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Tag: Real Estate

  • Buying A Home Post-COVID? Here’s What You Should Know

    Buying A Home Post-COVID? Here’s What You Should Know

    A Changing World

    Let’s rewind the clock a bit.

    It’s December 31st, 2019, and New Year’s Eve is in full swing.

    The fireworks are blasting off, the champagne is popping, and people are happy. If you had listened in on others’ conversations, you would hear a general air of hopefulness. Everybody had high expectations for 2020, and they weren’t afraid to let the world know.

    If you were anything like most people, then you probably had the same level of optimism.

    Instead, the universe decided to prove us all wrong. January got off to a rocky start, February was okay, and by early-March, everybody had heard about COVID-19.

    At first, nobody expected this virus to have the effect that it did. But after another 30 days passed and the entire world was still on lockdown, all of the optimistic people realized what was happening.

    No matter what you do, the virus has likely impacted you and your family in at least some small way. Despite all of the unexpected ups and downs that 2020 threw out, though, families are still searching for buying a home.

    buying a house

    Owning A Home Is Smart

    When apartments started evicting people who couldn’t pay their rent, owning a home suddenly seemed a lot more secure. After all, mortgage payments are usually cheaper than apartment renting (for a similar-sized space), and apartments are ridiculously overpriced. All of this goes to say that even though the world is still amid a pandemic, homeownership is steady.

    In today’s article, we’re going to be looking at everything you should know about the changing real estate market, how you can prepare, and how to ensure that you get a good deal. We’ll also be talking about the holy grail of home loans (at least as far as banks are concerned)- your debt-to-income ratio (or DTI, for short).

    Let’s dive in!

    Understanding Debt-To-Income Ratio (DTI)

    Before you start shopping for a house, the most important thing to know about is your debt-to-income ratio. Every bank you go to, every lender you speak to, and even some real estate agencies will want to know this number.

    Most of these organizations will do the math on your DTI for you, but it’s a good idea to know before you get turned down for the loan required to purchase your dream home. It will also save you time spent at the bank going through all of your expenses line by line.

    Save Your Credit Score!

    Another great reason to have your DTI calculated before you start applying for loans is that it will save you from unnecessary “hard checks” on your credit.

    When a major lender has to run a credit check, this counts as a hard check and can reduce your overall credit score by a couple of points. These negative marks stay on your credit score for two years, and there’s no way to get them removed sooner.

    Obviously, if you want a home loan, you’ll have to consent to at least one credit check. But it’s a lot better than getting denied for multiple credit checks because you were applying for a larger loan than you could get approved for.

    How To Calculate Your DTI For Home Loans

    Your debt-to-income ratio is a number that compares your monthly debt (bills, loans, expenses, rent) to your income. If you’re single, only your income matters. If you’re married, they’ll also count your spouse’s after-tax income towards your income, which can significantly boost your DTI.

    Calculating your DTI ratio is simple- divide your monthly income by your monthly debt and expenses.

    This is where you’ll have to do a bit of inventory. You must itemize all of your debts and expenses, not just the big payments.

    Include how much you spend on groceries, entertainment, gym memberships, subscriptions, phone bill, internet, and even your pets. The bank will go through your bank statements anyway, so you’re not going to be able to hide anything.

    So, let’s say that your total monthly expenditure is $3,000, and your monthly salary (or business income) is $10,000. Divide your income by your debt, and you’ll get a DTI ratio of 33%.

    A 33% DTI is excellent, but most Americans have a higher DTI- especially after COVID. The higher your DTI ratio is, the worse it is. In general, banks and lenders like to see a 43% DTI ratio or lower.

    You might be able to get a loan with a higher number, but you’ll likely have to make a higher down payment or be required to pay a higher interest rate.

    calculator

    Looking For An Easier Way?

    One of the easiest ways to calculate your debt-to-income ratio is to head over to MortgageCalculators.info. The site is 100% free to use, and their DTI calculator is second to none!

    All you need to do is enter your pre-tax income, your spouse’s post-tax income (if applicable), expenses, and mortgage details (if you know them). Once you’re finished, press ‘Calculate,’ and you’ll have all of your numbers. You can then screenshot or save all of the information.

    If you’re looking for other essential real estate calculators, the site developers have created an excellent line-up of tools, including:

    • Monthly payment calculator
    • Minimum income requirement calculator
    • Home loan limit calculator
    • Repayment charts
    • Closing cost calculator
    • Reverse mortgage calculators
    • …and a lot more!

