Tag: real estate

Millionaire Tells Millennials To Buy A Home

CNN recently ran an article explaining why self-made millionaire David Bach has said,

“The fact is, you aren’t really in the game of building wealth until you own some real estate.”

In his book, “The Automatic Millionaire” Bach writes,

“As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!“

We have touched on this in the past. (see Buying Still Cheaper Than Renting, Renting vs Buying a Home and Accumulating Wealth, and Homeowner Average Net Worth 3,600% Higher Than Renter)

Bach has told CNBC that buying a home is “an escalator to wealth“.

“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

In regards to the idea of a starter home, Bach says,

“Oftentimes, buying your first home means you’re not buying your dream home. You’re just getting into the market.”

The Logic

Following David Bach’s logic is simple. We all have to live somewhere. We have to pay either rent or a mortgage. Over time, a mortgage can increase your net wealth over renting.

While buying your dream home would be nice, Bach says that the key is to just get into the market, and admits that your first home may not be your last.

The Takeaway

On average, family wealth of homeowners is dramatically higher than that of renters, and this divide has seen growth over time. David Bach, best-selling author and self-made millionaire, advises homeownership as the surest path to building wealth.

Call or contact me today! Contact your Benchmark mortgage lender today. Find Your Branch here: Get Started Now!

7 Quick Tips for a Smooth Move When Selling Your House

by Benchmark

Unless you only have a few things in your house, moving can be overwhelming. However, if you have a plan ahead of time, your move to your new abode can be a lot less stressful than you think. To get you on the right track to a successful move, here are seven smooth moving tips to keep in mind:

Get Organized

Try not to start organizing things the very last minute. The moment you know you’re going to move, it will be time to start gathering boxes, markers and other moving materials. By developing a strategy and sticking to it weeks in advanced, you won’t feel overwhelmed the day the moving truck arrives.

Arrange Transportation

Whether you’re moving across town or the United States, it’s important that you pick out the right transportation. If you’re going to move a short distance, don’t feel bad if you have to keep coming back. However, if you’re moving across state lines, just make sure that moving truck won’t be too small to fit all your possessions.

Get Rid of Clutter

There’s never a better chance to sell things than during the moving process. With every item you pack away, ask yourself if you’re really going to use it. Unnecessary items are going to take up precious cargo space and will just collect dust in your new home. Create a pile and even if you don’t have time to sell, consider donating it to a local charity.

Label Everything

When packing items, make sure that every box is labeled appropriately. When labeling, don’t just label it “kitchen.” Instead, be more specific. So for example, if it has pots, pans and some utensils, write this all down on the box. That way, when you arrive and start unpacking, you will know exactly what’s inside each box.

Keep Your Necessities

If you plan on moving hundreds of miles away, make sure that you set aside the items you will need when you arrive at your new destination. This box should contain toiletries, clothing, snacks and other essentials you may think you will need once you arrive.

Hire a Babysitter

If possible, try to hire a babysitter for your children and pets the day you plan on packing the truck. That way, you don’t have to worry about a pet running away through the open door or a child getting injured.

Treat the Movers

Whether you’re hiring the professionals or some friends, make sure that everyone is taken care of. Order a pizza, have cold drinks nearby and always take breaks. If hiring the professionals, don’t forget to tip.

What is a Real Estate Appraisal?

by Benchmark

A real estate appraisal is the process of determining the value of a newly build property, the resale value of a residential property, or evaluating properties for investment purposes. The appraisal is a report of many crucial details about the subject property and creates comparisons to similar ones in the neighborhood.

How Do Real Estate Appraisals Work?

When an individual applies for a mortgage, the lender will require the property to be appraised by one of their certified appraisers. The cost, normally around $300 or higher depending on the property, is usually paid by the buyer outside of closing.

The appraiser will start the appraisal with a thorough physical inspection of the property inside and out. Also, they will look at courthouse records, recent real estate reports, and other numerous sources for more information on the subject property.

There are two different methods for conducting appraisals for residences:

The sales comparison approach is based upon comparing the subject property with a few similar homes that have been recently sold in the neighborhood. These are often referred to as the comparables. Analysis will focus on comparing specific bits of information, such as the square footage, style, age, lot size, and various other features of the homes.

The cost approach is mostly used for homes that have just been built and based upon the reproduction costs. This analysis will involve the appraiser estimating the cost to cover replacement of the property if it were to be destroyed. Land value and depreciation can also be added in to determine the value.

What is Included in an Appraisal Report?

The real estate appraisal report will contain:

An explanation of the method through which the appraiser ended up with the property’s value
Description of the size and condition of the house, along with any improvements that have been made recently and permanent fixtures
Accounts of any serious structural problems that were found through the inspection
Information about the surrounding neighborhood and recent market trends in the area
Comparisons with other residences surrounding the subject property that will support the market value appraised
Photographs, maps, or sketches of the subject property and its land

Overall, a real estate appraisal is more than just another cost or hassle added to the buying process. It is protection that will help everyone make informed decisions, so that a fair and reasonable price for market value can be formed.

