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Category: Real Estate

  • Navigating the Home Buying Journey: Step-by-Step Guide and Anticipated Milestones

    Navigating the Home Buying Journey: Step-by-Step Guide and Anticipated Milestones

    Infographic provided by The Sherry Riano Team, a leading FHA loan lender

    Embarking on the journey to purchase your first home can be a daunting task but breaking it down into manageable steps can make the process more approachable. Here’s a brief overview of the home buying experience and what you can expect.

    It’s crucial to recognize that the timeline from initiation to closing on a house varies depending on market conditions and various factors, spanning from a brisk 15 weeks to a more extended eight months or beyond.

    Begin by assessing your financial situation, considering factors such as applying for an FHA loan and evaluating your credit health. Having a clear understanding of these aspects at the outset facilitates securing funding and starting the process on a solid foundation.

    Once you’re ready—or if you seek further insights into financial aspects—reach out to a mortgage lender for pre-approval. In today’s seller’s market, possessing a pre-approval letter is pivotal in demonstrating your suitability as a buyer. Additionally, a lender can assist in establishing your initial budget and addressing any loose ends to secure a favorable mortgage rate.

    Upon securing approval and enlisting a real estate agent, the next step is to explore available listings. Whether you rely on the realtor’s suggestions or online listings, it’s advisable to refine your search based on parameters like price range and location. Maintaining realistic expectations streamlines the overall process.

    Once you’ve identified potential options, schedule property tours. While virtual tours offer convenience, personally assessing the property before committing is essential. When ready to make an offer, be prepared for potential competition. Collaborate with your realtor to negotiate with sellers and navigate contingencies to secure your desired home.

    Upon acceptance of your offer, you’ll enter the due diligence period. This involves scheduling a home inspection and appraisal. While these steps can be expedited, they should not be overlooked.

    The subsequent underwriting process, which may take days or weeks, involves a thorough review of your finances and property details. Responsiveness to the lender and underwriter is crucial to keep the process moving smoothly.

    Finally, the closing phase arrives. Once the loan is finalized, both parties review the deal, a final house walkthrough occurs, and, if everything aligns, the last paperwork is signed, funds are transferred, and you receive the keys to your new home.

    For a detailed breakdown of the home buying timeline, explore the accompanying resource to deepen your understanding of the process.

    Author bio: With over 20 years of experience in the mortgage industry, team leader Sherry Riano exudes a deep passion for helping families in North Carolina, South Carolina, Tennessee, Virginia, Florida and Alabama financially obtain their dream home. Ensuring its clients and business partners are top priority, The Sherry Riano Team consistently takes into consideration each customer’s needs and goals to build a lifelong relationship. With a specialized approach to self-employed borrowers, first-time homebuyers, jumbo loans and VA loans, The Sherry Riano Team has knowledgeable advocates for any customer with which it partners.

  • Is Madison, Wisconsin a Good Place to Invest in Real Estate?

    Is Madison, Wisconsin a Good Place to Invest in Real Estate?

    Almost every metric points in the right direction for the housing market in Madison, which is a positive sign. Even though home prices are going up at a historically high rate, the growth of the local real estate market is still being driven by how affordable homes are. In fact, Madison’s real estate market is cheaper than most others in the country.

    Homeowner Woes?

    When it comes to meeting their monthly mortgage responsibilities, homeowners in Madison have become used to allocating around 9.8% of their income. However, the typical homeowner throughout the nation devotes more than 15% of their salary to the same thing.

    Because prices are low in Madison, it seems like a good idea to invest in real estate there. Having said that, one of the best places to locate houses at lower prices is in markets that are currently in trouble.

    According to RealtyTrac, the property market in Madison has more than 377 properties that are in some stage of the foreclosure process. This means that the properties are either in default, have been seized by the bank, or are in the process of being prepared for auction. Despite the fact that the number of foreclosed homes in Madison has decreased by 33% when compared to the previous year, there are still a lot of good bargains to be had.

    Foreclosures = Investment Opportunities

    The savings that are available on the distressed market should inspire those who are interested in investing in real estate in the Madison area. Homes that are not in difficulty are selling for an average of $199,800 right now. Properties that are in a state of distress, on the other hand, often sell for an average of $152,500. That works up to an average savings of 24%, or $47,300 per home, depending on how you look at it.