    Overall, MortgageCalculators is an excellent resource for anybody who wants a simple way of calculating all of their numbers. The writers have also included in-depth guides on how to apply to federal FHA loans, how to refinance your home, and more.

    The best part of it all- it’s 100% free!

    Don’t Stretch Yourself Too Thin

    One thing that COVID taught almost everybody in America is that you should never stretch your resources too thin. Before this happened, there were a lot of people who had high DTI ratios, and as soon as they lost their job, they lost everything.

    If you’re shopping for a home or trying to get a home loan, then the best thing you can do is reduce your monthly expenses as much as possible.

    Real Estate Changes After COVID-19

    Pretty much everybody can agree that things aren’t the same as they used to be; this also applies to the real estate market. Possibly one of the biggest changes we’ve seen is one of the most iconic- no more “Open House” signs.

    In the past, this was one of the easiest ways to go house shopping. You could hit up all of your favorite neighborhoods and just drive around until you saw an “Open House” sign, walk in, drink a soda, eat one of those grocery store cookies that the real estate agent puts out, and see if you liked the place or not.

    Today, though, things are a bit more impersonal. In some states, where the virus isn’t as bad, you may be able to schedule an in-person visit with an agent. However, more agencies are switching to virtual tours, at least for first-time showings.

    These usually involve a video or Facetime call where the agent walks around the house and shows you all of the important interior and exterior features.

    Although they’re not quite as inclusive, these virtual tours are a great way to do a preliminary examination of a house. If you indicate that you like the house, then the agent will typically be able to schedule a short personal visit. The virtual tours are a good way to get a feel for the house, but ultimately, you really won’t know whether you want to buy it or not until you see it in-person.

    Sales Are Down

    The biggest change to the real estate market is that sales are down, meaning that it’s not the best time to be an agent. Since money is tight, many people who planned on buying a home this past year decided to wait a bit longer.

    … But You Might Get A Deal

    The flipside of that is that you could stand to get a better deal on your home. There are still a number of people who are desperately trying to sell their home. With sales down, many sellers may be willing to reduce their home price to sell it faster.

    home price

    Final Tips For Buying A Home

    There’s no need to cancel your plans to purchase a house in 2021, even with a pandemic going on. Although the real estate market is undoubtedly going through some changes, home prices and loan rates have stayed steady throughout most of 2020. If anything, you may stand to get an even better deal since fewer people are shopping.

    Ultimately, owning a home is the ultimate security. You’ll be able to reduce your monthly living expenses, and you’ll actually get to own the house. In the future, you can use the house to help you get business loans, and owning a home looks great on your credit!

    Remember, though, before you start shopping, check out MortgageCalculators.info to calculate your DTI ratio (and anything else you might need). As long as you know your numbers, you’ll know exactly how much home you can afford, and finding a lender will be much easier.

  • Is Investing In Property A Good Idea?

    Is Investing In Property A Good Idea?

    Investing is one of the biggest ways people prepare for retirement; be it in the stock market, 401(k) plans, precious metals, business opportunities, you name it. However, one particular category of investments that has been gaining traction lately is real estate property investing. It has become so popular because it typically enables your current funds to follow the rate of inflation and even appreciate beyond inflation in some cases. Everyone can agree that some forms of investment are better than others — except that perception depends on your interpretation of the term “better.” To some, “better” is relative to the chance of a greater return, but to others, it is simply dependent on the stability of the investment for its duration. Let’s look at how these definitions compare to determine whether an investment in real estate is the right choice for you.

    investing in property
    “Saving vs Investing” by ota_photos

    Getting Started

    In order to dive into how investments in real estate stack up in comparison to other areas of investment, we need to start from the beginning and evaluate the process.

    Many misinterpret real estate investment to mean you will be buying multiple houses or properties and flipping them or renting them out. While that can be your plan of action in investing, that’s not the only way to do so.

    Also, prospective investors commonly assume that in order to invest in real estate, you need to have immediate access to the funds to afford multiple properties. However, you can actually take advantage of your lending options as well. There are a variety of loans that allow investing or renting with a low-rate down payment. In fact, the idea of a standard 20% down payment for a loan is woefully outdated and the average percentage has been trending downward. In recent years it has dropped below 10%, meaning that homeownership has started to become more accessible.

    While you may still require a chunk of change to make the down payment on a home, different loan options require varying down payments and credit scores. For example, loans from the Federal Housing Administration require down payments as low as 3.5% with a credit score of at least 580. These loans are ideal for people purchasing their first home, which can still be an investment since real estate values appreciate in tandem with inflation. Meaning your invested money will retain its purchasing power whenever the home is sold.

