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The Cost of Waiting to Buy a Home

The National Association of Realtors (NAR) recently released their July edition of the Housing Affordability Index. The index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.

NAR looks at the monthly mortgage payment (principal & interest) which is determined by the median sales price and mortgage interest rate at the time. With that information, NAR calculates the income necessary for a family to qualify for that mortgage amount (based on a 25% qualifying ratio for monthly housing expense to gross monthly income and a 20% down payment).

Here is a graph of the income needed to buy a median priced home in the country over the last several years:

Qualifying income | Keeping Current Matters

And the income requirement has accelerated even more dramatically this year as prices have risen:

Qualifications | Keeping Current Matters

Bottom Line

Some buyers may be waiting to save up a larger down payment.  Others may be waiting for a promotion and more money. Just realize that, while you are waiting, the requirements are also changing.

 

Original Post from www.keepingcurrentmatters.com


 

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Why Real Estate Could Be a Better Investment than Stocks – Ya Think!

Before my added “Ya Think” emphasis, the title is the same as a title of an article this week over at Money,USNews.com. It’s not surprising to see an article like this now, as the China situation took the Dow Jones down in a dramatic way over the course of a week or so. If you want some historical perspective, there are some dates and Dow plunges historically:

• August 24, 2015: -588.47
• August 21, 2015: -530.94
• August 8, 2011: -634.76
• Six more 600 points or larger drops since 2000.

Yes, if you just bought and held for 15 years, you would have done well in stocks. Unfortunately, many people can’t simply drop a major chunk of change into stocks and just let it ride for that long. And, depending on when you buy, having to sell after a drop like these can be devastating to your savings and retirement.

So, that said, I’m not saying dump all of your stocks and buy real estate … particularly not now. However, the next time your stock broker advises you to “diversify,” don’t just do it with stocks. Let’s look at some of the points referenced in the linked article.

Actually, the article wasn’t really that positive about the advantages of investing in real estate. Things like the ease of placing stock trades and low cost of transactions were mentioned. Property taxes were mentioned as a negative, and they are to a point. The article’s title really wasn’t in my opinion supported very strongly by the content. So, let’s take a look at some differences between stocks and real estate as an investment asset class.

Inflation Hedge

Stocks are susceptible to inflation risk. Your return is whatever it is, including dividends. When inflation gets rowdy, it can take away major chunks of your investment gains in stocks. That’s not to say that real estate is inflation proof, but there are some logical reasons why it may be better.

Let’s think about what inflation really is. It is an increase in the cost of goods and services. So, what do you expect to happen to home prices when wood, tile, wiring, plumbing and other materials and labor costs increase? If it costs more to build, usually within a reasonable period of time it will cost more to buy. Your owned property value can actually increase during inflationary periods.

Interest Rate Increases

When interest rates rise, stocks and definitely bonds usually suffer. It costs companies more to borrow to expand and finance operations, so their profits are reduced. Bonds carry a fixed rate of return, so their value drops when interest rates increase.

If you own rental real estate with a fixed mortgage rate, interest rate increases don’t really bother you. In fact, they can help. If mortgage rates rise, more people must rent than buy. Rental demand increases and rents rise.

Taxes

Sure, you must pay property taxes if you own real estate. However, if you’re doing your job, you factor those into your purchase of rental property and the positive cash flow you project to receive. Sure, they can go up, but you may be able to offset that with rent increases.

One major difference is in using the IRS 1031 Exchange rule for growing your real estate portfolio. While the stock market investor will pay capital gains taxes in the year they sell a stock at a profit, real estate investors get a major break. Using this IRS rule, you can sell and roll the profits into another investment and forego paying capital gains. It’s complicated and the rules are strict, so an accountant needs to be involved.

I’m not trying to push anyone into real estate who is afraid of it or not suited for a landlord’s duties. But, there definitely are reasons for real estate as a diversification strategy.