    Because they make up the bulk of the already distressed market (56.2%), foreclosures that are now up for auction in Madison will be profitable for real estate investors. This figure is lower than it was this time last year by more than 22%. Pre-foreclosures account for 29.7% of Madison’s foreclosures, making them the city’s second most common kind of property loss. All of the foreclosed homes that are still on the market are held by banks. Each of these areas should have a lot going on when it comes to investing in real estate in Madison.

    Growing Economy

    In the past few years, the growth of the economy has helped the real estate market in Madison a lot.  Zillow’s Market Health Index gives the city’s metropolitan real estate market a score of 9.1 out of 10, which means it is in great shape. Because of the strength of the property market in Madison, the percentage of homes with a negative equity position is at an all-time low. Only 10.8% of the residences in the region are in the red, which is far lower than the national average of 16.9%.

    Madison, Wisconsin, has, for all intents and purposes, grabbed the recovery by the horns and ran with it. Since the home market in this area is one of the hottest in the nation, real estate investment in the region should continue to profit from the success of the housing market in this area.

  • Real Estate Liabilities: A Guide for Investors

    Real Estate Liabilities: A Guide for Investors

    Real estate liability refers to the unavoidable risks associated with owning real estate. As a landlord, even if you don’t live on your rental property, some of these liabilities are not transferable. That means you still have responsibilities to your tenants, and if you fail to meet up, you could face legal suits.

    One of the habits of successful investors is protecting their assets and avoiding liabilities, so their business can continue to thrive.

    This article is a guide for investors looking to understand their liabilities and how they can avoid them.

    Common liability issues a landlord might face

    When it comes to owning real estate, liabilities come in all shapes and sizes. Managing a rental property requires several interactions and the completion of several tasks, so liabilities are vast and multiple. But we can streamline them:

    Harm to one of your tenants

    Home accidents are avoidable but inevitable, and when they occur on your property, you could be at fault. Loose steps, dark hallways, and other minor defaults that you’ve been planning to get around to could be the basis of a lawsuit.

    As a landlord, your foremost responsibility is guarding your tenants’ safety, and if your negligence can be linked to an injury, you can expect to pay compensation. Some claims, such as lead paint liability, are so detrimental they can put you out of business. You’ll find that it’s easier to prioritize your tenants’ health by fixing a faulty heater rather than footing the bill for their medical appointments and attorney fees.

    Loss of property

    Your duty as a landlord extends beyond protecting the person; you’re also responsible for safeguarding their property. If water floods one of your tenant’s apartments because you failed to carry out a routine inspection of your pipes, you have to answer for it. You’ll have to cover the damages to their furniture, appliances, and personal belongings that might have suffered in the mishap.

    Most of the time, repairing or replacing the item should get you off the hook. But if the renter wishes to sue, you could be facing the added expense of attorney fees and their awarded compensation.

    Misinformation

    Another liability issue you might run into as a landlord is misinformation. Making false claims is wrong, but it’s also a punishable offense that could land you in some hot water. Yes, it might be tempting to add a few amenities you don’t have to attract tenants. Once they fall in love with the place, it won’t matter.

    While it might work out that way, it could also end terribly. Intentionally misleading and essentially tricking your tenants could cost you a significant amount of money in reparation fees if they decide to go to court.

    You could also look at the misinformation liability from the business angle, which applies to adverts and public statements. Here, you have to answer your competition. So a logo, tagline, or photo that is too close to theirs or qualifies as defamation falls under public misinformation.

    How to avoid liability

    Liabilities are inconveniences that expose your business to punitive damages. Protecting yourself from these liabilities allows you to channel your resources like time and money to manage your property efficiently and other investments. As the saying goes, “prevention is better than cure.”

    Keep meticulous records
    One of the easiest ways to avoid a liability problem is to keep meticulous records of the myriad of interactions you experience as a landlord. File away copies of your contract with short-term and long-term employees, and save receipts of rent payments and other charges. You should also take photographic and video graphic evidence of your units before tenants move in, during routine inspections, and after moving out.

