homes In An 'As-Is' ConditionWhen considering buying a home in an “as-is” condition, the buyer takes all the risk of anything needed to bring the property back up to current building codes and make it ready for occupation or re-sale. There can be bargains in as-is properties if you know how to hunt for one. 

How To Find As-Is Bargain Properties

To find these properties, look for those that sell at auction for tax liens or other reasons for governmental asset-seizure. The might be distressed as-is properties that are foreclosures, short-sales, or estate sales.

A popular home-flipping strategy is to buy an as-is property at a price that is far below market value, make the repairs necessary, and then resell the home for a price that covers the repair costs plus makes a profit.

Tips On Buying As-Is Properties

It is a guessing game when buying an as-is property. There may be very unpleasant surprises for repairs that are very costly and are not obvious. Hidden problems include major plumbing troubles, severe electrical system repairs, shifting or broken foundations, dry rot, and termite infestations.

Here are some tips about how to improve the chances of getting a better deal when buying an as-is property:

Home Inspection: Conduct a professional home inspection. This is insurance to avoid a serious mistake. It is worth the few hundred dollars to pay for one, even if you do not get the property. 

Work With A Contractor: Being a contractor yourself is great. Many contractors buy and flip houses when not working on projects for others. The next best thing is working or partnering with a contractor. Just doing a walk-through with a remodeling contractor helps identify things that need to fix. Then, the estimates for the renovation can be done more accurately.

Major Systems: Assume the major systems will need work or replacement. The biggest unknown expenses in a renovation come from the heating, cooling, and other major systems.

Check Drains: Running water into the sinks for a few minutes is an easy way to see if the drains are blocked.

Roof: Based on the home’s age, assume the roof needs replacement if the roof is more than 20 years old. Inside the home look for evidence of roof leaks that left behind stains on the ceilings and walls that are signs of water damage.

Probe For Termites: Drill tiny deep holes into wood, in an inconspicuous area, to test for termite infestation and/or pay for a pest control inspection.

Foundation Problems: Go into the crawl space under a home to look for foundation problems, such as major cracks and shifting. Another indicator of ground movement and settling, which may be a problem, is that the doors in the home are not level or plumb and do not close properly.

Summary

It is possible to get a bargain when buying an as-is property; however, it is not a certainty. If you are just starting with flipping houses, it is better to partner with professionals to get helpful guidance. Work with a qualified real estate agent who specializes in distressed properties and partner with a reputable building contractor to increase the chance of success.

Case Shiller, FHFA Report Uptick In Home Price Growth In September

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Case Shiller, FHFA Report Uptick In Home Price Growth In SeptemberCase-Shiller’s National Home Price Index showed 3.20 percent national home price growth in September, which was 0.10 percent higher than August’s reading of 3.10 percent. The 20-City Home Price Index showed the continued impact of exorbitant home prices on both coasts as home price growth slowed in high-cost areas and smaller markets experienced upward pressure on home prices as home buyers were seeking affordable homes.

Phoenix, Arizona led the 20-City Home Price Index with 6.00 percent year-over-year growth in September. Charlotte, North Caroline had 4.60 percent growth in home prices and Tampa, Florida rounded out the three cities with highest year-over-year home price growth with 4.50 percent growth. The 20-City Home Price Index has documented migration of home buyers away from prime metro areas to interior and southern states. Analysts said that lower mortgage rates helped affordability in some cases, but home price growth outpaced stagnant wage growth and inflation.

FHFA Data Shows Home Buyers Leaving High Priced Areas

Federal Housing Finance Agency reporting for the third quarter of 2019 supported Case-Shiller’s trends. Home prices in mid-sized cities are rising as buyers relocate to areas where home prices are accessible to moderate-income buyers. FHFA reported year-over-year price growth for homes owned or financed by Fannie Mae and Freddie Mac slipped to 4.90 percent. This was the first time home price growth dipped below 5.00 percent growth since 2015.

FHFA reported home prices in Boise, Idaho grew by 11.10 percent year-over-year; home prices in Tucson, Arizona grew by 10.30 percent year-over-year in the third quarter. Lynn Fisher, a senior economic advisor for FHFA, said that home price growth rates in California and New York were lower than the national average.