 

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Real Estate Investing, It Isn’t Just for the Boys Anymore

When 51 year old stay-at-home mom and part time piano teacher Gena H. from Washington State woke her husband up at 1:15 AM and said “I want to be a real estate investor,” he patted her on the shoulder and said, “that’s nice dear.” In the morning he shared all the reasons he believed it could not work for her. Fast-forward a few years and Gena, who obviously didn’t listen to the husband she adores, is a successful and very profitable investor. She has in her words “dramatically changed the financial course for me and my entire family.”

Stories like these are coming to my attention at a rate like I’ve never seen in my well over 20 years of investing. I’ve been fortunate to watch countless people go from real estate observer to successful real estate investor. But never before has there been such a massive wave of women taking ownership of the household finances using real estate.

In watching this transition, I believe it’s due to a couple of primary factors. First, we all know that the real estate market peaked like never before around 2006, and then the bubble burst and the market crashed. It reminded me of flying down Space Mountain in Disneyland. However, after the bottom comes the inevitable shift in the market, when it begins trending back up as we are seeing now. This is truly a magical time for investors.

Second, I think we are heading into the years of more empowerment of women. I could be criticized for saying this, but I think it’s less about women’s liberation, as that was yesterday’s news. I see it as more that women are just losing any hesitation at all to do anything they want. I think it’s a very positive trend for our country. I watched my single Mom struggle to support my sister and me growing up, so I’m always cheering for the ladies. I think we are entering a whole new era of advancing equality. But that’s for another story.

Jen G., a single Mom, was working in an accounting office with no windows and too little pay each month to support her and her son. Frustrated, stressed and wanting a new path in life, she decided to reinvent herself through real estate investing. Friends and family told her real estate investing was for people with money and experience. Some even expressed resentment and actively discouraged her. Recently, Jen called to tell me: “Just six months after starting, I got to walk into my office and tell my boss I no longer needed her services!” Jen quit her job and has done more than 185 real estate transactions so far and feels she is being the Mom she always wanted to be.

Tammy R. lives in a crazy fast moving market in CA. This is a market where even seasoned investors are afraid to take the plunge. However, this determined Mom of four, who was homeschooling her children when she started investing, refused to yield to her fears. She didn’t listen to her husband who said “it won’t work for you.” Like Jen, she didn’t have a ton of money to start, but researched a method called “wholesaling.” Wholesaling is matching up monied investors with good deals, and making money in the middle. On one transaction alone she made more then she did the prior two years, and she is currently working on her 23rd deal. “You just can’t let the naysayers spoil your dreams” she said when asked about the secret of her success.

Whether you’re in a strongly rebounding large urban market like Tammy, a more rural and smaller city in Alabama that’s coming back at a slower pace like Jen, or somewhere in the middle like Gena in Washington State, it doesn’t matter. The current state of all of these markets is opening up endless opportunities for investors to gain the knowledge to profit and who aren’t afraid to go for it.

Real estate is my life, and with over 20 years of non-stop investing I’ve personally experienced that there is always a profitable strategy that fits the current market cycle. However, the massive spike in real estate, followed by the inevitable and dramatic crash, is setting up a solid rebound. I truly believe this is the greatest time for everyone who would like to secure a better future to get educated, learn from those who are doing it, and jump into real estate investing.

I’m currently doing 30 to 50 deals every month all around the country, in 9 states actually. I’m working with women like Gena, Jen and Tammy, as well as a slew of others who are crushing todays shifting real estate market rather then complaining about it.

Maybe real estate investing is cooler and more possible then you think. All I can say is that the boys better step up.

Follow Dean Graziosi on Twitter: www.twitter.com/deangraziosi

 


 

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Real-Estate-Investment

5 Trends That Will Move Real Estate Markets This Week!!

Enjoy Labor Day … because these five trends may rock the real estate world the rest of the week:

 

  1. Who’s remodeling? See profits at HD Supply, Restoration Hardware.
  1. Homebuilding profitable? Watch Hovnanian earnings, out Wednesday.
  1. Look at real estate slice of Producer Price Index.
  1. Are rates moving? See Freddie Mac mortgage survey, out Thursday.
  1. Who’s borrowing? Watch mortgage bankers’ application survey, out Wednesday.

