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Category: Housing Market (Page 1 of 26)

Investment Property Analysis Tool

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A brand-new investment property analysis tool is now available…and it would be my pleasure to help run some numbers with you.

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Did you know that two-thirds of individual’s net worth comes from real estate?  That’s according to Kiplinger – so owning property is a great way to build wealth. 

But what about owning an investment property? 

Based on data from Fannie Mae and Freddie Mac, about one in every six or seven purchases are for an investment property.  So building wealth via investment property income and appreciation is a pretty popular strategy.

So how can you better evaluate the decision to enter the investment property market?

Whether you’re a realtor helping clients make this decision or a buyer interested in purchasing yourself, I have a new and unique tool that will calculate the return on an investment based on area-specific appreciation, rental rates, and costs to buy and sell. 

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This is a fantastic way to do some analysis on would-be properties.

Important metrics such as cash-on-cash return, as well as the compounded annual return over time, are easily illustrated to help you make better decisions on selecting the best opportunities in this market. 

A Sample

Here’s a sample with the following assumptions – 3 unit property, purchase price $725K, monthly rents of $3,900, 30-year fixed mortgage at 6.99%, 25% down payment:

Assuming this buy-and-hold transaction over 9 years, here’s the cumulative cash return:

Here’s the annual return…

But what’s most relevant is the Annual Average Compounded Return, so you can measure this return versus other investments:

In Conclusion

As you can see, this is an extremely helpful tool to help analyze a particular income producing property to determine whether is a good investment or not!

Reach out to me today so I can share this exciting new tool with you.

New Housing Survey Shows Potential Opportunity for Buyers

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The MBS Highway Survey, which is comprised of roughly 3,000 Mortgage and Real Estate Professionals, was just released for August.

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For buyers looking to purchase real estate, this slight cool-down in activity may present a wonderful opportunity! 

There is certainly a slowdown in activity and pricing pressure from July to August, but 53% of respondents are still citing that their markets are active, while 47% note that it is slower.

16% of those surveyed are still seeing price increases, while 58% are seeing some degree of price decreases, although many of these are listing prices that are coming down to earth and not home value declines.

Out west, you can see that activity is slowing and pricing pressure has decreased dramatically!

Almost half of the respondents are seeing the sales pace at normal levels, with homes selling near the asking price.

Of those who said activity was slower, many cited that it was due to a lack of inventory. In addition, many are still seeing multiple offers, but less than in previous months.

Please do contact me for more information, as I would be glad to send you a customized report showing the health of the real estate market in your local area.

Inventory Numbers Explained – Late Summer 2022

Existing real estate inventory is up 22% from its lowest level in February.  Many in the media are claiming that this rise in inventory will lead to some sort of housing crash.

But a deeper look shows that this build in inventory is a normal occurrence that happens every spring and summer.

Families want their children to enter a new class at the beginning of the school year to more easily form friendships.  This means they would have to close on the purchase of their new home before September.  Naturally, they would have to list their existing home for sale during the spring and summer months to accomplish this, which explains why the inventory build occurs this time each year.

The chart below shows this annual trend – notice how each summer there’s an inventory build-up:

Additionally, the amount of existing homes for sale currently is less than half of what was available pre-Covid.  So, the increase we have seen is actually from a historic low.  And of those homes counted in inventory, more than half are under contract.  This means true available inventory is even less than the headline.

As a matter of fact, you can see from the graph below that actual housing supply is still a near all-time lows and is running at a deficit, relative to new household formations:

The increase in real estate inventory from such low levels isn’t all bad, as it makes purchasing a home a little easier.  And while demand has cooled, it is highly unlikely that the housing fears in the media will materialize.

To see what the appreciation forecast is in your local market, contact me here, as I’d be glad to run the numbers for you!

Announcing New Investor Specific Financing Options

I’m glad to announce that we now have investor specific financing options in the residential income producing space…both long-term and short-term financing available, ranging from 1 to 20 units.

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These products are tailor-made for real estate investors with income producing properties.

Finance of America Commercial, a division of Finance of America Mortgage LLC, provides individual and business exposure limits with individual FIX & FLIP rehab property loans, along with BRIDGE loans, NEW CONSTRUCTION loans, and SINGLE & PORTFOLIO RENTAL term loans to residential real estate investors across the country.

These offerings have helped clients overcome traditional financing hurdles and build long-term wealth through real estate investment.

These specific lending products and tools are designed with the real estate investor at the forefront – to help provide the personalized service investors need.

Income Producing Property/Portfolio Loans – 2 to 20 units

  • 30-year term available
  • Full amortization and interest only options
  • Loans from $200K to $5M
  • Funding up to 80% on purchases and rate/term refinances

Fix and Flip Loans

  • Funding up to 95% of acquisition and rehab costs
  • Max loan-to-value 75% based on ARV
  • Interest accrual on drawn balance
  • 12- and 18-month term options

Bridge Loans

  • Individual property loans up to $3M
  • Funding up to 80% LTC on multi-family
  • Payoff other loans or lenders on completed flips or new builds
  • Ideal for light rehab flips when self-funding cosmetic rehabs

New Construction Loans

  • 12–18-month term for build ready lots in urban locations
  • Funding up to 100% of construction budget and 80% LTC/65% LTV for multi-unit
  • Funding up to 90%/75% LTV for experienced builders (conditions apply)
  • Business purpose loan with no income requirements

Would you like to find out more?  Contact me to discuss your current situation and how you might be able to take advantage of these fantastic financing options.  It would be my pleasure to help you!

Inflation and Real Estate – Should Buyers Wait? History Says “NO!”

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Inflation is hot…and so is real estate.  But what does the future hold for both?

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As we’ve talked about before, the Federal Reserve is late to the party in dealing with inflation and the latest data shows the rate of inflation is still rising.

Many are feeling the pinch in their wallets, at the gas pump, and at the grocery store.

For would-be real estate buyers that just begs the question…is now a good time to purchase a home?

I’m linking to an article from the real estate blog Keeping Current Matters, and the author does a great job in highlighting why now might be a very good time to buy.  You can access the entire article here…

Greg McBride, the Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market:

“Inflation will have a strong influence on where mortgage rates go in the months ahead…Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”

While there’s no denying it’s more expensive to buy and finance a property this year than it was last year, it doesn’t mean potential buyers should pause their search. Here’s why…

History Says So – Real Estate Is A Great Hedge Against Inflation

During periods of inflation, prices generally rise across all areas of the economy.

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Historically, however, real estate ownership is a fantastic protection against those increasing costs because buyers can “lock-in” what’s likely the household’s largest monthly fixed cost for the duration of your loan.

Not to mention, as property prices continue to appreciate, the home’s value will, as well.

That’s why Mark Cussen, Financial Writer at Investopedia, says:

“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”

Secondly, nearly all industry experts agree that although the current rate of home appreciation can’t stay this hot, the likelihood of homes losing value is extraordinarily slim. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

In Conclusion

Purchasing real estate is one of the best financial decisions that can be made during inflationary times. Buyers also receive the advantage of the added security of owning their property in a time when experts are forecasting prices to continue to rise.

If you are considering a purchase, your real estate search shouldn’t go on hold because of rising inflation or higher mortgage rates.  Contact me for more…as it would be my pleasure to help you.

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