    Having physical and digital copies of your records in the cloud gives you a layer of protection from false testimony. It’s much easier to vindicate yourself when you have proof.

    Include appropriate disclaimers

    Steer clear of misinformation and other types of liabilities by including appropriate disclaimers where necessary. Under federal law, state-required disclosures dictate what a landlord should pre-inform their tenants about. It consists of using health hazards such as lead-based paint, existing property damage, and other tenancy charges.

    You can extend this to your interactions by including disclaimers about the time and date of the photos in your listings. And also in scenarios where you have to consult an external expert, such as an accountant, to procure information about the property on behalf of your prospective tenant.

    Draft your landlord-tenant agreements with caution
    When drawing up your lease agreement, you need in-depth knowledge of landlord-tenant laws in the country and your jurisdiction. Ideally, it should protect both parties, but did you know you can make specific provisions for yourself to ward off liabilities? You can include disclaimers and add coverage for your attorney fees.

    Conclusion

    Landlords have many liabilities to navigate, but you can successfully run a drama-free rental business with the right info. Of course, you don’t have to go through it alone; if you are a beginner, hire a professional to manage your investment property and minimize the risks of owning real estate.

    Sometimes, despite your best efforts to understand and mitigate the risks, you might still face a lawsuit. Getting liability insurance gives you a layer of protection from the damages you might incur during or after a court settlement.

     

     

  • Five Tips for Financing Investment Property

    Five Tips for Financing Investment Property

    Real estate investments have the potential to provide a steady income for investors—presuming they can get their hands on the financing required to get in the game. There are many financing options available, and the primary differences boil down to how much the loan is going to cost the investor. The higher the cost of the loan, the lower the long-term income potential of the investment. If you want to maximize the profitability of your venture, getting the best mortgage is critical. Here’s what you need to know to get the best loan possible.

    1. Tidy Up Your Credit

    A credit score in the mid 600s may be enough to qualify for a basic investment loan, but the terms will not be on the investor’s side. With low credit scores come high down payments and high interest rates, neither of which will help your profitability. The higher your credit score, the better the terms of the loan—and a score over 740 will typically qualify borrowers for the best terms available from most lenders.

    2. Organize Your Financial Documentation

    Most lenders want to see that you have either the income or the available cash to cover your existing obligations and the new loan you’re trying to secure. You’ll be allowed to count a certain portion of the investment property’s income in your application, but having the right documentation to show the rest of your income and cash reserves will speed up the process. Gather your tax returns from the last two years, including W-2s, 1099s, and other income statements, along with bank statements, recent pay stubs, and anything else relating to your current income—especially if you have new sources of income that are not on previous tax returns.

    3. Reduce Current Debts

    Most lenders consider your debt-to-income ratio to make sure you’re not using all your current income to pay obligations and have nothing to spend on food and the electric bill. If you’re unable to boost your income levels, paying down debts is the way to go. For borrowers who already meet the minimum requirements for a lender, reducing that ratio can help you get better terms for your loan.

    4. Document the Property’s Cash Flow

    Most lenders are primarily concerned with your ability to repay a loan. Some lean heavily on your personal ability to pay, as demonstrated by your past (i.e., your credit score) and your current income levels. Others, called asset-based lenders, will be satisfied with a property that can demonstrate a high debt service coverage ratio, or the ratio of the projected income of the property to the total amount of the mortgage payments, taxes, and insurance. In essence, the more income that remains once the debts have been paid, the higher the score; the higher the score, the better the terms of the loan.

    5. Cast a Wide Net

    From an outside perspective, it may seem like most lenders are the same and that loans do not vary considerably from one lender to the next. The truth is that there can be significant differences from lender to lender. First, the fees associated with the mortgage will vary, and even a fraction of a percent difference in interest rates will have a major impact on the long-term cost of your loan. Borrowers should take the time to apply to several lenders and include conventional lenders as well as asset-based lenders so they can compare and contrast their options.

