Lee Morof's Real Estate Blog

While making a real estate purchase can be filled with many questions, buying to invest in a long-term property can be even more confusing. If you’re looking into investing in real estate and wondering what variables to consider, here are a few tips that you’ll want to keep in mind before deciding on an investment property.

Be Aware Of The Market You’re Buying Into

Since you’ll need to be aware of what other people are looking for in a property if you’re diving into real estate to invest, you’ll want to carefully consider the neighborhood and city that you’re buying in and think about what the future holds. While becoming knowledgeable about home prices in the area you’re thinking of buying is a must, you’ll also want to think about market projections, trendy new neighborhoods and what the appeal will be to renters or buyers of the home you’re contemplating.

Consider A Diamond In The Rough

It might seem like a home that is a little rough around the edges is going to be a high-maintenance endeavor that doesn’t balance out in the end, but a fixer upper of a place may be end up being the best option. While you may need to renovate a little here and there to unearth some of its natural features, improvements to a home with a good structure in a good neighborhood can be more economical than spending more on a home that instantly appeals. It can also provide a better return on your investment in the long-term.

Stay Within Your Spending Means

When considering an investment property, it can be quite easy to get derailed and think about what you’ll be making instead of the expenditure of the initial investment. However, it’s important to determine beforehand that what you’re choosing to afford is going to be manageable in case you have to swing it on your own. By determining whether or not it’s an affordable expense, you can have a successful investment that will balance out in your favor at the end of the day without having to worry about sinking beneath the cost.

There are many questions that can come along with choosing to invest in real estate, but by carefully considering the market and keeping your purchase at a reasonable price point, you may have a long-term moneymaker on your hands.

Last week’s scheduled economic news included readings from the National Association of Home Builders on housing market conditions. Reporting on housing starts and building permits was released along with weekly reports on mortgage rates and jobless claims.

NAHB: Home Builder Confidence Grows as Demand for Homes Increases

November’s national reading for home builder confidence in housing market conditions for single-family homes rose three points to an index reading of 83 and the expected reading of 80. Component readings for the national index were mixed. Builder confidence in home sales for the next six months was unchanged at an index reading of 84. Builder confidence in potential buyer traffic in new housing developments rose three points to an index reading of 68. Readings over 50 indicate that a majority of home builders were confident about housing market conditions.

High demand for homes continued, but builders faced ongoing obstacles including shortages of lots and labor. Robert Dietz, the chief economist at the National Association of Home Builders, said: “ Lot availability is at multi-decade lows and the construction industry currently has more than 330,000 open positions.” Mr. Dietz urged policymakers to address these issues to enable builders to better meet the high demand for single-family homes.

Three of four regional readings for builder confidence in housing market conditions rose, while the Northeast’s reading fell to 69 in November from October’s reading of 73. The Midwest reading rose to 75 in November from October’s reading of 72. Homebuilder confidence in the South also rose three points to 87 in November. The Western region posted a two-point gain in builder confidence for an index reading of 87.

Housing starts fell by one million starts in October to 1.52 million starts on a seasonally-adjusted annual basis. Building permits issued in October rose to a pace of 1.65 million permits issued on a seasonally-adjusted annual basis. Housing starts and building permits issued do not always reflect builder confidence readings.

Mortgage Rates Rise as Jobless Claims Fall

Freddie Mac reported higher fixed mortgage rates last week as the average rate for 30-year fixed-rate mortgages rose  12 basis points to 3.10 percent. Rates for 15-year fixed-rate mortgages also rose 12 basis points and averaged 2.39 percent; the average rate for 5/1 adjustable rate mortgages fell four basis points to an average rate of 2.49 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent. 

Initial jobless claims rose to 286,000 new claims filed from the prior week’s reading of 269,000 first-time claims filed. Ongoing jobless claims fell to 2.08 million claims filed from the prior week’s reading of 2.20 continuing jobless claims filed. 

What’s Ahead

This week’s scheduled economic readings include sales of new and previously-owned homes, reporting on inflation and consumer sentiment are also scheduled. Weekly readings on mortgage rates and jobless claims will be released in advance of the Thanksgiving holidays on Thursday and Friday. 

Rent has gone up significantly during the past year. Even though it is not unusual for rent to go up over time, the average rent across the country has increased significantly during the past year. This means that the average rent will probably be even higher next year than it is this year. Even though this is one of the biggest deterrents against renting, there are other reasons to get out of the rental market as well. 