 

            Source: Jonathan Lansner – writer OC Journal

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Dita Von Teese, queen of burlesque from Irvine, buys Tudor hideaway with ‘secret garden’

 

Burlesque star and onetime Playboy cover girl Dita Von Teese – Heather Sweet when she was growing up in Irvine – has bought a Tudor Revival-style house in Los Feliz for $2.83 million.

Built in 1927, the 3,200-square-foot retreat boasts a round castle turret, Gothic arches and center medallions encircling feudal fixtures. The property, on a third of an acre in a “Sherwood Forest” setting, includes a “secret garden,” according to listing agent Peter Reyes of Keller Williams Realty in Los Feliz, near Hollywood.

The four-bedroom house has slate and hardwood floors. A dark-bottom swimming pool and detached pool house with a wet bar and dry sauna fill out the grounds.

Real estate website Trulia recently broke news of the sale, which closed in late July. The home was listed in May at $2.99 million.

Von Teese, 42, whose family moved from Michigan to Irvine when she was 12 years old, also lived in Costa Mesa and Huntington Beach. She left Orange County in 2001, became a Playboy cover girl the following year and went on to marry and divorce heavy metal rocker Marilyn Manson.

Her recent, over-the-top “Burlesque: Strip Strip Hooray!” national tour showcased routines inspired by old-fashioned glamour, a bathtub-sized martini glass with 250,000 Swarovski crystals, a blinged-out mechanical bull, her hallmark corsets and custom stilettos by Christian Louboutin.

She also teamed up with the designer to release a line of lingerie.

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Source:

 Image – Dita Von Teese, a burlesque star who grew up in Orange County, has bought a 3,700-square-foot, Tudor Revival-style house in Los Feliz.
COMPOSITE BY MARILYN KALFUS; INSET: DANIELLE BEDICS; TRULIA
Leslie Sargent Eskildsen is an OC real estate agent. leslieeskildsen.com.  http://www.ocregister.com/lansner/irvine-679168-teese-house.html
Marylin Kalfus OC Journal Staff Writer

 


 

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Renters Insurance

How Renters Insurance Will Help Cover The Loss of Your Valuables

Red Rock Management (www.RedRockManagementLV.com)  encourages all tenants to purchase renter’s insurance.  Many tenant’s inquire as to why we ask them to purchase rental insurance.  Below is an outline by Farmers Insurance as to the importance of having renter’s insurance.

HOW RENTERS INSURANCE WILL HELP COVER YOUR VALUABLES

Imagine a moment you’ve just returned home from a long day at work to find there’s been a fire. Everything you owned has been destroyed: your flat-screen TV, computer, furniture, books, game consoles, CDs, jewelry, collectibles and clothing. Where will you stay until your home is renovated? Who will pay to replace all your belongings? Not your landlord.

A Renters insurance policy can be the answer. It provides coverage to help you to replace your lost or damage items. If you suffer a covered loss, we’ll reimburse you for your lost or damaged items. And if the loss makes your home uninhabitable, we’ll also pay for the additional living costs for hotel, meals and related expenses.

Renters policies are affordable, generally ranging from $15-$25 each month. For less than a dollar a day, you can have valuable insurance coverage!

BENEFITS

– Personal property coverage

– Personal liability coverage

– Additional living expenses

OPTIONAL COVERAGES

– Personal articles floater

– Jewelry, furs, fine arts

 

 


 

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House with cash

Buying with cash saves cash – and time

An article by Real Estate Agent Leslie Sargent Eskildsen, discusses the differences of Buying a house with cash or taking out a loan.

