Apr 9, 2013 | Real Estate Tips
When you make an investment in Massachusetts real estate, it’s important to consider your options for turning a profit even before you write an offer.
It might be best to rent out the property to cover your mortgage and build equity providing the home cash-flows with solid rents and demand.
Or, you could fix up the home and flip it so that you can sell it quickly for a larger amount than you invested.
Both strategies may be appealing options, so here are some important factors to consider before making your decision.
Flipping May Lead To Short Term Profits
Flipping a house can be tricky, so you will want to have enough experience to know what you are doing, or work with an experienced advisor who can guide you around the most common pitfalls.
If you are thinking about fixing and flipping a house, you will need to have enough capital to invest in the property so you can make the required improvements and repairs.
Many people find themselves short of working capital after closing on the new purchase.
It is important to factor in carrying costs, or monthly mortgage payments while fixing the home, into your overall budget.
Do your research so you’ll know what renovations will have the most impact on the value of your real estate.
You will also need to know if the market in the area will support your new price point.
Make sure your flip property is in a very buyer-friendly community for your best chances of a positive return.
Renting Is The Buy And Hold Strategy For Investment Real Estate
Flipping a house gives you quick cash, but renting it out instead may give you monthly cash flow and a potentially larger long-term profit if the property appreciates over time.
If you don’t mind being a landlord and you have the time to screen for reliable renters, then renting out the property might be a better option for you.
This option also means that you will have the home later on in case you want to live in it.
Of course, don’t forget to factor in additional upkeep costs, such as repairs, utilities and property taxes.
Seek Professional Counsel
Investment real estate has consistently been considered a solid way to get your money working for you.
Whether you rent out or flip your investment property will depend on whether you are interested in a long-term investment or a short-term project.
A great next step while you are planning your investment real estate purchase would be seeking the advice of a qualified, licensed real estate professional.
Apr 8, 2013 | Mortgage Rates
Last week’s economic news includes several factors that drove U.S. mortgage rates lower.
The Bank of Japan announced that it would increase its purchase of bonds by $1.4 trillion over the next two years.
This news caused yields on Japanese bonds to fall, which made U.S. bonds more appealing to international investors, that in turn increased MBS prices and caused mortgage rates to fall.
Bumpy Employment Numbers Support Lower Interest Rates
Other significant economic news involves an unexpected drop in the number of new jobs created last month.
The Bureau of Labor Statistics (BLS) Nonfarm Payrolls Report issued Friday indicated that 88,000 jobs were added in March, which fell considerably short of the expected 190,000 jobs added as well as the 236,000 jobs added in February.
Average hourly earnings remained flat against February, which indicates another stall in U.S. economic growth.
Expanding employment sectors for March included professional and business services and healthcare, while retail jobs decreased.
Jobless claims increased last week in concurrence with lower than expected jobs added for March.
New jobless claims came in at 385,000 and were higher than expectations of 345,000 new jobless claims and the prior week’s jobless claims of 357,000.
The monthly unemployment rate fell from 7.7 percent to 7.6 percent, but this isn’t encouraging news.
According to the BLS, the unemployment rate fell due to workers leaving the work force instead of workers finding jobs.
Next week, Treasury Auctions will be held Tuesday, Wednesday and Thursday.
On Wednesday, the Federal Reserve will release FOMC minutes.
Fed Continues Monthly Bond Purchases
Investors and analysts review the minutes for predicting future economic developments and also for gauging the Fed’s sentiment about how or if changes should be made to the current quantitative easing program (QE).
The current QE program involves the Fed’s monthly purchase of $85 billion in bonds and MBS is intended to keep long-term interest rates including mortgage rates low.
Retail Sales will be released Friday, and as indicated by falling job numbers in the retail sectors, analysts are expecting no growth for March in either report.
Global news concerning North Korea and the European Union economic situation could also move U.S. markets up or down depending on the nature of the news.
While not encouraging in terms of an economic recovery, these events show that the recovery is proceeding with ups and downs; this doesn’t provide investors a clear picture and may cause them to seek safe haven in bonds.
The good news for Worcester County area homeowners is uncertainty and low expectations of the financial markets typically help keep mortgage rates lower.
Apr 4, 2013 | Real Estate Tips
When looking to buy or sell Worcester County area real estate, confusing terminology can leave you feeling somewhat uneasy.
From a multitude of numbers to marketing jargon, property listings can provide you with an overwhelming amount of information — and it’s hard to know what’s important.
So, brush up on the terms below and don’t get fooled this April.
Sale-to-List Ratio
This is an important number to pay attention to when choosing a real estate professional to sell your home.
The percentage is calculated by what a home was initially listed for, divided by the actual sale price.
The closer an agent’s percentage is to 100, the better.
If it’s low, that could be an indication that they routinely list homes too high, or you may be in a slow market which would favor the home buyer.
On the other hand, if it’s high, it could show that your agent markets their listings well and your market might favor home sellers.
Median Days on Market
The median days on market is the midpoint of how many days it took for homes in that area to sell.
