The Benefits of an Open House

open-houseThere are many ways to get buyers interested in your home, one of which is by holding an open house. By doing so, you let the potential buyer to explore the house and see how it looks like and what it feels like to live there, which can somehow help to persuade the potential buyer to buy the house. This is a pretty good reason in itself to hold an open house, but there are also other benefits worth mentioning.

Build a Buzz around Your House
By putting up an open house, you are opening your home to people, both those who are interested to buy it, as well as those who are not and are simply looking around. This creates a buzz around your home, and one way or another, this is bound to spread as those who’ve seen your house are bound to tell it to a friend, who will tell it to their friends, who will tell it to their friends… well, you get the picture.

Preparation is Key
If you hold an open house, you will be able to prepare the whole place before the visitors come. In the traditional showing, brokers and potential buyers can come anytime they want in the day, and thus it is not common for them to catch you with the floor dirty and the kids toys all over the place. However, in an open house, you can do some thorough cleaning that will keep the house clean for as long as potential buyers come. When it comes to selling a house, preparation is key, and an open house will give you more than enough time to prepare.

Stand Out from the Crowd
Although there is a nationwide open house which is set annually, this does not mean that you have to wait for that day in order to put your house on listings and hold an open house. You can basically hold an open house on any weekend that you want. Since you basically control when you want to hold the open house, you will be able to hold it on a day when you have lesser competitors in your area, which then increases the chances of potential buyers going to your house instead of another’s.
Holding an open house is considered to be a great way of attracting potential buyers, but careful planning must be done in order to fully harness its effectiveness and thus encourage sales.

The Benefits of Purchasing a Home Warranty

home-warrantyOne of the things that worries most new homeowners when it comes to buying a new home are the costly repairs that expenses that they weren’t aware of when they first saw the house. Fortunately, there is a way to avoid this, and that is by purchasing a home warranty.

A home warranty is a kind of service contract which covers repairs and replacements for residential houses for a period of one-year, thus lessening the burden of homeowners who are supposed to shoulder the cost. By purchasing a home warranty, the new homeowners will be able to enjoy the following benefits:

Save Money and Spend Less
It is no secret that home repairs can cost a lot of money, and after paying for the down payment for the house, it is no surprise that many new homeowners find themselves with very little money left in their bank accounts. And whatever money is left, is supposed to be used for paying the utility bills or for buying groceries – not for any home repairs.
With a home warranty, new homeowners can breathe easier because the company will be the one to shoulder the cost of the repair, allowing the new homeowners to put their money aside for the more important matters.

Guarantees and Protection
Some home warranties also offer to cover the replacement and repair of electrical systems and appliances. Some companies who offer home warranties also offer to cover such items regardless of the brand or model, and the best part is that the repairs are even covered by a guarantee.

Renewable Warranty
Because of the benefits that a home warranty gives, new homeowners often opt to renew their home warranties with the company (provided that the company offers such a program). If such a program is offered the new homeowners can renew their warranties annually and enjoy the same benefits.
Take note though, that not all companies who offer home warranties provide for the same coverage. One feature may be present in one company, another feature may be present in another company, or both features may be present in only one company. In order to ensure that you are getting the best deal possible, be sure to learn more about each company’s home warranty and make comparisons where relevant.

Should You Invest in Residential or Commercial Properties?

4293254_sWhen thinking about investing in real estate, there are two main options to choose from: residential properties and commercial properties. Although investing in residential properties is usually the way to go for many people, the booming commercial real estate industry and it wide and compelling marketing strategies are starting to make their mark on investors.

Because of this, many people are finding it difficult to choose which of the two they should invest in. In order to make the process easier, it helps to know the different pros and cons associated with investing in either of the said properties.

Cost of Investment

Investing in commercial properties is generally more expensive than investing in residential properties. However, this still depends on several factors like the location and size of the property. You will find that a large residential property in a high-end subdivision can cost just as much as a small commercial property in a not-so-well-known business district.

