What Happens When a One-of-a-Kind Home Needs a New Owner?

It’s essential to have the right marketing plan, pricing strategy and real estate agent.

When shopping for a home, it’s not uncommon to come across one that truly stands out. It’s not because the home is an old fixer-upper or that it’s a newly renovated home with a designer kitchen. It’s a home that’s architecturally significant or in some way conveys a “different” attribute. For instance, it might be a castle, a church or even a fire station that has been converted into one or more living spaces.

With an unusual home, pricing and marketing can be a challenge. Here are three things to keep in mind when either buying or selling a truly unique property.

1. Buyers should be cautious

As crazy as it sounds, a would-be buyer may want to reconsider purchasing an offbeat home. While it may be a home you love, it is also an investment. A home with a unique, unchangeable structural feature will likely alienate a large portion of the market.

If you’re faced with the opportunity to purchase a unique home, don’t get caught up in the excitement of it all. Think long term. Understand that when it comes time to sell, it may be a burden, particularly if you try to sell in a slow market.

2. When selling, don’t assume buyers will love what you love

As the owner of an interesting or different home who is considering a sale, be aware that not everyone will have the same feeling about the home as you did when you bought the place. While you’re likely to get lots of activity, showings and excitement over your property, a lot of that may simply be curious buyers, nosy neighbors or tire kickers.

Time after time, sellers with unique homes believe that since they fell head over heels, another buyer who might feel the same. But that person could be hard to find.

3. Hire the right agent and have a serious marketing/pricing discussion

A unique home requires a unique marketing plan and pricing strategy as well as a good agent. The buyer may not even live in your local market, and instead might be an opportunist buyer open to a unique property. So you should consider advertising outside the mainstream circles. Media and press can help get the special home the attention it may need.

The buyer may not want to live in your town but is fascinated by an old church or castle. The more you get this out there, the better your options for finding the specific buyer.

If you get lots of action but few offers, you may need to drop the price below the comparable sales to generate interest, particularly if you really need to sell. Just like a home with a funky floor plan, on a busy intersection or with a tiny backyard, the market for your unique home is simply smaller.

With online home listings, blogging and real estate television shows, unique homes stand out and get more exposure than ever. But selling a distinctive or offbeat property requires out-of-the-box thinking early on, and with a top agent. You only have one chance to make a first impression. Be certain to price the home right, expose it to the masses and have a strategic plan in right from the start.

Top image from Zillow listing.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published October 10, 2014.

Source: zillow.com

Buyer’s vs. Seller’s Market: What Do They Mean?

When you’re buying a house, it’s important to know what type of market you’re in: a buyers market or a sellers market. Each type of housing market offers its own set of unique opportunities and drawbacks depending on what side of the equation you’re on.

In a buyers market, the market is more favorable toward buyers due to an abundance of inventory, a low demand for housing or other factors that cause home sales to be slower than normal. This type of market works in the buyer’s favor because they can ask for extra concessions, lowball the offer or generally push the purchase to be more favorable to them. A sellers market, on the other hand, means that you’ll be competing with other buyers for the homes on the market. In this case, the seller calls the shots due to high demand for homes.

Though much of the country would be considered a sellers market right now due to extremely low interest rates on mortgage loans, that could always change in the near future. The pendulum swings constantly, and it’s not always clear where it will stop. So, if you’re considering a new home purchase in the near future, here’s what you need to know about a buyers or sellers market to make the most of the market you happen to be in.

In this article

What is a buyer’s market?

A buyers market is when there are more houses for sale than there are buyers. People aren’t buying at a fast enough rate to keep the market from flooding with inventory — which drives the market to be more friendly to the buyers that do exist.

[Read: Mortgage Rates Hit Another 50-Year Low. Should You Buy?]

In a buyers market, sellers must often lower the asking price on their homes to be competitive. If they don’t, they run the risk of their house sitting on the market for too long, which can cause financial issues or issues with getting a loan for the house they’re moving to. Therefore, not only do homebuyers get to enjoy deflated prices in a buyer’s market, but they also stand a good chance of having their lowball offers being considered.

What is a seller’s market?