Foreign Buyers Continue Purchasing Cheap U.S. Homes

by bmadmin

Foreign consumers purchased $41 billion worth of American houses and apartments during the 12-month period that ended in March 2011, according to the latest statistics from the National Association of Realtors. That’s roughly the same as the previous year showing that foreign buyers continue to see value in U.S real estate.

But add in the $41 billion spent by immigrants who moved here within the last two years and people with visas of more than six months, and the total is $82 billion worth of U.S. residential real estate taken off the market by international buyers, up from $66 billion in the previous year.

The demand for American real estate is so strong that last fall, the National Association of Realtors launched an international version of its property search website. Now, the 4.4 million properties displayed on Realtor.com can be viewed more easily by buyers from practically any place in the world, and in almost a dozen languages.

The top destinations of foreign investors for U.S. real estate purchases are:

1. Florida: 31% of all home purchases in that state are made by foreign buyers, with most coming from Cuba, Haiti, and Colombia.

2. California: 12% of all home purchases (most coming from Mexico, the Philippines, China, India, and Vietnam)

3. Texas: 9% of all home purchases (most coming from Mexico, India, Vietnam, China, and the Philippines)

Thinking About Investing in Rental Real Estate?

by bmadmin

It’s easy to get thrown off by the appearance of a property, your emotions, or what the media is saying. Here are four ways to avoid making that mistake if you are thinking about investing in rental real estate:

Reality Check One: Who is Your Target Market?

If the property is a good fit for your target market, it doesn’t matter if you wouldn’t live there. A renter may enjoy the property.

Reality Check Two: Are You Emotionally Involved?

Emotions shouldn’t be involved in buying a rental property, but it’s something to be wary of. If, at any point in the negotiations, you feel you can’t walk away from the deal, you need to take a step back and review everything! When your emotions are involved, you can’t make rational decisions. It is also a good idea to have a trusted adviser to bounce ideas off and receive confirmation when the property is good.

Reality Check Three: Are the Numbers Really What They Say They Are?

The numbers might look good on paper, but will the rent cover all the expenses? Make sure the numbers are what the sellers say they are. Get copies of any leases to verify rents. Check market rental rates for the area to make sure the current tenants aren’t under or overpaying. And make sure you obtain copies of the bills you’ll be responsible for (taxes, utilities, insurance, etc.).

Reality Check Four: Are You Judging the Book by Its Cover?

Many opportunities are missed because a property makes a negative first impression. The best deals are often those that look rough but can be easily rehabbed. Some properties may need a major face-lift to maximize its potential – but don’t judge a property strictly on its looks or you may miss out on a deal that could pay off big in the long run.

Baby Boomers are Expected to Boost Real Estate Market

by bmadmin

When it comes to housing, baby boomers are different from many people in two important ways: They have more equity in their homes, and many are preparing to move.

If housing experts are right, boomers — the 77 million Americans ages 47 to 65 — soon may be a sweet spot in an otherwise sour market for new homes.

Homebuilders — caught in a slump that has slashed U.S. new homes sales in half since 2007 — have been slow to adjust. And the stock of existing homes in many regions is not exactly rich in the type of amenities boomers say they want.

A few builders are shifting to the senior market, but there’s not nearly enough construction planned to meet the pent-up demand, said Edsel Charles, a national and local housing researcher.

“Right now,” said Charles, of Tennessee-based MarketGraphics, “I think only about 60 percent [of boomers] will find what they want, and it should be much higher.”

So empty nesters like Bruce and Nancy Childs, who decided to downsize from a large home on an acre lot, had better be ready for a slog. The Childses started with a list of 220 houses — and ended up dismissing all but two before eventually buying in Noblesville, Ind.

“It was a madcap search,” said Bruce Childs, 64, “and they didn’t have a lot we were interested in.”

It’s a story that Charles, who has been researching new housing in more than 20 states, says will be told more and more frequently as early as next year.

The retirement market, experts say, appears ripe for change.

Having raised families, many baby boomers are ready to turn in the keys to their oversized suburban McMansions. Research suggests boomers are tired of climbing stairs and mowing lawns and will seek ranch-style homes along quieter blocks, with features that make life a little easier on achy backs and knees.

So far, however, boomers haven’t started moving in big numbers.

“They have hesitated because of the recession,” Charles said. “Once the government and the stock market settle down, and the [housing] market turns, you will find this bunch that has hesitated will become a pent-up demand.”

Boomers and retirees, he says, will be among the largest share of the market beginning as early as 2012.

If so, it could be a potent market.