If it’s 30 days, then half of the homes sold quicker and half took longer than 30 days.
If you compare the real estate you’re considering to its area’s median days on market and you find that it’s been on longer, the sellers might be willing to take a lower offer.
Distressed Property
Properties are listed as distressed when the owners have defaulted on their mortgage loans or are about to.
As a buyer, you might be able to get a good deal on a short sale or a foreclosure, as banks many times list them below market value to try and recoup some of their loss and clear the property from their books.
An Active Versus Pending Status
If you find your dream home and then notice that it has a pending status, brace yourself for disappointment.
An active status on a home means the owners are accepting offers, while a pending status indicates that they’ve already accepted an offer.
If you know it’s the one for you, you can still place a bid in case the first offer falls through.
While there are many new concepts and terms you will learn when purchasing your new home, the benefits of home ownership far outweigh any fear that you may have.
If you’re looking to purchase a new home soon, please contact a licensed real estate professional who can cut through the jargon and find the home of your dreams.
Apr 3, 2013 | Real Estate Tips
It’s a great time to buy a new home because there are still quite a few Worcester County area homes for sale, and interest rates have continued to stay comparatively low.
Whether it’s your first time purchasing real estate or you’re a seasoned professional, here are a few tips to make shopping for a new house more pleasurable.
1. Get Help
Searching through all of the available properties on the market can be mind-boggling.
Find a professional real estate agent to help guide you through the homes for sale and select one that meets your family and financial needs. Be certain to work with an agent or Realtor that you know, like and trust. If you don’t know any real estate agents or Realtors please contact me. I work with some of the finest real estate professionals in the area and would be glad to introduce you to an agent to match your needs.
2. Start Looking Now
Finding the perfect house can take longer than you might think, especially if you’re looking in a competitive market.
If you’re looking at getting a good deal on a foreclosure or short sale, then these transactions can take even longer because you’re likely waiting on the bank to make the final call on your purchase transaction.
Try to be patient. The more thorough you are in your search, the happier you’ll be in the long term.
3. Don‘t Settle For The First Place You See
Searching for a house can be extremely emotional.
If you think you’ve found the one, then take a step back, consult your real estate agent and go over your housing checklist one last time before writing an offer.
4. Weigh The Pros And Cons
Almost any property will need a few improvements; even newly constructed houses usually need improvements like landscaping.
Sellers are more savvy now about how to make cosmetic changes to catch a buyer’s eye, so look carefully.
There will still be things you want to change, so weigh the difference between the cost of those repairs and the sales price of the home.
If you really want a house even though it’s going to take a lot of work, make your offer accordingly.
5. Make Sure Your Financing Is In Order
Having financing done in advance makes the process of buying homes for sale much easier because you’ll know how much you can afford.
Your loan officer can also help you determine what your monthly payments will be based on how much money you borrow.
A great first step is to consult with a licensed mortgage financing specialist to go over the available programs and terms available in the area.
Contact me if you would like an introduction to one of our professional and accountable mortgage lender clients. 978-728-5104
Apr 2, 2013 | Housing Analysis
Last week, the S&P/Case-Shiller Index showed home prices gaining 8.1 percent during the 12-month period ending January 2013, marking the largest year-over-year increases since the summer of 2006.
The Case-Shiller Index measures changes in home prices by tracking same-home sales throughout 20 housing markets nationwide; and the change in sales price from sale-to-sale.
Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.
All 20 Case Shiller Index Markets Show Growth
Between December 2012 and January 2013, home values rose in all 20 Case-Shiller Index markets, with previously-hard hit areas such as Phoenix, Arizona leading the national price recovery.
Another notable gainer was New York, which posted the first year-over-year increase following 28 straight months of negative annual returns.
The top three yearly “gainers” for as of January 2013 were:
- Phoenix, Arizona : +23.2 percent
- San Francisco, California : +17.5 percent
- Las Vegas, Nevada : +15.3 Percent
Other year-over-year double digit gainers in home value were Atlanta, Detroit, Los Angeles, Miami, and Minneapolis.
Broader Numbers Support Widespread Housing Recovery
These strong annual home value increases continue to support the overall housing recovery.
There have been year-over-year double digit increases in home building permits and new housing starts as of February 2013 as well.
And foreclosure filings have fallen to only three-fourths of their previous annual levels.
It should be noted, however, that the Case-Shiller Index is an imperfect gauge of home values.
First, as mentioned, the index tracks changes in the detached, single-family housing market only. It specifically ignores sales of condominiums, co-ops and multi-unit homes.
Second, the Case-Shiller Index data set is limited to just 20 U.S. cities. There are more than 3,000 cities nationwide, which illustrates that the Case-Shiller sample set is limited.
And, lastly, the home sale price data used for the Case-Shiller Index is nearly two months behind its release date, rendering its conclusions somewhat out-of-date.
That said, the Case-Shiller Index joins the bevy of home value trackers pointing to home price growth over the last year.
A good next step for getting up-to-date home values in the Massachusetts area is to contact a qualified, licensed real estate professional.
