“The higher the climb, the better the view.” Bacotkeren.blogspot.com
Dayo Dekker began buying rental homes close to streets where houses were being revitalized and renovated. He did not buy on the same street where revitalization was actively taking place, but he bought ahead of the path where the revitalization was headed so he could still buy at a low enough price to get a good profit from his tenants, and yet he could see his values pop up quickly as more and more other investors started buying around him and fixing up houses. Dayo positioned himself with a rooftop view of his local real estate market and bought ahead of the curve for a quicker return on income and value.
Rent vs. Buy Decision
If you are a renter in Memphis, TN, rents have gone up 13.5% year over year. That means if you were paying $1,000/month in 2020, you are now paying $1,135/month to live in a place that belongs to someone else. If rents continue to trend upward at this pace, you will be paying almost $1,300 per month for the same space next year. If inflation continues to increase, food and gas, and other goods will be costing you more too. The advantage to buying your own home is so you can lock in a low fixed-rate mortgage. Your principal and interest portion of your mortgage payment will never increase.
Buying more investment real estate
Where are the neighborhoods that are starting to be revitalized? Where can you buy in established areas that have continued to go up in value with rents that have been steadily moving upward? When you lock in a fixed mortgage rate with a principal and interest payment that never increases, you give yourself a raise in pay every year when you raise the rents.
Refinance to Restructure For A Better Life
More homeowners are refinancing to lower their interest costs, get rid of their mortgage sooner, or combine other debt into one low fixed rate. Others are using a cash-out refinance to remodel their homes.
Telling Trends:
1. Home values will hit new highs and continue going up in 2021 and 2022 but at a slower pace.
2. Rents will continue to increase. However, builders completing newly built homes will ease housing inventory woes as labor comes back and lumber prices come down.
3. Millennials and Gen Z will continue to be the biggest number of homebuyers. People working from home will head for the suburbs.
4. Rents will continue to increase year over year.
As real estate and financial professionals, we have a rooftop view of the trends that affect our customers. Subscribe to more than one reliable real estate news source. Learn from other people in the industry. Build customer loyalty as a trusted advisor.
First week of August and we get the July jobs report on Friday. Not likely to be a great number, but the FED has dismissed all the jobs misses so it shouldn’t be a surprise, unless the FED sees something new. I do think the inflation report next week is also likely to be a terrible number, but once again, the FED will just dismiss it with its new favorite word, “transitory” and keep right on ignoring the inflation we all see.
Housing is another issue, prices continue to rise across the country and in many areas, it’s more than double digit increases year over year. While activity has slowed down a little in some areas, volume of both home sales and demand remains strong. Fueling much of that is the insane rise in rents. Last month we saw a 2% increase in rents, leading to more than a 10% increase year over year. With some markets seeing rental availability challenges at, or worse than listing inventory!
Yes, mortgage applications were down last week for both purchases and refinances, but levels are still strong, and opportunities are plentiful if you know where to look. While some companies are panicking to low origination volume, many I work with are well ahead of last year’s numbers and still managing 70% purchase to refinance balance for the year!
With many across the country beginning the trek back to school, we may see a brief lag in activity but be prepared for a spike in the action within two to three weeks of the kids going back to school and functional obsolescence of current homes forces a change! Staying committed to your plan and the focus of relational business practices will continue to help you out pace your competition!
Questions or comments: This email address is being protected from spambots. You need JavaScript enabled to view it.
Ralph Waldo Emerson-“The desire of gold is not for gold. It is for the means of freedom and benefit.”
Samir and Sabba had finally found a home that would give them some rest from the busy city and the noise. They had been visiting with a builder who called them to let them know that he had a ready-made house that had everything on their wish list. The first buyer was supposed to close in the next two and a half weeks but had backed out due to a family emergency. So if Samir and Sabba wanted the house, they would need to buy it right away, or the builder would have to take the next offer.
How could Samir and Sabba close in two and a half weeks on the new home if they could not sell the old one yet? They would need to use a large amount of equity from the sale of the old house to put down enough on the new home to afford the new payment. The answer for the Sader’s was getting an equity line of credit on their old house to use for a down payment on the new home. The Sader’s story is one example of interim financing to bridge the gap until the old house sells.
Low Inventory-High Demand Causes Interim Financing To Be More Popular
We are experiencing a record low number of homes for sale. At the same time, low mortgage rates and rising rental rates are driving people into the homebuying market. It is normal to walk into multiple home purchase offers on the same house. The bridge loan and other interim financing tools are wildly popular because they allow the buyer to make a home purchase offer without having to make the offer contingent on the sale of their current home.
Advantages of Using Bridge Type Financing
1. Your peace of mind knowing you aren’t forced to sell your current home before buying your new one.
2. Your offer is more competitive if you are not making the home purchase offer contingent on the sale of your old home.
3. Your comfort level on the financing on the new home is better since you used interim loan secured on the old house, giving you proceeds to put a substantial down payment on the new home. The large down payment on purchasing the new home lowers the permanent mortgage and the permanent house payment. You have your loan terms where you want it. When you sell the old house, you pay off any mortgages and the interim loan that was secured on the old house.
Disadvantage of Using Bridge Type Financing
The borrower is required to qualify with the lenders for all of the loans on the current home and the new home.
The borrower is required to make the payments on all mortgages secured on the two homes.
As a real estate professional, connect with other realtors and lenders to get familiar with the various types of interim bridge loan types that can help get your home buyer and home seller closed quickly and smoothly.