The top three states with the largest year-over-year home price growth rates in the FHFA 20-City HPI were Idaho with 11.60 percent; Maine and Arizona tied with Utah with 7.90 percent home price growth. States with the lowest rates of home price growth were Illinois with 1.90 percent year-over-year growth, Connecticut reported 2.20 percent home price growth and Maryland home prices rose by 2.40 percent. FHFA reported that home prices have risen for 33 consecutive quarters; this is good news for homeowners, but also creates affordability challenges for would-be buyers facing high home prices and strict mortgage qualification standards.

Be sure to consult with your trusted Realtor and home mortgage professionals regarding your real estate concerns and transactions.

3 Signs You’re Not Ready To Buy A Home

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3 Signs You're Not Ready To Buy A HomeThose who are looking at buying a home need to think about whether or not they are truly ready for this responsibility. When someone takes out a mortgage, this is frequently the largest loan someone will ever apply for in their life. Furthermore, owning a home also means homeowners insurance, real estate taxes, home maintenance, and home repairs.

There are a few signs that signal someone is not ready to buy a home. Identifying and rectifying these situations ahead of time will ensure that someone is the right position to take on the responsibility of homeownership.

Too Much Debt

One of the biggest signs that someone is not ready is own a home is too much personal debt. A mortgage is another (albeit different) form of debt. It someone already has a large amount of debt, they might not be able to handle an additional loan.

Some forms of debt that people might have include student loans, credit card debt, and car loans. Cutting down this debt before applying for a mortgage will make someone more competitive when applying for a mortgage.

Not Enough Savings

In addition to reducing debt, it is important to build up savings as well. First, people need to have enough money for the down payment. It is highly unlikely that a lender is going to hand out a loan to someone who is not able (or willing) to put up any of their own capital.

In addition, savings are important for potential home maintenance or home repair costs. Owning a house is a major financial investment. People should be able to put up some of their own money when buying a home.

Location Is Not Determined

People move from place to place. It is a reality of school, employment, relationships, and more. At the same time, it is hard for someone to buy a house they don’t know where they want to live.

While this might seem obvious, this factor is frequently overlooked. Think about where “home” is going to be before deciding to buy a home. Consider the overall cost of living in that location, the potential commute, and the potential HOA.

Buying A Home

It is important for everyone to think about whether or not they are truly ready to buy a home before applying for a mortgage. This is a significant responsibility that should not be taken lightly.

Talk with a home mortgage professional to discuss the options that will get you on the path to homeownership. Although it may take time and planning, buying a home is absolutely possible for everyone. When you are ready, your trusted real estate professional can help you find your new home.

What’s Ahead For Mortgage Rates This Week – December 2nd, 2019

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What’s Ahead For Mortgage Rates This Week – December 2nd, 2019Last week’s economic news included readings from Case-Shiller Home Price Indices, readings on new and pending home sales and weekly readings on mortgage rates and new jobless claims. The holiday break on Thursday and Friday curtailed some economic reports.

Case-Shiller Reports Uptick in September Home Prices

Home prices rose 0.10 percent to a year-over-year growth rate of 3.20 percent in September. Rates of home price growth showed a new geographic trend with smaller cities showing higher home price growth than the coastal cities that dominated rapid home price growth in recent years. Homebuyers seeking affordable options turned inland and southward where home prices are less expensive.

Home prices in Phoenix, Arizona rose 6.00 percent year-over-year in September and claimed the top spot for home price growth in Case-Shiller’s 20-City Home Price Index. Charlotte, North Carolina held second place in home price growth with a reading of 4.60 percent year-over-year.

Tampa, Florida rounded out the top three cities with home price growth of 4.50 percent year-over-year. September’s readings indicate slowing home price growth as compared to double-digit growth rates that dominated Case-Shiller Home Price Indices in the past.

Analysts said that while low mortgage rates are helpful to home buyers, strict mortgage requirements and home price growth rates continued to outstrip inflation and wage growth.

New and Pending Home Sales Dip in October

The Commerce Department reported 733,000 sales of new homes in October; this was lower than 738,000 new homes sold in September but exceeded analysts’ forecasts for 705,000 sales. Fewer homes are sold in the fall as peak home-buying season winds down and winter holidays approach; September’s reading for new homes sold was upwardly revised from the original reading of 701,000 new homes sold.

The National Association of Realtors® reported fewer pending home sales in October with a negative reading of -1.70 percent as compared to September’s reading of +1.50 percent. Factors contributing to fewer purchase contracts signed included shortages of available homes and higher mortgage rates in October.

Pending sales are home sales for which purchase offers have been made and the sale is awaiting completion. Pending home sales are a gauge of future mortgage loan volume and completed home sales.