A sellers market is the opposite of a buyer’s market, and occurs when there are more buyers than there are sellers. When this happens, sellers obviously have the upper hand. Any reasonably priced house is likely to get multiple offers or even instigate a bidding war in highly desirable neighborhoods or cities.

In this type of market, most homes don’t last long before being snatched up by buyers — especially if mortgage loan interest rates are as low as they are right now. Many homes are sold as is and could even get an offer that’s well above asking price. If you have a home to sell, putting it on the market during a seller’s market will likely get you more than you paid for it and help propel you to your next home.

[Read: How to Negotiate Mortgage Closing Costs]

How to determine if it’s a buyers market or a sellers market

If you want to determine whether you’re in a buyers or sellers market, there are a few tricks you can use to figure it out. These include:

  • Analyze the inventory. Use a listing website and look at the county, neighborhood or area you plan to purchase in. Pay particular attention to information like time on the market and the final sales price. If you see a large number of homes are being sold as soon as they hit the market, you are most likely in a sellers market. If sold homes are few and far between, you’re in a buyers market. It’s possible to get even more precise. You can divide the number of homes on the market by the number of homes sold the last 30 days. If the quotient is over seven, you’re in a buyer’s market. Five sold homes or below equals a sellers market.
  • Determine the amount of time homes are sitting. Homes sell quickly in a sellers market if they are priced right and are in good condition — or in some cases, they may sell even if they need a ton of work and aren’t priced as low as you’d expect. The opposite is true of a buyers market.
  • Determine market trends. Are home prices rising or falling? A downward trend suggests a buyers market while an upwards trend indicates a sellers market. The good news is that you don’t have to do the research yourself. You can easily find market reports online or ask a licensed real estate agent to pull some comps for you.
  • Figure out whether the homes are selling for asking price. If a lot of the offers in the area you’re looking at are selling for more than their asking price, that is obviously good news for sellers and bad news for buyers. If the comps indicate that the homes are selling for well below the list price, then you know you’re in a buyers market. You can also look at current listings to determine whether you’re in a buyers or sellers market. Do you notice a lot of listed homes with price cuts? This suggests that homes in this area have sat on the market for longer than expected and that buyers are in control.

Tips for a buyer’s market

A buyer’s market offers unique perks for would-be homeowners. However, if you’re a seller, you’ll have to both lower your expectations and clear a few hurdles along the way.

[Read: 5 Tips for Navigating the Mortgage Underwriting Process During Covid-19]

Tips for sellers:

  • Don’t ask for too much. If your home is priced in the right range, you could still get a buyer in a reasonable amount of time. However, don’t price your home too low to try and unload it, since buyers will still push the envelope in this type of market, no matter what you list your home at.
  • Tackle needed repairs that won’t break the bank. With so many options to choose from, buyers won’t have a reason to take on a fixer-upper unless you’re selling it at a huge discount. Any decent agent will be able to tell you what your house needs to get attention — so listen to them and make repairs or upgrades when possible.
  • Be prepared for lowball offers. Don’t take lowball offers personally and be prepared for them. Figure out what you’re willing to negotiate on before you list your home. If you aren’t willing to negotiate, your home may sit there for a while.

Tips for buyers:

  • Be aggressive: Don’t be afraid to make an offer that’s well below the asking price — especially if the home has been on the market for a while. All the buyer can do is turn you down — and if you’re in a buyers market, it’s less likely that would happen.
  • Negotiate with the seller. You have nothing to lose by negotiating. There are tons of other options on the market if this offer falls through. So, unless you’re at risk of losing the house of your dreams, you can go back and forth with the seller without worrying that you’ll kill the deal over bad feelings.
  • Ask for repairs and closing costs. The worst thing that might happen is the seller will say no. At the very least, you can expect a reasonable counter offer to come of it — and best case, you’ll end up with some contributions from the seller to make your home purchase cheaper.

Tips for a seller’s market

A seller’s market is a great time to cash in if you’re a seller. If you’re a buyer, be prepared to compete with tons of other buyers and maybe offer more than you originally intended.