So many times, people will ask me why some people are far more productive than others? Why some people are more organized than others? How is it that some people get far more done in less time than others? Well, to me the answer is largely that people who do more, are much more likely to be more scheduled in their actions and activities than those who aren’t.
I learned early in my career from a well-established loan officer that you can spend all your time trying to remember what you were supposed to be doing next, or you could spend your time doing the things you needed to do. It’s a choice.
Back then, we didn’t have CRM’s to auto populate tasks and activities into our schedule for us, but we could use a planner to schedule WHEN we had to look at or review something or when we were going to do things like appointments or prospecting. Just like high school, some days our schedule had the same classes at the same time, some days we had different classes at different times. Some days we had off! The point is, if you manage your high school schedule, you can create a work schedule for yourself as to WHEN you were going to do things on specific days and then just drop those tasks into the appropriate time slot each day. In the event an unscheduled event or opportunity presents itself, you can simply reschedule the other tasks accordingly.
I spend a good amount of time outlining this in the scheduling advantage on the website, but the gist of it is, always schedule yourself as to what you are going to do and when you are going to do it. It does take some work, but just like high school, you will adjust quickly and be able to get far more done in less time!
You can proactively schedule your success, or you can reactively stress yourself on an almost daily basis. The choice is yours!
Questions or comments: This email address is being protected from spambots. You need JavaScript enabled to view it.
More...
Tony Martinez has been educating and training real estate agents for almost 30 years. As a Broker, Trainer, Coach and radio show host, he has made a tremendous impact on the careers of thousands of agents. Tony is considered by many as one of real estate’s premier speakers. As an expert on Short Sales and a National Speaker, Tony has trained over 10,000 agents on the Short Sales process.
On May 20, 2021 Tony Martinez Events, LLC acquired the rights to the CDPE Designation, content and trademarks. The CDPE, Certified Distressed Property Expert, was launched in 2008, by Alex & Cadey Charfen. This Short Sales course quicky became the fastest growing designation in the history of the real estate industry. Approximately 50,000 real estate professionals took the course, and collectively, rescued nearly two million distressed property owners from the devastating consequences of foreclosure.
“I’m very excited about bringing real estate #1 Short Sales Training back”; Tony Martinez said “Short Sales never went away. The minute the pandemic related lockdowns started; I knew that we were in for another huge wave of foreclosures. A certain percentage of these properties would doubtless be underwater, so I approached the Charfens about acquiring the CDPE brand with the intention of reactivating it and updating the content to reflect current market conditions. “
Tony’s sense of humor enables him to take complex topics, such as Short Sales and working with investors, and actually make them fun to learn.
Summer Goralik is a Real Estate Compliance Consultant and licensed California Real Estate Broker (#02022805). Summer offers real estate brokers a variety of consulting services including assistance with California Department of Real Estate (DRE) audit preparation, mock audits, advertising review, and training. She helps licensees evaluate their regulatory compliance and correct any non-compliant activities. Summer has an extensive background in real estate which includes private sector, regulatory and law enforcement experience. Most recently, she worked for the Orange County District Attorney's Office as a Civilian Economic Crimes Investigator in their Real Estate Fraud Unit. Prior to that, Summer worked for the DRE for six years as an Investigator. Among many achievements, she wrote several articles for DRE, four of which were co-authored with former Commissioner Wayne Bell. Before she embarked on her career in government and law enforcement, Summer also worked in the escrow industry for nearly five years, for both an independent escrow company and broker-controlled escrow division. Aside from her consulting business, Summer is also an Instructor for The Escrow Training Institute.
"By choosing our path, we choose our destination." Quotemaster.org
When you are looking for the quickest and easiest path up to your mountain, take the Mountain Trail Guide Sherpa with you. A good financial advisor, a good economist, and a knowledgeable mortgage professional are like Trail Guide Sherpas. They are standing at the top of the mountain, looking down along every trail. When asked, the financial trail guide can point clients to what looks like the best trail to get to their destination.
Let's take a look down the paths of homeownership:
1. The median home price this week of $363,300 is up over 23% year-over-year. The media is saying it is a Home Affordability Crisis. But remember that Median Home Price does not determine affordability. Affordability is determined by the relationship between home value Appreciation and wages. Appreciation is only up 14% year-over-year. People are also coming back to work with Pandemic Unemployment Assistance Claims falling by over a million.
2. The higher home prices do put pressure on first-time homebuyers. However, first-time homebuyers are still making up 31% of home sales over the last five months. Cash buyers made up 23% of homebuyers, up 16% from last year. Investors purchased 14% of the home sales, down 17%, which is a pandemic low.
3. Inventory of homes for sale is still down 19% year-over-year. Still, Chief Economist for National Association of Realtors, Lawrence Yun, forecasts that we will see more houses being listed for sale later this year.
4. Real estate economists are still predicting that the value of homes will continue to increase, even when mortgage rates start to climb. The serious lack of homes for sale and the tremendous buyer demand are being followed by an emerging Millennial and Z-Generation buyers market eager to own their own homes.
5. Mortgage rates are the lowest we have seen since February. So the big win for homebuyers is to lock in a low, fixed-rate mortgage on a home where they can build equity and wealth.
The best realtors and mortgage professionals want every tool at hand for helping their clients overcome obstacles and feel good about their real estate decisions. Subscribe to one or two reliable real estate market news sources. Connect with your local Multiple Listing Service. Lunch and Learn meetings and real estate sales meetings are great places to learn about various mortgage programs.
Agent Resource
From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.