Renters Stand To Lose More Money This Year

One of the biggest reasons why renters are losing so much money is that the average value of a house has gone up significantly. During the past year, the average value of a home in the United States increased by more than $50,000. This means that the average homeowner gained this amount of money in equity. Renters do not get the same benefit. Because renters are not investing any money in property, they are not seeing any return on the money they throw away in rent. This means that renters lost tens of thousands of dollars by renting this past year instead of owning. 

Renting Can Be Very Expensive

A lot of people do not want to purchase a house because they are scared of maintenance expenses, property taxes, and the size of the down payment. On the other hand, renting is like throwing money down the drain. The money is going directly into the pocket of the property owner, and the renter is not seeing any sort of return on that investment. Furthermore, even though the price of renting can go up over time, many people who take out a mortgage lock in the rate for 30 years. This means the monthly payment will be the same at the end of the loan as it is at the beginning of the loan. If someone has a steady job, their income is likely to go up during the course of the mortgage, meaning that they have more financial flexibility in the future. Renters need to think carefully about what they can do to get out of the rental market and purchase property before rent increases in the future. 

It doesn’t matter if you heat your home with electricity, natural gas or some other energy source; prices continue to rise and that means increased heating costs for most of us.

In today’s blog post we’ll share three easy ways that you can save money on your home energy costs this winter.

Install and Use Programmable Thermostats

Now that Nest and other companies have brought Wi-Fi enabled, programmable thermostats on the market there’s very few excuses to avoid using them. At bare minimum you’ll want a digital thermostat that can be programmed to turn on and off at certain hours of the day.

For example, you can shut your heat off after leaving for work and have it turn back on again a half-hour or so before you get home. You can do the same at night when you’re fast asleep under warm blankets. If possible, try to get a thermostat for each room so that rooms can be heated individually as needed.

Switch Up Your Ceiling Fans

If you have ceiling fans you may not know that by reversing their direction you can keep your rooms feeling much warmer. In the winter you’ll want your fans spinning in a clockwise direction, which will push warm air downward into the room where you’ll be able to feel it. In the summer you’ll want to switch the fans back to counter-clockwise as this will help move warm air towards the ceiling.

Check Your Insulation, Furnace and Ducts Now

Finally, you’ll want to check that your home heating system is operating at peak efficiency. If you can access your attic, check to ensure that your insulation is tightly packed and that it’s still in good condition. Clean or replace the air filter on your furnace, and check your ducts for any leaks that need to be repaired. If it has been a few years, consider having a professional furnace and duct cleaning to get all of the dust and debris out of the ductwork.

As you can see, a little time spent on home maintenance can end up saving quite a bit in energy costs when the temperatures drop. When you’re ready to look at buying a newer, more energy-efficient home, contact your local real estate agent and book a consultation where you can share your needs and price range.

When it comes to selling a home, it is a common belief that once the offer is accepted, there is nothing else to be negotiated. However, issues and obstacles that can arise during the home inspection can be a cause for discussion with the seller. Whether you’re currently searching for houses or your offer has already been accepted and you’re preparing for the next step, here are some tips in the event that the home inspection isn’t up to par.

Be Cautious About What You Say

Without a doubt, anything that you discuss with the real estate agent regarding the property you’re looking at is going to be addressed with the seller. Instead of telling the agent everything is fine and dandy, maintain a poker face with any deficiencies in the home so you can assess them after the inspection. While a seller may think they have you on the line if all seems fine during the inspection, maintaining your peace and negotiating after the fact may end up providing a better post-inspection deal for you.

Decide What Deficiencies Are Most Important

Before negotiating any repairs or defects with the seller and how this can benefit you, ensure you prioritize what deficiencies must be fixed and what you can live without. There may be leaks and small dings in cupboards that may not be much of an issue, whereas damage in a hardwood floor that you don’t want to renovate may serve as a deal breaker. Deciding what is most important will ensure that the seller knows you’re really interested, and it will likely convince them that the fixes will make for a successful sale.

Request A Credit For Repairs

If a seller knows you’re interested in a home, you may be able to get a little bit of leeway in terms of what you can negotiate following the inspection. Instead of expecting them to deal with the hurdles of home repair, ask the seller to consider a credit so that you can ensure the repairs are completed on your own. This will not only enable you to have the repairs completed the way you would like them done, it may also make the moving process a smoother transition for all of you.