Unlike the younger families targeted by most builders, boomers have been building equity for decades. They have paid down their mortgages over time, putting them in a better position to sell. Indiana University economist Willard Witte said boomers may be the first demographic to move when the market picks up. Charles agreed.

“I think we are heading into a huge retirement market,” he said.

What boomers want, however, appears to be in short supply.

Most boomers now favor ranch homes that are about 1,500 to 2,500 square feet, Charles’ research shows, selling for $140,000 to $230,000. Some prefer age-restricted communities, low-maintenance townhomes and downtown condominiums. The majority, his research shows, say they want single-story houses within neighborhoods that attract a broader mix of people — and are close to where they now live.

And they carry along a pretty specific checklist:

— Open spaces to host friends and family, rather than separate dining rooms, living rooms and kitchens.

— Features such as vanities and electrical sockets that are a bit higher off the ground than normal.

— Storage, especially his and hers master closets, plus structurally reinforced attics.

— Backyard living spaces — not swimming pools or outdoor kitchens, but large decks with fireplaces, hot tubs and wet bars.

Jimmy Dulin, a broker with RE/MAX, said boomers will buy existing homes within certain neighborhoods — but not houses that need work. And, just as the builders are learning, he said, don’t bother showing them a ranch surrounded by two-story homes with kids.

“They want a well-kept and well-maintained house,” he said. “They want to be around people like themselves, but not necessarily isolated.”

Today’s market is being dominated by first-time homebuyers, Charles said, and families ready for their first move up to a larger house. He encourages builders to look toward the future market but said that, to some extent, their hands are tied.

The economy has slowed home buying, and builders aren’t starting new neighborhoods as they did during the housing boom of a decade ago. That makes some builders hesitant to target a niche, such as boomers.

Originally posted at http://buffalonews.com

U.S. Shadow Inventory Months-to-Clear Estimate Down

by bmadmin

In the second quarter of 2011, Standard & Poor’s Rating Services’ estimate of the months to clear the supply of distressed homes on the market in the U.S. fell for the first time since mid-2009. The current estimate is 47 months, a five-month decline from our first-quarter estimate and the largest quarter-to-quarter drop since mid-2008. While the volume of these distressed U.S. nonagency residential mortgages remained extremely high at $405 billion in the second quarter, it has declined every quarter since mid-2010 including the most recent. In conjunction with stable liquidation rates, we believe these are positive signs that the amount of time it will take to clear this “shadow inventory” should continue to decline over the next year.

In tandem with our improved months-to-clear estimate, each of the individual top-20 metropolitan statistical areas (MSAs) that we track reported lower months-to-clear estimates this quarter than the previous quarter. In our view, this is a yet another sign that the months-to-clear has leveled off.

At the end of the second quarter of 2011, Standard & Poor’s estimated that the balance of shadow inventory had shrunk to approximately $405 billion, from an estimated $433 billion at the end of the past quarter. This latest number represents just under one-third of the outstanding nonagency residential mortgage-backed securities (RMBS) market in the U.S.

Read the full story on housingviews.com

America’s Ugliest Homes

by bmadmin

One way to make money in residential real estate: Buy the worst house in the best neighborhood you can afford — and then fix it up.

HomeVestors, which buys beat-up homes and resells them, is trying to find the ugliest of them all in its annual contest, which ends later this month.

Many of this year’s Ugliest Home candidates don’t look too unsightly from the outside, but a quick peek behind closed doors reveals some truly horrible conditions.

Buyers shouldn’t be too deterred by the chewed-up kitchen cabinets or flood-damaged floors, however. Buying a beat-up property can be a lot cheaper than buying one in A-one condition — as long as the damage isn’t too extensive.

Of course, it’s prudent to get an accurate estimate of what repair and renovations will cost before taking the plunge. The cost of fixing a cracked foundation or bad plumbing can wipe out any benefit of buying the fixer-upper on the block.

Here are five candidates in the running for HomeVestors’ Ugliest Home in America contest. Almost all of these homes have been bought by HomeVestors franchisees or clients and renovated. There truly is life after ugliness.

Chicago, IL
Status: Renovated
Ugly price: $45,000
Restored price: $162,000

After filling 3 huge dumpsters this Chicago home cleaned up nicely.
Photo: HomeVestors

The Chicago area is a moderately-priced market but when a two-bedroom, two-bath townhouse is in as bad condition as this one was, the value can plummet.

Despite the separate dining room, the balcony off the master bedroom and the nice yard, this home sold for a mere $45,000.

Why so cheap? The interior was a disaster. Junk was piled shoulder high in some spaces. It took three, 40-foot-long dumpsters to get rid of it — and that did not include construction debris, reports the buyer, Alan Washer, a HomeVestors franchisee.

Washer completely rehabbed the house and replaced the wiring and heating systems. He put in all new interior doors and hardware, hardwood floors, bath tile and fixtures, windows and molding. All told, it took six months to complete the job.