She writes, “Just recently, a reader asked me about the difference between buying a house with cash and buying a house with a home loan. That’s a great question!

Here’s a rundown of the differences.

Buying a house with cash saves you money. You don’t have to pay for an appraisal. That doesn’t mean you can’t or shouldn’t pay for an appraisal, you just don’t have to.

Buyers using a home loan have to pay for an appraisal. The lender requires an unbiased, licensed appraiser to give a thoroughly researched and documented report on the value of the home so the lender is confident you’re paying the right price and that they are making a sound investment.

A home buyer paying cash also saves on other lender related costs including a credit report, loan origination fee, flood certification, tax service fee (the lender has to be aware of any back taxes owed) lender required title insurance and any points a borrower chooses to pay to bring down the interest rate on the money borrowed.

In addition, a cash buyer is not required to purchase home owner’s insurance.

When you get a home loan, the lender requires evidence of insurance, and you pay for a full year up front.

I’d never recommend not buying home owner’s insurance. However, when you’re buying a house with cash, you can work it out directly with your insurance carrier as to the frequency of payments.

When you are buying with cash, you also save on escrow fees including the loan tie-in fee, the loan documentation prep fee, and the notary fees (you’re not signing anything that needs to be notarized).

The more subtle aspects of buying with cash include the need to prove you have the cash up front with your offer. This means you need to submit, up front, bank statements showing sufficient funds to cover the price.

If you are flush with tons of cash, you may want to keep a bank account that only has a balance large enough to cover the cost of the house and your share of the escrow fee and a processing fee.

You have no need to show the seller how much you have overall.

You get to keep your financial status a secret, as opposed to a buyer getting a home loan. Those who buy with a loan have to provide full financial disclosure to the lender to qualify for the loan.

There’s much less paperwork required when buying with cash. You can also close escrow much more quickly. You do not have to budget time for the appraisal review, underwriting review, management review, and all the time to prepare and review loan documents.

There’s also the advantage of representing less risk to a home seller. If you show the seller the money up front, and if your offer is a figure that is acceptable to the seller, you will probably win out over a buyer who needs a loan. Cash is much easier and less risky.”

 

Source: OC Journal – leslieeskildsen.com.

 


 

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Real Estate Finance

Is property management affordable for single-family rental owners?

Not only is property management affordable, using a property manager can actually increase your property’s overall profitability. Most property managers charge a small percentage of your monthly rent in exchange for comprehensive services that range from finding and screening tenants, to handling emergency maintenance, to keeping the books and preparing year-end taxes.

Source – All Property Management

 


 

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Now’s the Time to Buy for Some

Now’s the Time to Buy for Some
For some, now is a great time to buy real estate, especially Las Vegas real estate. Home
values are poised perfectly for an upswing in appreciation. There is a demographic of people
who can really score in this market. According to Yahoo:
“Dual-income customers should definitely buy a home now,” says George Kaiser, vice president
of banking operations for Northbrook Bank and Trust and West America Mortgage Co., its
sister company. “People with assets in reserve and a credit score of at least 680 should buy
as well. Anyone with a credit score less than that will have to verify their income.”

For others it is also a great time to get involved. For some it’s not. If you need help
determining whether or not the Las Vegas real estate market is right for you now get in
contact with your Las Vegas Realtor at www.RedRockManagementlv.com.


 

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3d Property insurance concept

Is Your Home Insurance High Enough?

Is Your Home Insurance High Enough?
The news commonly reminds us of unexpected disaster and loss of home. This Wall Street
Journal article suggests we get our insurance in order. Many of our homes may not be insured
properly for possible issues. We don’t intend to scare home owners but want to point out
that there are ways to verify if the home is properly insured or not.

Las Vegas is known for its storms during the monsoon season. A community can be flooded
quickly. There is a resource home owners can use to determine whether they live in a flood
plain or not. It is a web site with all of the flood zones outlined. Las Vegas Realtors can
provide you with that resource.


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