There are certain deficiencies that can show up during the home inspection, so it’s important to consider how re-negotiation can benefit both the buyer and the seller. If you’re curious about home inspections and other aspects of purchasing a home, you may want to contact your local real estate agent for more information.

Many first-time homebuyers are having a difficult time finding the right purchase. Therefore, a new trend is catching on. Some people are renting in the city, where property values are more expensive. Then, they buy a vacation home in the suburbs. Is it smart to buy a second home as a first home? 

The Advantages Of Buying A Vacation Home First

There are several advantages that come with buying a vacation home as a first home. First, buying a vacation home in the suburbs is usually less expensive than purchasing a house in the city. Furthermore, first-time homeowners can rent out their vacation homes the majority of the time, helping them cover monthly mortgage payments. Then, as the value of the vacation home rises, first-time homeowners build equity they can use to purchase a more expensive home in the city later. This can also help people save money on the cost of a vacation. 

Interest Rates On Vacation Homes Might Be Higher

At the same time, interest rates on vacation homes might be higher. Homeowners interested in getting the best interest rates need to live in the home they are buying. If they are not living in that specific home, lenders may charge a higher interest rate. Furthermore, first-time homeowners might have to put more money down to qualify for that loan. 

Managing A Vacation Home

First-time homeowners also have to think about how they will bring in rental income. It might be helpful to work with a property management company that can handle this from start to finish. Or, services such as VRBO or Airbnb might be helpful. Homeowners need to have a plan for how to maximize rental income. The more the home is rented out, the easier it will be to afford the mortgage payments.

Have An Emergency Fund Set Aside

First-time homeowners still need to have an emergency fund set aside for the vacation home. What happens if the roof needs a repair? What happens if the HVAC system has to be replaced? Homeowners need to think carefully about how they can cover these expenses. Not all of them are covered by home insurance, and some of them can cost thousands of dollars. 

Last week’s scheduled economic reporting included readings on inflation and a preliminary report on consumer sentiment. Weekly reports on mortgage rates and jobless claims were also released.

Inflationary Growth Exceeds Expectations, Creates Consumer Challenges

October’s inflation rate rose to its highest year-over-year pace in 31 years last week with a reading of 6.20 percent growth as compared to September’s year-over-year growth rate of 5.40 percent. Inflation rose by 0.90 percent month-to-month in October as compared to September’s reading of 0.40 percent growth. Consumers paid more for essential goods including food, fuel, and transportation. October’s inflationary growth rate surpassed the Federal Reserve’s inflationary goal of 2.00 percent year-over-year.

Pandemic-related conditions continued to delay supply chains and further limited goods and services available to consumers. Auto prices were higher due to lower production and falling inventories. Slim supplies and high demand caused rising prices in many economic sectors. Rising prices currently outstrip income growth, which renders current inflationary conditions unsustainable for many consumers.

Core inflation, which excludes volatile food and fuel sectors, rose by 0.60 percent in October and exceeded predictions of an 0.40 percent increase based on September’s reading of 0.20 percent month-to-month core inflation.

The Federal Reserve recently described ongoing high inflation as “transitory,” but it appears to be going nowhere anytime soon.

Mortgage Rates Fall; Jobless Claims Mixed

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 11 basis points to 2.98 percent. Rates for 15-year fixed-rate mortgages averaged 2.27 percent and were eight basis points lower. Rates for 5/1 adjustable rate mortgages averaged 2.53 percent and one basis point lower. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.40 percent for 5/1 adjustable rate mortgages.

Last week’s new jobless claims fell to 267,000 initial claims filed as compared to the previous week’s reading of 271,000 first-time claims filed. Continuing jobless claims rose to 2.16 million claims filed as compared to the reading of 2.10 million ongoing claims filed in the prior week.

The University of Michigan released its preliminary reading for November’s Consumer Sentiment Index and reported a November index reading of 66.8, which was lower than the expected reading of 72.0 and October’s index reading of 71.7. Consumer concerns over growing inflation and higher costs caused consumer sentiment about current economic conditions to dip.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders’ Housing Market Index, along with readings on housing starts and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.

The most popular time of year to sell a home is the summer. There are a lot of families with children who prefer to move during the summer because they do not want to move their children during the school year. In contrast, many people do not like to move during the winter. It can be difficult to request extra time off of work, particularly during the holiday season. At the same time, it is still possible to sell a home during the winter. What are a few tips homeowners need to follow to sell a home during the winter? 