    Protecting Your Investment

    Once you’ve done the hard work of finding the best loan for your investment property, the next step is to maximize the profits from that investment. Many first-time investors are overwhelmed with the day-to-day operation of rental properties, especially if there are multiple units and many tenants to juggle. It can be easy to make costly mistakes in the initial months, especially if your property has vacancies, and you don’t have the marketing skills to attract tenants or the screening skills to choose the right one. New investors may find that working with an experienced property management company will help ensure the venture gets off to the best possible start to provide long-term income and security.

  • A Complete Guide on REIT

    A Complete Guide on REIT

    Every individual looks for expanding his/her investment portfolio. With a variety of investment options available in the market, it often becomes difficult to choose which investment one should opt for.

    There are a lot of financial characteristics to consider before building your investment portfolio. These things include tax rates, liquidity, gains, etc.

    Real estate investing can be a major impetus to your financial portfolio. It can quite literally accelerate your journey to riches if done correctly.

    Most of the time, real estate investing is often associated with owning properties and leasing them out. However, there is more to real estate investing than just this. Real Estate Investment Trusts (REIT) are an important component of real estate investing.

    What is a REIT?

    The full form of REIT is Real Estate Investment Trust.

    It is just like a mutual fund. So this brings us to our question, what is a mutual fund?

    Mutual funds essentially make use of pooled money from a variety of investors to buy financial assets like stocks, bonds, etc. Then, the gains from these financial assets are divided proportionately among the mutual fund investors.

    Similarly, REIT pools money from a variety of investors to buy real estate and then generate income. It allows individual investors to earn a portion of that income-producing real estate.

    These real estate portfolios are made with multiple property types. REIT indulges in buying properties and leasing the real estate to other companies/individuals. The income which is generated as a result of leasing out or selling is then distributed proportionately among shareholders.

    Also, REIT is specific to one particular locality of the town/city. Therefore, you must choose the specific location you prefer to invest in.

    Also, REIT is of different types, categorized into many sections including medical REIT, office REIT, residential REIT, retail REIT, etc.

    Healthcare REIT includes nursing homes, medical offices, hospitals, and clinics. Office REIT includes business offices, business districts, etc. Hence, there are a lot of varieties of which REIT available in the market.

    Advantages of REIT

    Everything in life has advantages and disadvantages just like it is said there are two sides to everything: a bright and a dark side.

    Any and every financial decision requires careful analysis before investing. Gauging the pros and cons before going for REIT is very fundamental.

    These are some of the advantages of REITs:

    Diversification

    Diversification is the key mantra underlying investing.

    One of the first things to keep in mind while building an investment portfolio is to diversify it. The old saying, “Don’t put all your eggs in one basket” holds true here.

    Putting all your money into a single investment is never a good idea.

    Rather than investing in one stock or one mutual fund, investing in various assets is a better way to guard against market fluctuations. REITs are very similar to mutual funds in their approach and thus are a good option to add to your investment portfolio.

    Time

    REITs can prove to be very good investment options when invested in for a long period of time. Also, REITs come with a lot of time flexibility.

    Investing for long-term should be your priority if you wish to earn some major gains.

    Liquidity

    While it is easy to believe that selling houses is difficult, it is not entirely true.

    When you invest in a REIT, selling houses and getting back your money is way easier. It is a relatively liquid way of investing in real estate.

    Simple Tax Calculation

    The gains on REIT are charged for taxes just like other incomes. There is no complexity in the calculation of taxes and the whole procedure is really simple.

    Disadvantages of REIT

    While there are a lot of convincing arguments in favor of REIT, there are certain downsides to it as well. Before investing, one should think about the downside as well. Here are some disadvantages or drawbacks:

    Property Taxes

    While property taxes would not affect you directly as an investor in REIT, they would however have an indirect bearing on your gains.

    How?

    Because property taxes can decrease the earnings you get from the REIT.

    Also, property taxes vary from place to place. So you must keep a check on the property rates in the locality you are willing to invest.

    Interest Rates

    Whenever interest rates go up, REIT prices dip. While some people may consider this as an opportunity to sell and earn good money, it is important to keep in mind your long-term investment goals.

    The decision to sell or hold your REIT should be based on your financial goals rather than the market situation.

    Tax

    The gain from REITs is often considered as an ordinary income instead of as a capital gain. Hence, the gains from your REIT are charged at a higher tax rate than capital gains.

    How to proceed with REIT?