Tips for sellers:

  • Don’t worry about cosmetic repairs. As long as your home is in decent condition, it’s very likely to get multiple offers. You don’t need to dump a bunch of money into painting the bathroom a neutral color or upgrading the siding. Buyers will still likely be interested in your home.
  • Test the waters on the price. Believe it or not, you can scare buyers away with an overly ambitious listing price, but that doesn’t mean you shouldn’t test the waters a little bit. Try listing your home for over what you think it’s worth. Even with a high listing price, you may get a bidding war from buyers — especially if you’re in a highly desirable area and also in a sellers market.

Tips for buyers:

  • Check listing sites every day. It’s not uncommon for homes to get offers on the first day of listing in a sellers market. Be prepared to live on sites like Realtor and Zillow — and employ the help of a real estate professional who can send you the new listings as soon as they hit the market.
  • Work with a top notch agent. In a sellers market, you’ll need an aggressive agent who is able and willing to drop to show you a house. If you don’t have an agent like this, you’re going to miss out.
  • Get preapproved. You need to be able to make an offer at any time to be competitive with other buyers. Speak with a lender before you speak with an agent to get preapproved — this will strengthen your offer and make you stand out against others.
  • Know your maximum price. Bidding wars are common in a sellers market. Your emotions can put you in financial ruin if you aren’t careful, so you need to know when to back out. Set a maximum price cap and stick to it. Also keep in mind that you can refinance later on if you need to.
  • Don’t ask for too much. You’re competing with a lot of buyers in this type of market. Asking for too much in closing costs and repairs will likely result in the seller not considering your offer.

Compare top mortgage lenders

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What the Flip? Portland Home Gets a Major Face-Lift and Gains $600K in Value

Flipping a house is a lot of work that can yield a big profit. But not every project is guaranteed to be lucrative. So what’s the key to successfully making over a fixer-upper and selling it for a gain? Our series “What the Flip?” presents before and after photos to identify the smart construction and design decisions that ultimately helped make the house desirable to buyers.

Known for friendly faces, eclectic locals, and beautiful scenery, Portland, OR, has been seen as a desirable place to put down roots for a while now. It was even rated the ninth best U.S. city to live in by U.S. News & World Report. All of those benefits, plus historically low real estate inventory, mean housing prices in Portland are high. But for flippers who can nab a fixer-upper with good bones, there’s plenty of potential for profit—as this example shows.

The flippers who took on this five-bedroom, five-bathroom house made a smart move by pouncing on the well-worn property for $875,000 when it was listed in June 2019. After a full-on renovation, they put the home up for sale, and in December 2020 it was sold for $1,475,000.

So how did they raise the home’s value by $600,000 in just a year and a half—and during a pandemic, no less? The booming market wasn’t the only thing that made this home sale such a success. The fresh renovations also had something to do with making this a must-have property.

Taking into account the home’s now-stylish interior design, we asked our team of experts to look at before and after photos and weigh in on the changes that made the biggest difference in this home. Here’s what they had to say.

Living room

Talk about major changes! Once full of dark, drab wallpaper and a dated, textured ceiling, the living room now has a brighter, cleaner look.

“The application of white paint on everything really works well in this room,” says designer, real estate agent, and house-flipping investor Laura Schlicht. “Two of this house’s biggest assets have been artfully played up: the architectural moldings and the fantastic view.”

“It was a great move to get rid of the extra door on the side of the fireplace,” adds real estate investor and agent Molly Gallagher, of Falk Ruvin Gallagher. “There are plenty of other ways in and out of the room, and it allowed them to widen the hearth and keep the green-tiled theme going.”

Kitchen

The old kitchen was spacious, but that’s about all it had going for it. Once the flippers worked their magic, they had a kitchen that would impress any prospective buyer.

“Removing a section of the wall between the dining room and kitchen brings much more light into the kitchen, bouncing off the bright white cabinets, rather than keeping the view for the dining room itself,” says Kate Ziegler, real estate investor and real estate agent.

She adds that her top question from buyers touring homes is whether or not they can remove a wall.

“Having done this update for the buyers broadens the audience for this home, and boosts sale price as a result,” says Ziegler.

Real estate investor and agent Tracie Setliff, also with Falk Ruvin Gallagher, was impressed with the island addition.