    What if you don’t qualify for an FHA loan, but would like to invest in property despite still not having a large mass of funds? There are options for the property title that may be useful to you, such as joint tenancy or tenancy in common. Although it’s commonly discussed in relation to renting, tenancy in property investment allows for multiple individuals to share the ownership and financial burden of a property. Using the joint tenancy and tenancy in common title options, you and others that you trust can all chip in to purchase a property. This approach can make homeownership that much more accessible and can also be handy for those just starting out in property investing without significant capital.

    Lastly, there is the standard means of investing in real estate — buying a home. As you may guess, this is done by simply taking out a mortgage with upfront closing costs and a higher down payment. Some people can even afford to buy a property outright without the assistance of a lending institution. Regardless of which entrance to real estate investing best fits your situation, it’s time to consider whether or not investing in property is actually right for you.

    Regal Assets Banner

    Who Should Invest

    Whether or not it’s a good idea to invest in property depends on what you are looking for in an investment and how you intend to invest. To cut to the chase, if you are looking for a quick, high return investment, then real estate probably isn’t the best place to start unless you are looking to fix and flip houses. Real estate properties see their best returns and greatest effects in long-term conditions for a few different reasons. One reason is simply the appreciation of property which, as mentioned earlier, usually follows the rate of inflation. Looking at real estate strictly in terms of appreciation, it’s not a great investment, but rather more of an asset — something to be leveraged when money is needed. Property rarely becomes an investment on its own due to upkeep costs and the rate of inflation of a little over 2% a year for the past 25 years. Since it requires more attention, property investment is not as turnkey as other forms of investment, such as stocks. However, real estate is a much more secure investment as it has a significantly lower chance of depreciation. Real estate investing is therefore most effective in two focuses: renting as a landlord and fixing and flipping.

    Landlords

    Being a landlord is a relatively straightforward way to secure a passive income. With current rent prices being so high, it’s easy to profit off of rent even after accounting for the expenses of the building itself. While this alone may sound simple, as a landlord you still have to be accessible at all times in case of an emergency and coordinate schedules for routine maintenance of the property. Becoming a landlord is still possible even for individuals in a hindered financial situation because some loan options will allow the purchase of multiunit properties, with FHA loans being an example of this too. The only stipulation is that the borrower must reside in one of the property’s units, and there can’t be more than four units in the property. All that considered, you are still presented with a great opportunity to have your taxes, mortgage, utilities, and general maintenance paid for you, or to even just lower your out-of-pocket costs while earning experience as a landlord.

    As your experience with being a landlord increases, you can hopefully start to own more properties, eventually surpassing the need for a typical job. Since most of the maintenance can be performed by hired hands, it’s possible to retire at an early age as a landlord and even continue being a landlord past retirement. Finally, if you ever decide that you are done being a landlord, you can sell the properties and essentially get a full, inflation-adjusted return on your investment.

    Fix And Flip

    Fixing and flipping houses is a much less stable investment in property, but it also presents the opportunity to receive much greater returns on your initial investment. The returns also have a much shorter turnaround time than renting or simply holding on to a property and selling it off later in life. This style of investing has, arguably, been popularized by a multitude of television shows, starting with the first most successful show, “Flip This House” in 2005 on HGTV.

    Much like what is depicted in any of the television shows, house flipping requires a lot of knowledge in different trades and an understanding of interior design. If the flipper doesn’t have these skills, it’s possible to hire helping hands to perform these jobs. However, that will diminish the amount of the return and will also require immediate access to funds to pay for the help. So to avoid this, most people tend to do the work themselves or with business partners. The bottom line is that this form of investing is significantly more hands-on and therefore is close to outright being a full-time job rather than a passive investment. Many people working with the fix and flip style of investing have likely spent a great deal of time working in a profession that already required those same skills.

    Conclusion

    Investing in property is a good idea for individuals who are looking for stability, passive income, or assets to add to their financial portfolio. If you are looking for a significant, short-term payoff, but are not skilled in the trades and are not looking to become well-versed in them, then investing in property may not be the most feasible investment type for you. Due to the nature of property being a physical asset that is exposed to the elements and subject to age, it’s not much of a possibility to have a hands-off approach like you can with the stock market.

  • How Much Rent Can I Afford?

    How Much Rent Can I Afford?