Even after deducting for expenses, the deal was profitable: Washer sold the home for $162,000.

Frisco, TX
Status: Refreshed
Ugly price: Not applicable
Restored price: Not applicable

The renter in this Frisco, TX home left behind a huge mess but the outside looks good.
Photo: HomeVestors

The owner of this vintage house north of Dallas, Robert Pittana, nominated it for the Ugly Home contest himself because, he said, “I had never seen a house that ugly before.”

Really though, the place has all the attractive exterior accouterments of a home buyer’s dream: an arched entryway and windows, solid brickwork and a fan-light over the front door. Inside, though, it was another matter.

Pittana had rented the house to someone who “went off the deep end,” he said. Neighbors informed Pittana that they saw five or six cats trying to get out of the house. When he entered, he couldn’t stay long: There were cat feces everywhere, even on the ceiling.

The fix included stripping out the carpets and floors, bleaching walls and repainting. He brought in an ozone machine for several days to drive out the stink. Pittana still owns his ugly home, but it’s a lot easier on the eyes and nose now.

Englewood, CO
Status: Renovated
Ugly price: $76,000
Restored price: $110,000

This Englewood, CO abode just needed a good clean-up.
Photo: HomeVestors

The ugly duckling on a block of well-kept homes, this was a sad little two-bed, two-bath ranch house that sold for less than half as much as other similar homes in the neighborhood.

The home’s biggest problem was its owner, a hoarder. Floors, cabinet tops and other surfaces were piled with junk, much of it soiled and worthless.

Once the buyers got rid of the junk, exterminated all the pests and eradicated the molds, the home only needed some cosmetic repairs and replacements, which were done in just a few weeks.

The house was resold for $110,000, up from the $76,000 paid for it in this condition and retook its rightful place among the other tidy homes in the community.

Teaneck, N.J.
Status: Renovated
Ugly price: $180,000
Restored price: $330,000

Roof leaks took a heavy toll on this Teaneck, N.J. home – but now it’s better.
Photo: HomeVestors

From the street, this bank-owned property looked pretty good: a modest wood-framed colonial with a small yard and a two-car garage. Inside was another story.

The roof had leaked for years and rainwater had rotted out many of the home’s structural elements — all the way to the basement. The plaster ceilings and walls were un-salvageable and ugly thick mold was growing all over the damp spots in the house.

The buyers had to completely restore the home with new floors, sheet rock, paint and woodwork. The baths were done with tile and the kitchen with granite counters, cherry wood cabinets and stainless steel appliances.

Teaneck, N.J., where this home is located, is a short hop to Manhattan and home prices are relatively high, averaging about $350,000, according to real estate website Zillow. The buyers only paid $180,000 for this home. After they renovated the place, they sold it for about $330,000.

Shirley, MA
Status: Renovated
Ugly price: $41,915
Restored price: $174,500

An ugly duckling home can become a swan.
Photo: HomeVestors

This was a handsome old house, one of the nicest in town, with a rocking-chair front porch and roomy interiors. But then the former owner lost his job, according to the local HomeVestor franchisee, Michael Jordan, and “The mounting bills and upkeep on the home became too much.”

Jordan and his brother, a contractor, bought the home for less than $50,000 and embarked on a total renovation. One of the biggest problems was the amount of debris. Jordan filled dumpsters with junk, including two pianos and several arcade games.

The home needed a lot: a new roof, heating system and the floors were a wreck. All the windows had to go. The Jordans also added a bathroom and put in a new kitchen. The rehab cost about $90,000.

They resold it at a small profit. But almost as important, said Jordan, is getting rid of an eyesore for the neighborhood.

Originally posted on money.cnn.com

Are the Wealthy Buying Real Estate?

by bmadmin

We have taken the stance that real estate is currently a great investment. There have been MANY that have let us know that they think we are crazy. Today, let’s look at a few prominent people, media sources and one very important group that agree that now is the time to buy.

Fortune Magazine and The Wall Street Journal

John Paulson, billionaire investor.

Donald Trump, no introduction necessary.

Barbara Corcoran, real estate TV personality.

A pretty impressive list!

So are the wealthy buying real estate?

The real question: Is anyone listening to them? The answer: The wealthiest people in the country. According to the most recent Existing Sales Report from the National Association of Realtors, at a time when sales of all homes have decreased 2.8% compared to last year, homes over $1million dollars are selling at a rate 3.9% higher.

Why are the wealthy buying real estate right now?

Money is cheap. The 5% interest rate will not be available forever.
The ability to lock in that interest rate for 30 years may soon disappear.
Getting a mortgage may get much more expensive soon.
They want to buy low and sell high. The price of real estate is low.

Bottom Line

We know many will disagree with us about now being the time to buy. But if the wealthiest people in the country are buying real estate, shouldn’t we at least consider the possibility?