“The island placement is perfect—it seems like it was always there and makes up for some of the storage lost by opening up the wall,” she adds.

“We love that they nod to the original lights and time period of the home with the updated light fixtures they chose,” adds Gallagher. “And they smartly chose to appeal to a wide buyer pool by not adding in some specific tile that will be dated in five years.”

Home office

Before 2020, a home office was just a bonus, but now it’s essential—whether it’s for work or school, or both. Even though this renovation was started before the coronavirus pandemic, the flippers chose to upgrade this home office in a major way, which really paid off by the time they listed the home.

“I love that they removed the old attached bookshelf,” says Setliff. “The room has an airier feel to it without the hulk of the built-in shelving. There are so many cute bookshelves that are much sleeker.”

Schlicht agreed, explaining that the built-in bookcase, while often a bonus, was actually the wrong size for the space and made the room feel crowded.

“Let’s take a moment to notice the windows,” says Ziegler. “New windows are a significant cost that most new buyers don’t want to take on in the near term—but the payback in efficiency can be remarkable. Replacing windows as part of a flip makes the whole space look more contemporary and polished, but also adds real value to the home that buyers can quantify.”

Dining room

At first glance, it may seem like the only real change in the dining room was a new coat of white paint, but Ziegler says that’s not the case. In fact, she was rather impressed with the flippers’ efforts in this room.

“The dining room demonstrates places where the investors behind this work took the time to restore and retain older details: keeping the built-in sideboard, and even the mirror detail below the smaller window shows a thoughtful approach and is indicative of more time-intensive work,” Ziegler says.

“Restoring details rather than replacing with cheaper, contemporary alternatives requires patience and care, and that attention to detail is something buyers notice even if they don’t have the vocabulary to describe it,” she adds. “The updated chandelier is trendy but also a nod to midcentury modern styling that is appropriate for a house of this age.”

Setliff is happy to see the “boring” light fixture go, in favor of the new “sophisticated, sculpturelike light.”

“Buyers do not want to have to change fixtures, as simple as it seems, and keeping it fun yet unfussy was the way to go,” she says. “It is interesting how you notice the views from the windows now that your eye isn’t drawn to the dark brown of the built-in cabinets and window trim.”

Den

This old den went from afterthought to amazing after this flip, and our experts are impressed with the results.

“Goodbye, ’60s; hello, now!” says Gallagher. “Knotty pine is best reserved for Wisconsin supper clubs these days, and today’s buyers are not interested in having a supper club theme for their den.”

“Removing drop ceilings and wood paneling is an easy, instant update, but the nicer detail here is the addition of recessed lighting,” says Ziegler. “Recessed lighting in a basement space creates the illusion of more headroom, making for a much more comfortable den. Updating the basement den adds valuable square footage that buyers might have otherwise written off as just basement space.”

And we can’t forget about the star of this room: the fireplace.

“Replacing the dated brick with a pop of green tile and the white surround and mantel transform this new den,” says Setliff.

Source: realtor.com

Can you use a 203k loan for an investment property?

203k loans for investors: A special use case

The FHA 203k rehab loan can be an affordable way to buy or refinance a home and refurbish it with a single loan. 

This might make the 203k loan attractive to investors and fix-and-flippers. But there’s a catch.

These mortgages are limited to ‘primary residences,’ meaning the borrower has to live in the home full time. So they’ll only work for specific types of investment properties. 

But there are ways to legally and ethically use a 203k loan for rentals and investments. Here’s how.

Verify your 203k loan eligibility (Feb 23rd, 2021)


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FHA 203k loan for investment properties

There’s only one legitimate way to use a 203k loan for an investment property. You can buy and renovate — or construct or convert — a multifamily (2-4 unit) building and live in one of the units.

FHA allows borrowers to purchase 2-, 3-, and 4-unit properties and renovate them using the 203k loan.

To fulfill FHA’s residency condition, you’ll need to occupy one of the units yourself as your primary residence for at least 12 months.

You can rent out the other unit(s), and even use the rental income to cover your monthly mortgage payments.