    Renting a Place

    Getting a space of your own is deeply ingrained in the psyche of a human. The leverage of being able to decorate your home as you like is very intriguing but as thrilling as it may sound, it is very expensive and might exceed your budget. For this reason, people often prefer renting a place instead.

    how much rent can i afford

    Benefits of Rent Calculator

    A rent calculator comes in handy when figuring out the amount of rent that you can afford. One must take advantage of this application to proceed further. Rent calculator websites like Zumper see how much you can afford to spend on renting a house for yourself or your family. It is based on several things, all you need to do is provide all relevant information and the calculator is going to do the rest of the work for you.

    Using a rent calculator, you need to put in a few requirements i.e. location you want to live in, neighborhood, household income, monthly expenses, number of bedrooms, monthly savings, number of bedrooms required, monthly debts, etc. All of the information is used to calculate the housing benefits and the amount you can afford to pay the rent for the property you are renting from a private landlord. Zumper is going to help you do it all in a snap, moreover, it will also help you find the apartments to rent and reserve them online. 

    How does the Rent Calculator Work

    To calculate how much rent you can afford, the calculator multiplies the gross income by how much you are willing to spend on rent. Further, the rent amount is deducted from the monthly income, and the expenses, savings, and debts are subtracted from it. The final number is what you have left to spend. 

    Things to Consider before Renting a Place

    First of all, you need to add up all of your other expenses to see how much rent you can afford to pay. All the straight and ongoing costs must be considered before deciding how much rent you can afford or whether you can afford the rent or not. 

    Budgeting

    A household rent is most probably going to be your largest outgoing funds, so for your peace of mind, it is important to know how much you can afford. It will additionally give an accurate idea of what you are looking for and you will have better control over the expenses. Budgeting helps you in accomplishing your long term financial goals. You need to draw a proper budget for all your costs, make an estimate of what you will spend on each month. Your monthly or day to day expenses include; cell phone, clothes, food, car insurance, gym, traveling, hobbies, loans, credit card payments, children, health care, etc. 

    If you are in doubt, it is better to overestimate than to underestimate. Keep in mind that your expenses also include the summer holidays and Christmas time. You do not want to go into debt after just a few months of renting just because you failed at drawing a budget. Now, once you have a list of all the expenses and the costs you can easily calculate how much rent you can afford.

    Other Rental Costs

    You need to keep in mind that renting a house involves more bills than just paying your rent, it is not just paying your rent all in all. You have to pay the service charges, utility bills, insurance; some of the most expected monthly bills are the following:

    • Water Bills
    • Gas and Electricity bills.
    • Service charges.
    • Digital TV subscription and Broadband bill.
    • Landline bill. 
    • Insurance

    Different types of bills are calculated in different ways, so you must find out from the property owner how they are paid i.e. weekly, monthly, or yearly. 

    Moving Cost

    You do not have a proper sense of how much of the stuff you have until you have to move it. Here, you will need a moving service to move your possessions into your new home, and that my friend costs money. From a cab to a truck you will be needing money to pay to the service company to move your stuff, the more the possessions double the cost. So, planning everything ahead of time will save you a lot of time and headache. 

    Estate Agent Fees

    The estate agent does not work for free either; you got to pay him the money to find you the desirable place. The estate company is going to do all the leg work for you, so it is better to keep some cash aside for them while looking to rent a place. The estate agent’s fee varies, so you better be mindful of the structure to make a smart deal.

    Furnishing

    If you are moving to a furnished place then well and good but if you are moving to a place that is yet to be furnished then you will need to keep extra cash on the side for the furniture and soft goods. You will need cash to buy the hardwood furniture, curtains, decorative items, etc. to make the place look and feel homelike. 

    How Much Rent Can I Afford

    Houses for rent sites like Zumper helps you in calculating your expenses so that you can easily figure out how much rent you can afford or whether you can afford it or not. Apart from that Zumper also allows you to reserve apartments to rent online, you can find verified properties and places on Zumper that you can reserve for yourself on the spot and lease. On Zumper everything is very efficient and convenient, you can lease online without any worry or competition. It further informs you within 24 hours whether your application is approved or not. So, what are you waiting for? Find your dream place now. 

    Renting a place is far more time saving than owning a house; it provides you with the freedom and at the same time a feeling of having a home. However, you need to calculate your expenses to see how much rent you can afford so that you rent a place accordingly. Zumper comes extremely handy here since it has got you covered in calculating everything regarding renting a place. Certain things need to be considered before renting a place so one must pay heed to them to be on the safe side.

