Why Invest in Real Estate?

Hi, everyone. Welcome back to my video real estate blog. Today, I wanted to talk about something I am very passionate about: real estate investment. Investing in real estate can reap a lot of benefits.

Why invest?

1.    It’s safe. What I mean is, investing in real estate is safer than stock, equities and bonds.

2.    You can control it. When you purchase a property in your area, you have the ability to oversee it.

3.    Hire a great property manager. Some of you may not be the property management type and I understand that. I can recommend fantastic managers for your property to make sure everything runs smoothly.

4.    Rate of Return. The average rate of return on stocks, bonds, etc. is around 5-10%. Now, let me give you an example of a recent real estate investment: the client bought the property in total for $18,000. If he charges $700 per month for rent, he has a gross of $8,400 a year. Now, to come up with the net profit, take about half of that. His net profit for the year is $4,200. That’s a 23% return. What else can you invest in to get such a great return?

5.    It can be tax-free. Through a self-directed IRA, that 23% and anything else you profit from later on, can possibly be tax-free for life.

These are just a few of the reason I strongly believe in investing in real estate! If you have any questions, please give me a call 502.458.2722

Thanks for watching!

For-Sale-by-Owner Tips

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A lot of people want to sell their home by owner because they want to save on the real estate commission. That’s understandable. Let’s first look at the facts. Nationally, the facts are that 90% who try to sell by owner end up hiring a realtor. A good realtor who advertises will get you 10 to 15% more for your house than if you would have sold it yourself, even if you’re paying a 6 or 7 % commission. You therefore come out ahead. Here are other things to consider.

 

You have to price it right. Owners often don’t understand pricing and are not objective because they are attached to their homes, so they price it way too high. To avoid pricing yourself out of the market, get some ideas of what the price should be. Get an opinion from a realtor. After all, it’s free!

Get your home ready. First and foremost, make sure you have fresh clean flooring and fresh paint because buyers make up their minds in the first 30 seconds. First impressions count.

  

Market your home. Two things sell real estate—price and marketing. Marketing is a struggle for those trying to sell their home on their own. You have to figure out a way to make your property stand out, whether it’s using the Internet, paper, a sign in your yard, etc. Marketing sells properties.

Don’t take it personally. When people look at your house, let them take their time and if they have anything to say, don’t take it personally. 

Be ready to negotiate. When you negotiate with a buyer, you have to do so in good faith and know what their real estate goals are. Never reveal why you are selling, and if they ask, say it’s personal because you don’t want to give them leverage. 

Know the steps in selling. You have to get the home ready first. When you have a buyer, make sure the buyer is prequalified with a letter from their lender. It’s not too much to ask. If a buyer isn’t prequalified, suggest a couple of lenders for them. Remember you need to negotiate a lot of things besides price such as inspections, the closing time, etc. When writing the contract, you’ll need to discuss such issues as the price, down payment, inspection time and closing time. Once you get the contract written, the inspection period is a big negotiation time where the buyer will have seven to 14 days to perform inspections on the house, so be ready to negotiate. Knowing when to move is also important, so don’t move out before or on the day of the closing. The buyer and seller should mutually agree on where the closing should take place. Last, but not least, have your documentation ready, such as seller’s disclosures the buyer needs to sign, lead-based paint forms, etc.   

If you dare to sell your home by owner, we can give you some advice. You can reach us at (502) 458-2722 or jp@jpsold.com. 

Trends on Both Sides of the Fence; Here's What is Happening

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We are definitely seeing a plethora of lengthy reports about the real estate market these days, whether on a national level or honed in on a particular local area.  But the fact remains that the market is in an unstable state and keeping track of indexes, watching over home sales and how they fluctuate from month to month or year over year, is giving us a glimpse into what to expect.  It is these very measures that allow us to foresee the greater trends that exist so we can act accordingly.  Here, according to which side of the transaction you are on, are some happenings in the industry and what they mean to you as a home buyer or home seller.

Buyers Don’t Beware
Buyers Trend #1
Foreclosures have slowed down. 

For the most part, whatever foreclosures that had flooded the market have either slid into transition stage, where the banks are reviewing documents and going through the sometimes lengthy review process that comes before accepting applications to purchase a foreclosed home – or there are fewer properties available.  There was indeed a flood of distress sales in the market that occurred in the recent past but banks have now shifted away from foreclosures and they are favoring short sales instead. Short sales are a far better option for many reasons, but the two main benefits remain 1. Homeowners are either able to retain some of their credit while buying back their home at less than its current value and 2. Banks are spared the added expense and risk that goes along with foreclosures.

Buyers Trend #2
Prices remain historically low.

One thing that has not changed for the duration of our current recession, even as we have headed into a double-dip economic downturn, is that as a result home prices continue to be at their lowest level in years.  In the S&P Case-Shiller Home Price Index, it is indicated that housing prices these days rival a 30-year low and they seem to be hanging there in place as the market remains unsettled. Even though prices are as low as they are, the fact remains that these transactions that are taking place are happening with regular homeowners and simple sales deals, rather than banks for foreclosure sales.

Buyers Trend #3
Rates are still at an all-time low.

Interest rates, depending on the day, are still as low as a little under 5% for the average 30-year fixed rate mortgage loan.  For potential homeowners and those who want to move up or seize the opportunity to move into a luxury residence, this could not be a more perfect time to invest in that property.  For those people willing to remain in the mix for the long haul, the current market trends will predominantly not affect them in terms of return on investment.  The market will indeed bounce back, whether 6, 7 or even more years later.  And when it does, you will end up having much more house (in terms of value), while still paying that very low interest rate.
It’s a Small (Selling) World After All


Sellers Trend #1
There are lots of buyers looking to buy. 

When you are selling your property, the more the potential buyers the merrier.  With the number of buyers who are looking for a great deal your chances of selling are a lot better these days and if you have a home that has unique or upgraded amenities you can further avail the opportunities that will come with having that edge over other sellers.

Sellers Trend #2
Inventory is down. 

With the number of pending sales in limbo on a day-to-day basis, inventory figures are relatively low.  This is great news for people looking to sell their properties, because that translates to more buyers for the taking and the ones that do come looking at your property are far more impressionable.
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To sum things up, right now is a great time to be a buyer – especially with all the incentives out there ranging from super low interest rates to housing prices that are closer to those from 7 or 8 years ago.  If you can afford it now, buy now.

As a seller, the main advantage you have these days is that there is less inventory for those buyers out there looking for a deal now – which means you have the edge and better chances of selling that property.
The trends keep fluctuating a bit here and there but the major things remain:  low rates, low housing prices, low inventory.  And now is the time to seize the opportunities that lie within these trends.