Benefits of the FHA 203k loan for investors

While this might not be your first idea of an investment property, it can be a foot in the door for first-time investors who want to test out owning and renting properties.

It’s also worth noting that since you’d be buying the property as a primary residence, you get access to lower interest rates.

This means you’d have lower monthly payments and pay less interest overall compared to someone with a ‘true’ investment property mortgage.

Drawbacks

The main downside to this strategy is that you yourself need to occupy one of the units for at least one year.

After 12 months, you could rent out the unit that you live in and move on to purchase other real estate.

But FHA is not for serial investors. Once you use one FHA loan, you likely can’t get another one. You’ll have to secure other financing if you move out and buy again.

Also, keep in mind that you will be living side by side with your future tenants for those 12 months — some may consider this a downside while others won’t mind.

Another downside: FHA loans come with pricey mortgage insurance premiums (MIP) which borrowers are normally stuck with until they sell or refinance into a different loan program.

So there’s a lot to consider before going the 203k investment property route.

But for the right borrower, this could be a great strategy to finance and renovate their own home and a few rental units at the same time.

Verify your 203k loan eligibility (Feb 23rd, 2021)

Can I use a 203k loan if I already own the home?

If you already bought your home, you can use a 203k rehab loan to refinance your current mortgage. This opens up another back door for investors.

You could potentially use the 203k loan to refinance your current home, make renovations, then move after one year and rent the house out as an investment property.

FHA allows you to rent out a home you still own with an FHA loan, as long as:

  • You fulfilled the one-year occupancy requirement
  • You moved for a legitimate reason, like a work relocation or upsizing to a bigger house for a growing family

This would only work for refinancing a home you currently live in and plan to keep occupying for at least a year after the loan closes.

If you already moved and kept your previous home as a rental property, you would not be able to use the 203k rehab loan since the home is no longer your primary residence.

How does the lender know if it’s my primary residence?

Some people make good livings by buying fixer-uppers and then selling them after rehab — aka “flipping” them.

A few might be tempted to take advantage of the 203k program by lying about their intention to live in the home. After all, how can the FHA prove in court what your intentions were when you made the application?

The main argument against this strategy is that lying on a mortgage application can be a felony that could see you in federal court.

Even an email to a contractor mentioning that you don’t intend to live there or other indication of your plans could show up in the court case.

And, repeat FHA buying would not be a viable long-term strategy.

FHA only allows borrowers to have one active FHA loan at a time, except in rare circumstances (for instance, if your work required you to relocate and you needed to buy another home near your new job).

In other words, borrowers cannot move once a year and continue financing new homes with FHA loans.

If you see yourself as an entrepreneur with a rosy future in real estate investing, set yourself up for success by choosing a legitimate financing option that keeps your options open in the long run.

Check your investment property loan options (Feb 23rd, 2021)

About the FHA 203k rehab loan

The 203k rehabilitation loan is backed by the Federal Housing Administration (FHA), an arm of the U.S. Department of Housing and Urban Development.

This mortgage program lets you buy a rundown home — a fixer-upper — and then renovate it using a single loan that covers the purchase price and cost of repairs.

If that involves demolishing the existing structure down to the foundations and rebuilding, that’s fine under 203k loan rules, too.

203k renovation loans are only for necessary repairs to improve the structure or livability of the home. So the funds can’t be used to add luxuries like tennis courts or swimming pools.

And there’s one more important rule: You cannot do the construction or remodeling work yourself. The 203k loan requires you to hire a reputable, licensed contractor, unless you are one yourself and you work full-time as a contractor.

Limited vs. Standard 203k mortgage

There are two flavors of the 203k program: the “Limited 203k mortgage” and the “Standard 203k.”

The Limited 203k used to be called the “Streamline 203k.” As its new name implies, this version is more restrictive about the amount you can spend and the types of work you can do. But it’s also less complicated, hence its former “streamline” moniker.

The maximum repair budget for a Limited 203k loan is around $31,000 ($35,000 officially, but there are mandatory reserve accounts that eat into that sum). And you can’t make any structural renovations to the home.

On the plus side, these loans require much less paperwork and hassle.

