Some small investors starting to partner up

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CHICAGO – Feb. 20, 2018 – As property prices rise, smaller real estate investors are reportedly teaming up with others so they can afford their next flip or rental property. They’re pooling funds with friends, relatives or other investors to pay for their next property, and that means sharing the risks and profit that go along with that plan.

The most common partnerships are among those who want to keep and rent out their properties after fixing them up, because financing is harder to come by for rentals than for house flips, says David Hicks, co-president of HomeVestors of America, known for its “We Buy Ugly Houses” franchises.

About two-thirds of the nation’s single-family rentals are held by mom-and-pop investors who own just one or two properties, according to ATTOM Data Solutions, a real estate research firm. Individual investors purchased 16 percent of homes in December 2017, up from 14 percent a year ago, according to the National Association of Realtors® (NAR).

Investment property prices surged 25 percent between 2014 to 2016, according to NAR’s most recent survey of homebuyers; in 2016, the nationwide median price of an investment property was $155,000.

However, higher home prices aren’t the only reason to partner up. John Warren, a real estate broker and investor in Chicago, purchased a four-unit building on his own in 2015, but has since teamed up with an accountant. They purchased two multifamily properties in 2016 – one in a Chicago suburb and another in South Bend, Ind. Warren says his real estate background is a good match to his partner’s financial and business skills.

“We’re able to work more efficiently with two than with one,” says Warren. “It’s nice to have someone else on board.”

But as with any venture, partnerships should be entered with caution.

“A lot of people don’t understand the full risks and rewards of a partnership,” says Dennis Cisterna of Investability Solutions in Denver. “It can test the limits of friends and family. And it can be a complicated situation if things go sideways.”

Source: “Small-Time Real Estate Investors Team Up for Big-Time Profits,” realtor.com® (Feb. 13, 2018)
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4 Costs You Haven’t Factored into Your Home-Buying Budget

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It’s not cheap to buy a home these days, and we’re not just talking about the price of the home itself.

Other out-of-pocket costs that crop up during the purchasing process, or even when you’re moving in, can put an unexpected strain on your already-hurting bank account.

For starters, you’ll need to budget between 2% and 5% of the home’s purchase price for closing costs, including appraiser, lender, and title fees. New regulations passed last year mean lenders have to be more transparent about these fees, and (as long as you read your closing documents) you should have a relatively good idea of what they’ll be when your lender makes you an offer.

Unfortunately, those closing costs only make up a portion of the added expenses you’ll face.

Nearly half of homebuyers incurred more than $2,000 in unexpected charges during the homebuying process, according to a recent survey by TD Bank, and 10% spent at least $5,000 more than they expected.

“Most people just look at the sticker price of the house and the mortgage payment,” says Svenja Gudell, chief economist at the housing site Zillow. “But there are a lot of additional costs that can shock first-time homebuyers.”

  1. The inspection  

Once you’ve made an offer on a property, you’ll usually need to pay an inspector a few hundred bucks to give the home a once-over. If he finds any potential problems — structural issues or asbestos, for example — you may have to pay another specialist to come in and offer a professional assessment.

While it can be tempting to skip the inspection to save cash (or to make a more attractive offer to a seller), it’s worth the outlay to get peace of mind that the home is in good condition — or negotiating ammo to make sure the price reflects the necessary repairs. “It’s money well spent,” says Cindy Hamann, chair of the Houston Association of Realtors.

  1. Bringing cash to the table

Homebuyers are also often surprised with the extra cash — beyond closing costs — that they need to spend at the closing table. Many lenders require you to pay a year’s taxes and mortgage upfront. If the seller prepaid any taxes or homeowners association dues, you’ll have to pay her the prorated amount for the rest of the year or quarter.

“Once you’re done with all the fees and the deposits for reserves, you may end up bringing many more thousands of dollars than you thought to the closing,” says Keith Gumbinger, vice president of HSH.com.

  1. The move

Once you’ve officially closed, you’ll need to pay for the move itself. That cost will vary considerably depending on where you live, how far you’re moving, and how much stuff you’ll need to haul. In general, though, expect to pay at least a few thousand dollars for professional movers.

It’s easy to overpay for movers, so get quotes from a few companies, and hire someone who’s licensed by the Federal Motor Carrier Safety Administration and has good reviews online (even better if you can get a referral from a friend).  

  1. Immediate costs

While you may be able to put off renovations or furniture purchases, there are some costs that new homeowners face right away. You’ll likely want to hire a locksmith to change the locks, for example, and there could be deposits or setup fees for getting your utilities started.

As a new homeowner, you’ll also now be on the hook for both routine, and unplanned maintenance costs on the home. Experienced realtors say you should expect something to break or need replacing within your first year.

Set up an emergency savings account with at least six months of expenses that you can tap if your roof springs a leak or the heater suddenly stops working. That way you won’t have to turn to credit cards to cover the unexpected, and you can spend some time enjoying your experience as a new homeowner, rather than worrying about how you’re going to pay for it.

CNNMoney (New York)First published June 26, 2017: 10:32 AM ET
Article Source: CNN Money

Mortgage Rates Hit Another Low for 2017

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Interest rates for a 30-year fixed-rate mortgage took another dip this week, setting a new low for 2017, Freddie Mac reported in its weekly mortgage market survey.

“The 30-year mortgage rate fell 2 basis points to 3.88 percent this week,” says Sean Becketti, Freddie Mac’s chief economist. “However, the majority of our survey was conducted prior to Tuesday’s sell off in the bond market, which drove Treasury yields higher. Mortgage rates may increase in next week’s survey if Treasury yields continue to rise.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 29:

  • 30-year fixed-rate mortgages: averaged 3.88 percent, with an average 0.5 point, dropping from last week’s 3.90 percent average. Last year at this time, 30-year rates averaged 3.48 percent.
  • 15-year fixed-rate mortgages: averaged 3.17 percent, with an average 0.5 point, holding the same as last week. A year ago, 15-year rates averaged 2.78 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.17 percent, with an average 0.5 point, rising from last week’s 3.14 percent average. Last year at this time, 5-year ARMs averaged 2.70 percent.

 
by Daily Real Estate News | Friday, June 30, 2017
Source: Freddie Mac