Return on Investment

The ROI for commercial properties are also generally higher than in residential properties. This is because there is potentially more means of earning with the former than the latter. For instance you can rent out an office space or property much expensively than you would with a residential estate. In addition, the appreciation value of commercial properties tends to be higher and rise faster.

Associated Risks

Investing in a commercial property or residential property does not come without risks. However, the risks tend to be higher with commercial properties. For instance, there is the problem with long-term vacancies, due to difficulty in finding businesses or firms who are willing to rent your commercial property. When businesses fail, you may find that those renting your commercial property may be unable to pay you.

All in all, investing in a commercial property may seem more appealing than in a residential property. However, the risks involved are relatively higher. The most important thing to consider though is how you intend to make money out of this investment. If you want to rely solely on land appreciation and do away with the risks associated with rents and leases, you may want to consider investing in residential properties. However, if you are brave enough to face the challenges and risks of owning and managing a commercial property in exchange for the possibility of higher profits, then commercial properties are the better choice.

Why a Commercial Real Estate Site Visit Plan Adds to Your Return on Investment

JTS 0091Investing in commercial real estate is a big decision, and so you would want to make the most out of it in every way possible. One way of doing so is by conducting a site visit to the commercial real estate of interest. Like in any other purchase, you’ll want to see the product first before you put your money down, just to check if it’s really worth it.

To make the most out of your commercial real estate site visit plan, you need to make some preparations. These will guide you into successfully completing the site visit and determining whether the commercial real estate is worth investing in.

Visit the Site Online

Nowadays, it is very common to Google a product before buying it. The same is true for commercial real estates. If you can’t find a website which discusses in detail the commercial property you intend to invest in, you can also try using Google Maps. Using the satellite view, you will be able to see an actual image of the property, including the surrounding areas like residential houses, commercial establishments and so on. The point here is to get an overview of how the property looks and of its surroundings.

Market Conditions

During the site visit, you should observe and inquire about the prevailing and possible market conditions of the place where the commercial real estate is. Remember that you are investing in a commercial property, and you will want it to have a viable and easy access to your target market.

Local Issues

You’ll also want to know about the major local issues affecting the area. For instance, if any residential homes were demolished to give way to the commercial real estate development, or if the utilities like water and power work fine in the area. Any unresolved issues like this can make it harder for you to see gains and profits.

Possible Business Opportunities

If you are looking to grow your investment, you need to look at expansion projects for the commercial real estate in question. For instance, is there are possibility of expanding the estate by purchasing the surrounding lots? Will there be any reasons for contest among the locals in the place? Answering these questions will make sure that you are investing your money on a winning property that can earn you more than you expected and give you the best returns for your investment.

EVERYTHING YOU SHOULD KNOW ABOUT A MORTGAGE BUT WERE AFRAID TO ASK

Part 1

Questions You Should Ask Yourself BPare Applying For A Mortgage

On a recent trip to Greece, I was very surprised that everywhere we went we would see homes that were only half built and looked abandoned. When I asked if the economy was really that bad to justify all these abandoned homes the response shocked me. These homes weren’t abandoned and in fact they were all being built. I found out that in Greece as in many other countries they don’t have home mortgages. When you want a home you buy the land then as you get extra money you build a little more. Eventually, sometimes 10 – 20 years later you have a completed home.

For me, this moment was an epiphany as I just assumed all countries had a system in place for financing a home and that all counties would want to incent home ownership. A home purchase is usually the largest expense that we make and for the most part it is this consumer spending that keeps our economy flowing. Upon my return from Europe, I realized that the United States, a country of only 316 million people, has the largest economy in the world due in large part to our home mortgage system and our ability to access inexpensive long term money.