The Limited 203k loan is typically best for current homeowners who want to make cosmetic repairs or renovations. It works a bit like a cash-out refinance, except you must spend the money on the home improvements you’ve listed.

A “Standard 203k loan,” by contrast, allows much higher budgets and would be better for home buyers purchasing serious fixer-uppers that need structural repairs.

FHA loan requirements

The basic requirements for 203k loans are similar to those for other FHA mortgages:

  • A 3.5% down payment — Based on your purchase price and rehab budget combined, subject to an independent appraisal
  • Minimum 580 credit score — It may be possible to dip below 580 if you have a 10% or higher down payment
  • Debt-to-income ratio of 43% or less — No more than 43% of your gross monthly income can normally be eaten up by housing costs, existing debt payments, and other inescapable monthly obligations such as child support

Although the FHA sets these minimum requirements, you’ll be borrowing from a private lender. And they’re free to impose their own standards.

For example, some mortgage lenders require a credit score of 620 or 640 for an FHA loan. If one lender has set the bar too high for you, shop around for other, more lenient ones.

Verify your FHA 203k loan eligibility (Feb 23rd, 2021)

What repairs can you do with a 203k loan?

The FHA is putting up taxpayers’ money to guarantee part of your mortgage. So it’s not in the business of writing loans for luxury upgrades.

There are strict rules about the types of home renovations you can do and the amount of money you can borrow.

In fact, the total amount you can borrow for your home purchase and renovation costs is governed by current FHA loan limits, which vary depending on local home prices.

You can find the loan limit where you wish to buy using this lookup tool.

Maximum rehabilitation loan budgets

We already mentioned that a Limited 203k loan gives you a cap of around $31,000 on your rehab budget.

A Standard 203k lets you have as big a rehab budget as you want, capped only by your local loan limit minus the home’s purchase price.

Your total loan amount can be up to 110% of the property’s future value when complete.

But an appraiser will pore over your plans to make sure the final value of the home — after your projects are completed — will match the amount FHA is lending you.

What you can spend your rehab budget on

The Limited 203k is mostly intended for refreshing a home that’s a bit tired. So you can do things like:

  • Replacing flooring and carpeting
  • Installing or replacing an HVAC system
  • Remodeling a kitchen or bathroom
  • Fixing anything that’s unsafe
  • Making the home more energy-efficient

But you can’t use the money to do structural work, such as moving loadbearing walls or adding rooms.

The Standard 203k is very different.

You can do all the above and almost everything else, including serious construction work. Heck, you can even move the house to a different site if you get the FHA to approve your plans.

The 203k loan process

Limited 203k loans are pretty straightforward. Indeed, they’re easier than most to qualify for and set up.

But a Standard 203k isn’t like that. It may be your best path to your dream home. But there will be some extra hoops to jump through compared to a traditional mortgage.

Here’s the basic process to apply for and close an FHA 203k loan.

  1. Find your best lender — You can save thousands just by comparison shopping among multiple lenders. They aren’t all the same! Make sure the ones you consider offer FHA 203k loans and are experienced in delivering them. You’ll want a lender familiar with the specifics of 203k loans to make sure the process goes smoothly
  2. Get pre-approved — Pre-approval shows you your exact budget as well as your future interest rate. And you’ll get a chance to resolve any issues that arise in your application
  3. Find the home you want — This is the fun bit. But download the Maximum Mortgage Worksheet PDF from HUD’s website because that will help you assess whether your plans are affordable
  4. Find a 203k consultant — A 203k loan consultant will visit the home site, inspect the building, and then prepare a document outlining the project’s scope and specifications, along with a detailed cost breakdown for each of the repair tasks. He or she also prepares lender packages and contractor bid packages, along with draw request forms for stage payments
  5. Find a licensed contractor — Some lenders maintain lists of approved contractors. And your consultant may help you find a reputable one. Make sure candidates have proven records for projects similar to yours and are familiar with FHA 203k jobs. Many contractors add serious delays to 203k approval because they can’t seem to complete the paperwork correctly
  6. Have the home and project appraised — The lender will set this up for you
  7. Begin work — Once the appraisal is approved, the lender should let you close. And your contractor can then begin work, drawing on funds in an escrow account

Limited 203k loans require the borrower to live in the home while repairs are completed. So if it’s a new home purchase, you’ll have to move in within 60 days, which is the norm for FHA loans.