  • Legal Issues You Need to Know About Before Buying a Commercial Property

    Legal Issues You Need to Know About Before Buying a Commercial Property

    Investing in commercial property is always a solid business plan. A decent commercial property can return 4 to 5 percent of its total value in rent, which makes it into a steady alternative revenue that you really don’t have to invest too much in. Then, you can use it to start your own business and eliminate the need to pay rent (which is a massive part of your overhead). Commercial property can also be fixed and flipped for a profit, even though commercial gains tax for this can be quite severe. All in all, buying a commercial property is an opportunity and you need to learn a thing or two in order to get the most out of it.

    buying a commercial property

    Tips to consider before buying a commercial property

    1.     Inspecting the contract

    The first thing worth mentioning here is the fact that the contract in question needs to be thoroughly inspected before you sign it. Keep in mind that there are some special conditions that you have to pay attention to. For instance, the purchase of an industrial unit needs may need to be permitted by a local council. So, before you have this approval, you won’t be able to close the purchase, regardless if you’ve agreed on every single term with the seller in question.

    2.     Expert assistance

    The next thing worth considering is the fact that commercial property purchase is a lot more complex than the purchase of a residential property. After all, you’re already a homeowner or a tenant, which means that you have the right perspective to assess the appeal of the property. With commercial property, there is probably so much infrastructure to take into consideration, not to mention all the permits and legal work. Therefore, consult professionals to help you out. Good property solicitors can be of immense assistance when it comes to closing the deal.

    3.     Capital gains tax

    One of the issues that property buyers are concerned with the most is the ones of capital gains tax when buying or selling commercial property. If the property has been held more than 12 months, the amount of gain can be discounted by as much as 50 percent. This is pivotal for those who intend to fix and flip the property or sell it right away at an inflated price. In other words, sticking onto this investment for a tad longer may pay itself off several times over. Playing for the long run definitely has a way of paying itself off but a lot of investors simply don’t have this luxury of time.

    4.     Financing the purchase

    Another thing you should understand is that financing the purchase isn’t a simple thing either. Sure, if you have your own income that you will use for this purpose, things are a lot simpler to handle. However, if you are using alternative means of funding, you also need to take into consideration the improvements and renovation of commercial property. This raises another question – do you raise a single loan for all of these expenses or do you look for a specialized commercial space renovation loan, later on?

    In conclusion

    The above-listed four are just the tip of the iceberg of all you need to learn before you make investments in commercial property. The more you know, the safer your investment will be but you don’t have to do it all on your own. Asking for help from various experts is more than necessary and, given the value of the investment, it’s more than worth it.

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  • 3 Tips for Buying Your Second Home

    3 Tips for Buying Your Second Home

    Buying your first home may be one of the scariest things a person can do, and although you’d think getting your second home would be easier- it can be just as stressful.  If you’re ready for buying your second home and aren’t sure where to start, here are some tips to make the big ordeal easier.

    Buying your second home

    Tips For Buying Your Second Home

    1. Be Debt Free Before You Buy

    Having any debt, when you’re looking at buying a home, can put a hold on buying.  If that debt is a mortgage on your first home, then it can kill your goals to own home faster than anything else.  Most people sell their first homes before they buy their second, but if you’re keeping your first home to rent it out to be, your payments can get complicated.

    If you have to have debt going into your second home, make sure that it’s manageable.  Renting out your first home can help this, but so can going for a place that has a price under your budget.  Instead of putting yourself into another massive amount of debt, consider if you need both homes.  Selling your first one can make the second one far more affordable.

    2. Consider Changes You Want From Your Current Home

    The good thing about owning a home is that you can see the changes you want.  If you’ve noticed anything in your first home that you didn’t like, make sure that your next home doesn’t have these same problems.  Please take what you learned from your first home and apply it to the next.

    If you hated walking downstairs to do laundry or got annoyed with your tiny closets, don’t buy another home with those same changes.

    Although it might just sound like a wishlist of things you’d like– your home really should fill most of your wishes.  This home is the place you’re going to spend most of your time. Make sure that it’s somewhere that you’ll want to be.

    3. Consider Your Finances In The Long-Term

    This idea is a prominent place to go when plotting out the steps to buy a house.  Take the time to plan out the next ten years of your life.  You don’t have to stick to this plan flawlessly, it’s almost impossible to know how everything will turn out, but use it as a guide.  Babies, marriages, and job changes can affect your finances until they’re almost unrecognizable.  

    Nobody can plan for the future perfectly, but give your budget wiggle room for savings and emergency spending.  Don’t give yourself too much extra space and leave room on unneeded expenditures- but be smart with your money.  Failing your budgets could mean losing your home, which is devastating for anyone.

    Buying your second home can seem stressful, especially if you still own your first home, but take the time to plan and budget wisely.  This second home could be the home you live the rest of your life in, make sure it’s a place that you’ll be happy to live.

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