Real Estate Investment Property
Many people have looked to the Real Estate market as a place to diversify their invest portfolio. The idea of having someone else make the payments on your property so that you gain equity is very appealing. One of the ways to become a landlord, is to buy a new home for yourself and keep your existing home as a rental property. As with any method, you must analyze what best meets your specific needs. In the current market, we are starting to see a little more inventory in the move-up price ranges due to more new construction, so in those price ranges you are not in a bidding war for a property. The first consideration is whether or not your current home would make a good rental. If the property is in the lower to middle price range in an area, it may be a good rental. Conversely, a higher priced custom home will not bring in the same proportion of rent to value as the lower valued house. Advantages to this method of acquiring property can include an easier move, better financing, knowledge of the physical condition of the rental property and a way to move up in house and build long term wealth. Since you would be purchasing a new home to live in, the timing and moving is under your control and since you are already very familiar with the home, you know potential physical problems that you would have to deal with. Financing can be an advantage because it can be more cost effective to use the equity in your current property, which can be taken out at a lower interest rate. Instead of needing to save up a large cash down payment, the current home can be refinanced at today’s low interest rates. Then, when you purchase the new home (with the down payment from the old one) you get another attractive loan as an owner-occupant. Another important consideration is the management of the property. Decide carefully between finding a tenant yourself and hiring a professional to manage the property for you. You may save some money up front, but if you are not careful, doing it yourself can cost more in the long run. Your retirement account can also own real estate, not just stocks or mutual funds, so for some people, this can be a good way to diversify a portfolio. There are specific rules pertaining to this and not all account managers are set up for it, but it may be worth consideration. Your Realtor can be of great help in starting you on the right path by looking at your specific needs and desires, as well as educating you on what you don’t know. Owning real estate has been one of the great ways of building long term wealth that our country offers. Greg Zadel CRB, CRS, GRI, e-Pro Zadel Realty 303-833-3012 8110 WCR 13 – S-4 Firestone, CO. ...read more
Are your HOA policies hurting your home value?
The more potential buyers there are for a property, the more likely it is that the price will be driven up. The opposite is also true, if there are fewer potential buyers, the price will tend to be pushed downward. Over the past couple of years, we are seeing HOA’s adopt policies that may be hurting the value of their home owners by having policies that drive away potential buyers for the area. While it is likely that this is not what was desired by an individual policy, the unintended consequence is that these properties end up more expensive to purchase and thus the number of potential buyers are reduced. The specific policies I am referring to usually take place in a few areas. First, in getting a potential buyer access to the HOA information and documentation. When a purchaser is looking to buy in a given neighborhood that has a HOA, the buyer will want to review the HOA rules & regulations, newsletters, meeting minutes, covenants and other pertinent information. Most Associations have moved this information online so that access is quick and easy. Unfortunately, some HOA’s have instituted policies that require a potential buyer to register and pay for the ability to review these documents. One of the buyer’s first impressions of the neighborhood is then very negative compared to other areas. If they have to pay for this access, they are likely to want to pay less somewhere else, which is typically on the sales price of the home. This charge can also act as a deterrent to purchasing in this subdivision as compared to another that does not have the fee. The second, similar problem is with transfer fees. Some HOA’s charge excessive or different transfer fees, depending on the seller of the property. If the seller is a bank, or HUD, the transfer fee is doubled or tripled. What is not realized is that in most all of those transactions, the transfer fee is passed along to the buyer, thus increasing the cost of the transaction to the buyer. Again, when the cost is increased in a fee, the amount the buyer is willing to pay for the property decreases, thus hurting the property values in the neighborhood. Similarly, the buyer may just choose to look at other homes without the additional fee, thus decreasing the number of potential buyers for a given subdivision. The third area we are seeing difficulties with is in communication. Often times during a transaction, the buyer or seller will need to contact the HOA regarding a specific issue. If it takes more than a few days to speak to someone, that can cause problems in the transaction. There are benefits to having an HOA in a subdivision and often times, that can be one of the reasons that people buy a particular property. You just need to look out for the unintended consequences. Be involved in your local HOA so that it can be an asset for your neighborhood. Greg Zadel, CRB, CRS, GRI, e-Pro Zadel Realty 303-833-3012 8110 WCR 13 – S-4 Firestone, CO. 80504 Greg@ZadelRealty.com...read more
You Don’t Know What You Don’t Know
This saying is especially applicable with real estate transactions. Even those that have bought or sold several homes rarely do it often enough to keep up with all the complexities of a real estate transaction. For most people, buying a home is one of the largest purchases (and financial commitments) they will ever make. You need to make sure that you have the most complete information possible, as well as sound advice when you are making all of the decisions surrounding the purchase of a property. Picking the right home is just one of the decisions you will make. Others include: What price to pay? How to structure the financing? What about closing costs? How to best negotiate the offer? Title? HOA? What inspections issues should be addressed? Appraisal? Loan conditions? What timeframe for the transaction? What about possession? These are just a few of the issues to be addressed during the process, and they are looked at differently if you are the Buyer or the Seller. The input and advice you get from your Realtor, working as a Buyer’s Agent or a Seller’s Agent will help you immensely in the process. Your Realtor’s experience will not only help you understand the issues, but will bring to your attention issues you may have not contemplated. The Realtor is not there to make the decisions for you, but to help you in understanding the issues and your alternatives completely so that you can make the best decision possible. Take some time to select the Realtor you will be working with, either when buying or selling. Ask about their experience, background and office support. Make sure it is someone that you are confident in, trust, and you are comfortable working with. Ask others about the Realtor and talk to others they have worked with. Discuss how you would prefer communications. Buying or selling can be an intense and somewhat stressful process, but the right Realtor can make it as smooth as possible, and even a little...read more