Standard 203k loans, on the other hand, might include structural repairs that render the home unlivable while construction is going on. In this case, the home buyer is not required to move in right away.

Rehab loan alternatives for investment properties

FHA 203k loans aren’t the only way to buy and renovate a home with one loan. Fannie Mae’s HomeStyle Renovation and Freddie Mac’s CHOICERenovation products can do much the same thing.

Since the HomeStyle and CHOICERenovation loans are conventional mortgage loans, they won’t charge for private mortgage insurance (PMI) if you put at least 20% down. This can save home buyers a lot of money on their monthly mortgage payments.

However, like the 203k loan, these programs are only available for primary residences.

If you’re buying a ‘true’ investment property — meaning you won’t live in one of the units yourself — these loans aren’t an option.

But investors have other renovation loans to choose from.

Traditionally, you would buy a home with a mortgage and then borrow separately — perhaps with a home equity line of credit or home equity loan — to make improvements. Then you could potentially refinance both loans into one later on.

Another option is using a cash-out refinance on your investment property or primary residence and putting the cashed-out funds toward repairs or upgrades.

Of course, all these types of loans require you to have enough equity built up to cover the cost of repairs.

And if you choose to draw from the equity in an existing investment property, you’ll pay higher interest rates.

But the upside is that there are no rules about how the funds can be spent. So if luxury upgrades are on your agenda, this could be the way to go.

Explore all your options

FHA 203k loans are only available to a select group of investors: Those who will buy a multi-unit property and live in one unit themselves.

For real estate investors looking to fix-and-flip or build a large portfolio of investment properties, an FHA loan isn’t the right answer. But there are plenty of other financing options out there.

Be sure to explore all your loan options before buying or renovating a home. Choosing the right program and lender can help you achieve your goals and save money on your project.

Verify your new rate (Feb 23rd, 2021)

Compare top lenders

Source: themortgagereports.com

Fixer-Upper With a Premium Pedigree: Eleanor Roosevelt’s Childhood Home for Sale

A historic home where Eleanor Roosevelt, wife of President Franklin D. Roosevelt, spent a lot of her childhood is on the market. Although the exterior emits plenty of historic vibes, the home is a real fixer-upper.

“The current interior is unfinished, and needs to be finished by the buyers,” says the listing agent, Paul Hallenbeck.

The agent has high hopes for an enterprising buyer willing to take on this well-pedigreed property.

“It’s going to be incredibly grand,” he says. “I want to go back to the house when it is finished.”

It may not be complete, but that doesn’t mean that this prime piece of property on the Hudson River will come cheap. The 10,000-square-foot Second Empire-style home in Germantown, NY, is listed for $5.25 million.

Known as Oak Terrace, Eleanor Roosevelt’s grandparents built the home in 1865.

“It was their summer house when they lived in New York City. Due to tragedies in her family, she eventually ended up living with [her grandparents] and spent summers there with them. Her bedroom is identified, so you can visit it,” Hallenbeck explains.

Roosevelt’s memoirs say she spent time reading books under the shade of the trees on the estate.

The location and setting is hard to top—for reading or whatever leisure pursuit you choose.

“It’s directly on the Hudson River, with views of the river and the Catskill Mountains beyond. It’s 25 acres and has total privacy there,” Hallenbeck says.

Exterior
Exterior

Stephen Hallenbeck

Exterior
Exterior

Stephen Hallenbeck

Views
Views

Stephen Hallenbeck

Exterior
Exterior

Stephen Hallenbeck

Interior
Interior

Stephen Hallenbeck

Veranda
Veranda

Stephen Hallenbeck

Veranda
Veranda

Stephen Hallenbeck

Veranda
Veranda

Stephen Hallenbeck

Those gorgeous views are visible from a wraparound veranda accessible from a number of spots in the house.

Inside, there are 18 rooms highlighted by a 700-square-foot great room with dramatic 16-foot ceilings. A grand staircase goes up 36 feet and is topped by a spectacular coved ceiling with skylights.