Mortgage Rates, New Jobless Claims

Freddie Mac reported mixed movement on average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged 3.68 percent and were two basis points higher. The average rate for 15-year fixed-rate mortgages was unchanged at 3.15 percent. The average rate for 5/1 adjustable rate mortgages rose four basis points to 3.43 percent.

New jobless claims fell sharply last week from 228,0000 claims filed the prior week to 213,000 first-time claims filed last week. The dip in new jobless claims brought last week’s reading near to a post-recession low.

What’s Ahead

This week’s scheduled economic news includes readings on construction spending, public and private-sector jobs and the national unemployment rate. The monthly reading on consumer sentiment will be released along with weekly reports on mortgage rates and first-time jobless claims.

 

How Much Money To Budget For Home Maintenance

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How Much Money To Budget For Home Maintenance1Owning a home comes with a lot of responsibilities. One of these involves home maintenance. Sometimes, people are surprised by the size and frequency of home maintenance costs.

In order to reduce the stress that comes with home maintenance, it is important to plan ahead of time. This means budgeting for the inevitable costs that come with home maintenance. There are a few systems that people can use to estimate their home maintenance costs.

The Percentage System

One of the most common systems that people use is the percentage system. In general, the amount of money that people spend on maintenance is directly related to the size of their home. The larger the home, the more money someone is going to spend on maintenance.

Most people will spend between 1 percent and 4 percent of their home’s value every year in maintenance costs. Older homes are going to have more maintenance costs than younger homes. For example, if a home is worth $300,000, someone is going to be spending between $3,000 and $12,000 per year on upkeep.

The Square Footage System

The range above might be too large for someone to budget accurately. Therefore, a lot of people also use the square footage system. Again, the larger the home, the more someone will spend on upkeep.

In general, someone should allocate $1 dollar per year per square foot of home. For example, if someone’s home is 2,500 square feet, they should allocate about $2,500 per year in home maintenance. 

Some of the downsides of this method are that it does not take into account the location or age of the home. Keep these factors in mind as well.

Home Maintenance Is Different Than Home Repairs

Home maintenance costs are very different than major repairs. The idea of maintenance is to prevent repairs from arising. If someone has to replace their HVAC unit or take out faulty wiring, this does not count as home maintenance costs.

With this in mind, it is important for everyone to budget accurately for home maintenance and to make sure these tasks are completed on-time. Proper home maintenance can save money on homeownership by preventing major repair bills from coming up down the road. 

And any time you have home maintenance questions, remember to ask your real estate professional. They have a lot of experience dealing with every type of home repair and a list of local referral maintenance providers.

5 Essential Books To Read Before Starting In Real Estate

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5 Essential Books To Read Before Starting In Real EstateIt is important for everyone to put money in a position to make money in order to make financial dreams come true. One of the common targets that people circle is real estate investing.

Before jumping into the world of real estate investing, it is important for everyone to be prepared. This starts by reading a few fantastic books that can help people learn more about the environment associated with investing in real estate.

The Book On Investing In Real Estate

One of the first books that people need to circle is called The Book On Investing In Real Estate. This is a fantastic book that explains to everyone how they can get involved in real estate investing with limited capital. It doesn’t take much to get started. The strategies discussed in this manner are similar to those involved with investing large amounts of money.

The Millionaire Real Estate Investor

A book titled The Millionaire Real Estate Investor is another great read. This book was put together using interviews with more than 100 millionaire investors in the world of real estate. Those who would like to be successful in this arena need to make sure they learn from the successes of those who came before them.

How A Second Home Can Be Your Best Investment

This book, titled How A Second Home Can Be Your Best Investment, is a great read for anyone who is looking to get started in this investing world. This book is written by some of the world’s leading experts in the world of real estate. Using plain language, everyone has the potential to learn about the basics involved in investing in real estate.

One Rental At A Time

This read, titled One Rental at a Time, is an easy and straightforward read. The book compares the world of investing in real estate with an ancient Chinese proverb. This proverb can serve as a powerful guiding principle that can help people get started in the sector of real estate investing.

The Entrepreneur Mind

It is important for those who are looking to get started in this investment state to read everything they can. At the same time, this is also about building a business, which The Entrepreneur Mind addresses. The business world is useful for every aspiring real estate to understand.

Reading high-quality books about real estate investing is a great way to improve your knowledge. Combine that knowledge with a trusted team of real estate industry professionals like a trusted real estate agent and mortgage financing expert and you’ll have a winning combination!