    Now that you’ve gauged the advantages and disadvantages of REITs, you can choose whether it’s a good option for you to invest in.

    But how would you approach REIT?

    Research

    Similar to any financial investment, you must do an ample amount of research. Read about which companies are better, which REITs give better returns, and which localities are better to invest in.

    REITs or Mutual Funds that invest in REITs

    You can either invest directly in REITs or choose to invest in mutual funds which then invest in REITs further. The second approach is better for those looking for little effort and greater gains.

    Conclusion

    On the off chance, you are looking to increase your income level and up your investment game, Real Estate Investment Trust is made for you.

    Turbocharge your investments with this simple technique. If you have big-time aspirations for your financial situation, it is time to diversify your portfolio with real estate.

    If you are willing to invest in real estate but wish to avoid its high risk, lack of liquidity, etc., then you must opt for REIT after carefully analyzing its pros and cons.

    I hope this helped!


    By HomeLight Homes

  • Why investing in London properties now is a great idea

    Why investing in London properties now is a great idea

    Investment’ has turned to be happening one all over the world. Even though there is a jinx pertaining to Brexit and its aftermath, people are eager to invest in the housing market. Moreover, the political situation is expected to reach a steady pace in March 2019. Whatever form Brexit is going to take, most of its fascinations to the international community do not depend on the EU membership remotely.

    Across the UK, a housing cycle is underway, said Richard Donnell, director of housing market analyst Hometrack. On one side, growth is powering ahead in cities such as Manchester and Liverpool. On the contrary, it is flagging or going into reverse in places like Aberdeen and parts of London. There are also other parts of the UK that are yet to witness the ripple effects of formerly stratospheric growth in London and the Southeast. Nearly 5 cities are 50 percent higher in terms of price when compared 10 years ago.

    The number of housing transactions has been stagnant at the same level for four years — around 1.2m per year. But in London, where the market slowdown has been particularly witnessed in central or “prime” areas, the turnover is much down by 20 percent over four years. Most of the sellers are coming to terms with the fact that there are fewer buyers on the ground, and today’s house hunters are remarkably making higher demands of vendors.

    The UK is known for possessing a talented workforce accompanied by highly flexible labor laws and also a purely accommodative attitude to the industries of dispute. All these when put together make this country the most preferable one to invest in the year 2019. There are also many hotspots considered to be highly viable for investment. The most predominant one being Birmingham, Liverpool, Manchester, New castle, Slough etc.

    Birmingham, Liverpool, and Manchester:

    Known to be the top-notch investment destination in the North East these places are often targeted by the property investors as they offer a guaranteed return. They also play a vital part in the economic growth of the country, by and large.

    Newcastle:

    This is also one of the most sought after place for investment. This area has been into renaissance owing to the amalgamation of the Northern Powerhouse initiative and extensive investment in digital infrastructure, and ultimately paving the way to lay hands on multifarious global opportunities. Hence, it has attracted renowned industries such as pharmaceutical, finance, and technology

    Leicester:

     Its geographical location contributes to a large extent for Leicester to be at the top of the UK’s economic growth table. Its accessibility to airport symbolizes an easy reach for any European destination within 4 hours without having to go via London Heathrow. It is also digitally sound and is working hard to diversify its economy.

    Buying an off-plan home especially in the central London is a great way for investors and also owner-occupiers to make their home in a newly built residence with all the modern comforts set within a historically rich capital city which accompanies with own renowned perks.

    Slough

    Even though high prices and a sluggish market may put many investors off the London housing market, at least for some time, Slough could be very much worth a look owing to the combination of the arrival of Crossrail as well as the forthcoming Heathrow expansion. Both of which are likely to enhance the appeal of people towards Slough. The main reason is that people always search for accommodation which is really affordable and it should be also in a convenient traveling distance of London and beyond. Even, there is also scope for better employment in the future.

    Like Slough and other areas, even Norbury has also turned out to be a most sought after area and there are many properties for sale in Norbury. These properties pave way for a better investment in the long run.

    Conclusion:

    It is always better to look at the pros and cons before making an investment in real estate as they always personify long term growth. Hence, it is better to invest by making a thorough study of the market.