Maximize Curb Appeal

There is never a second chance to make a first impression, and homeowners need to maximize curb appeal. Do everything possible to make the yard look nice. It is also critical to shovel the walkways. That way, potential buyers do not need to worry about slipping and falling when they walk up the front driveway. It may also be helpful to clean off the patio to make it look larger. 

Warm Up The Inside

People are going to be cold when they step inside during the winter. Therefore, homeowners should turn up the heat. It may also be helpful to have a specific location for winter coats and wet shoes. That way, potential buyers will be comfortable at that look at each individual room in the home. 

Add More Lights

During the winter, it is dark when people go to work. It is also dark when they come home. It might be pitch black when people arrive, so remember to turn on the lights in the home. Having lights can make the home feel more inviting. They can also increase the visibility inside and outside the home so the buyers can see what the house has to offer. 

Showcase The Season

Sellers should not hesitate to showcase the season. Consider putting out a plate of cookies. Arrange pillows and blankets on the sofa. Turn on the fireplace if there is one. Even seasonal accents can make the difference when trying to get an offer on the table. Be sure to stage the home for the season to showcase the potential of a house. 

Starter homes are incredibly popular for young couples who plan to have a family in the future but don’t need a large place yet.

Life moves pretty fast sometimes and many couples find themselves expecting children before they have begun to look for the next home. This shouldn’t be a problem, as moving into a larger home before the baby arrives can be a lot easier than it appears.

Always Move Before The Baby Is Born

There is a choice when upgrading a home for children: moving beforehand and settling down in advance of having kids or waiting until after having the child and dealing with a move later on.

It may be tempting to wait until the stress of a pregnancy is over to move into a larger home. After all, selling and buying houses can be a tiring process for anybody, let alone expectant parents. Just remember, no matter how difficult or stressful the move is it will be one hundred times worse after having kids.

Work With A Professional To Help Coordinate The Move

There is nothing wrong with rushing through a purchase or the sale of a home, as long as everything is done correctly. A situation like this is never the right time to assume control and responsibility for every aspect of the move.

A real estate professional, once told of the situation, will know exactly how to handle everything. From preparing a current home for sale to finding a larger house in the right price range, a professional will have experience in coordinating the process.

Prepare For The Move In Stages

The best way to go about facilitating a quick move is to go in steps. Everything in the house that is not necessary to the staging should be boxed up and moved into temporary storage before the home is shown.

This is beneficial because it removes all clutter from the house and helps to make a quick sale and also allows for many personal items to be moved into the new house without having to wait for the current home’s sale to close. Instead of one gigantic move, the process can be broken down into several smaller moves to relieve some stress.

When there is a deadline on a move, you can increase your chances of selling your current home and buying a new one by using the services of a real estate professional. When things are done fast they need to be done right and a professional with experience can facilitate the entire process while making sure nothing slips through the cracks.

Making the decision to build a home might be one of the biggest you make in your life. You’ve found the perfect plot of land and have a vision of what type of home you want, but you need someone to bring your dream to life.

That means it’s time to start interviewing architects.

Hiring an architect isn’t as simple as just calling up a few and seeing who might have the time.

You’ll want to ensure you choose a professional that understands your design aesthetic, communicates well, can design on budget and has an upstanding reputation.

Below are a few key questions to ask when deciding whom to hire.

Do You Have A Specific Design Style?

When interviewing architects, be sure to ask each one if they have a specific aesthetic and if you can see a portfolio of his or her work. While most are adaptable, they usually all have design themes that recur in their projects.

Whether you want a minimalist structure or LEED certified construction, you’ll want to know they have the experience.

What Is Your Fee?

You’ll need to inquire whether they charge a flat fee for their designs or a percentage of the total building cost. Most architects charge a percentage of the overall cost of your home, usually ranging from 5-20 percent.

This is important to know because it means that for every floorboard installed, you’ll need to add on the architect’s additional percentage.

Do You Provide Project Management Services?

There are many services that architects should include within their contract, such as checking the contractor’s work, making adjustments as the construction moves forward and obtaining lien waivers.

Get a list of what each architect you interview includes in his or her fee. Additional charges can add up and might play a part in who you choose.

Interviewing architects and finding the right professional can make all the difference when it comes to building exactly what you want. One you work well with can make the construction experience extremely pleasant, while a negative relationship can leave you hating your new home.

So do your research and be sure to get references.