Now that I have set the stage let’s talk about all the home mortgage questions that we get and see if I can answer them. I was surprised to read that 31% of buyers don’t think it’s possible to get a mortgage for less than 5% down; 34% don’t know what the term “annual percentage rate” (APR) means and 75% of buyers don’t know how a ARM loan works. We often see clients more focused on negotiating a lower price on the home and ignoring the importance of finding the right loan. We are not mortgage brokers or loan officers but we have compiled and answered our most frequently asked questions.

#1 How much money do I have to put down?

It depends on what type of loan you get and if you want to pay mortgage insurance which is an insurance policy protecting the lending bank in case you default on the loan. There are three loans that have very little to no down payment requirements.

  • USDA loan: This is a rural loan but they define rural as being any towns with populations less than 35,000. In Jackson County that includes almost all the city’s except Medford. It will fund 100% of your home purchase and has a fixed percentage rate. To qualify you have to make enough to pay the mortgage but not too much or you’re disqualified. For the most part you cannot make more that 115% of the median income for your area.
  • VA loan: They can cover as much as 100% of the loan. The catch of course is you have to be a veteran, reservist or on active duty
  • FHA loan: FHA has been around since the 1930’s as a government loan helping buyers buy homes with only 3.5% down. The catch is mortgage insurance is included in the monthly payments so this loan maybe more expensive that a VA or USDA loan.
  • Conventional Loans: You don’t have to get a government loan for a low down payment! You can get a conventional loan from any bank or mortgage lender and pay as low as 5% down.

 

#2 How do I come up with the down payment?

Good question! If you don’t have a down payment we would suggest you start looking at 100% loans. There are other creative ways of getting a down payment. If you are a first time home buyer and have an IRA or SEP your can borrow from it. Unfortunately you can’t use a 401K. Many loans also allow a “Gift” from a family member which you can use for the down. Lastly, there is the old fashion way, save.

 

#3 How large of a loan can I qualify for?

There are lots of factors in determining how much you can qualify for but your credit score and your Debt-to-Income ratio are the two largest factors. The higher the credit score the more you can borrow but you must have a Debt-to-Income rate of 43% or less. So figure out the mortgage payment on the house you want to buy, go to bankrate.com for a mortgage calculator, and see if that payment added to your current fixed debt is less that 43% of your income.

 

#4 What is APR and how does it relate to my interest rate?

Your interest rate doesn’t reflect the true cost of your mortgage but the “Annual Percentage Rate” or APR, does. The APR includes various aspects of the loan including interest rate, points, origination fee and underwriting fees, which in theory makes it higher that your interest rate. When comparing the cost of two loans, use the APR not the interest rate.

 

#5 Should I lock in my interest rate?

Before locking in a rate it is important to understand there may be fees associated with an interest rate lock. Bear in mind, should rates decline during the period between application and closing you will not be able to take advantage of those lower rates. It’s somewhat of a gamble but if you go to bankrate.com they do a pretty good job of predicting where the interest rate is going and that may help you in making your decision. Bankrate.com’s interest rate predictor is called the “Mortgage Rate Trend Index” and can be found at the lower left corner of the home page. Also, rate locks expire and if your closing is delayed you could lose your lock.

 

#6 Can I get the bank to loan the cost of the home and extra monies to renovate it?

Yes you can get a FHA 203(K) rehab loan which is an all-in-one mortgage loan and remodel loan. These loans aren’t meant for upgrading your kitchen granite but can help pay for a new roof or a heating system. There is also a HomePath rehab loan available on Fannie Mae or Freddie Mac owned properties.

 

#7 Are interest rates going up?

Mortgage rates have remained at the lowest levels in history, primarily because of the Federal Reserve buying bonds and mortgage backed securities. The Federal Reserve has started tapering that bond purchase and even the news of tapering has increased the rates by almost 1%. Bottom line, as the economy slowly improves interest rates will slowly increase.

 

Next month in “part two” we will talk about; improving your credit score, refinance if you’re under water, ARM’s, reverse mortgages, HELOC’s, financing a rental property, getting a loan after a short sale and more!