Each of the six bedrooms in the four-story house comes an attached bathroom, including what Hallenbeck says will be a marvelous master suite.

Staircase
Staircase

Stephen Hallenbeck

Interior
Interior

Stephen Hallenbeck

Ceiling
Ceiling

Stephen Hallenbeck

Ceiling
Ceiling

Stephen Hallenbeck

Van Lamprou, a co-founder of Dolce Vita footwear, is the home’s current owner. He bought the home in 2013, for $2.85 million.

In the years since, he has poured lots of money into unglamorous but necessary elements to bring the home into the 21st century.

“The current owner has done an enormous amount of work,” Hallenbeck says. “He has redone the roof, drilled a new well, put in a new septic, installed modern heat and AC in the house, redone the fireplaces, and completely reinsulated the house.”

In addition to that infrastructure work, the home’s entire electrical and plumbing systems are also new.

Mechanicals
Mechanicals

Stephen Hallenbeck

Fireplace
Fireplace

Stephen Hallenbeck

Interior
Interior

Stephen Hallenbeck

Now that the crucial systems are in place, the next step is to finish off the interior.

“The owner decided to move ahead with other projects, instead of finishing the interior—which I think is probably a very good idea when you have a house like this,” Hallenbeck explains.

It will allow any buyers to customize to their personal taste the decor, finishes, and layout.

Hallenbeck estimates that the project will cost at least a million dollars.

“We’ve had quite a few people come with their architects and designers, trying to figure out how to finish it in the right way for them,” he says.

Interior
Interior

Stephen Hallenbeck

Interior
Interior

Stephen Hallenbeck

The perfect buyer is likely to be a family looking for a private weekend retreat, he says.

“When you’re outside here, you see the river and the Catskill Mountains beyond, and if you’re lucky, you see a boat or two on the river,” he adds. “But what you hear is nature, the wind. You don’t hear motorcycles or traffic. There are very few places like that.”

Interior
Interior

Stephen Hallenbeck

Source: realtor.com

Triumph Lending Review: A Near Perfect 5-Star Rated Lender

Posted on February 2nd, 2021

One of the highest-rated mortgage companies on LendingTree goes by the name “Triumph Lending,” which is a division of its larger parent company Network Funding, LP.

The Texas-based direct lender boasts an incredible 5-star rating out of 5 from more than 1,100 customer reviews, meaning they must be doing something right.

They also feature an elephant in their logo, which explains the choice of image above.

Much of their lending appears to take place in The Lone Star State, so if you live in Texas, they could be a good choice if customer service is important to you.

Triumph Lending Fast Facts

  • Direct-to-consumer mortgage lender
  • Founded in 1998, headquartered in Houston, TX
  • A division of parent company Network Funding, LP
  • Offer home purchase loans and mortgage refinances
  • A LendingTree Certified Lender (top-10 in customer satisfaction)
  • Licensed to do business in six states (most active in Texas)

Triumph Lending a direct-to-consumer mortgage lender that seems to live online, meaning you can apply for a home loan remotely from their website.

The Houston-based company actually got its start as a wholesale mortgage lender, meaning they worked exclusively with mortgage brokers, as opposed to the general public.

Later, Triumph transformed into what they describe as a “hybrid retail mortgage origination company,” meaning they likely have both a retail and wholesale lending division, and/or can broker out loans when necessary.

What this means to homeowners and prospective home buyers is you can work with them directly to obtain a mortgage by calling them up or visiting their website.

They were founded in 1998 by Rex Chamberlain (current CEO) and Greg “Buzz Baker (president), who also run parent company Network Funding, LP.

At the moment, they appear to be licensed to do business in the following states: Arizona, Colorado, Florida, Illinois, Texas, and Virginia.

How to Apply with Triumph Lending

  • You can call, request a quote online, or simply apply immediately via their website
  • Their digital application allows you to apply in either English or Spanish
  • They embrace the latest technology but believe there’s no substitute for one-on-one interaction
  • Borrowers can manage their loan from start to finish via the online portal

You’ve basically got three options here. You can simply call them up on the phone to speak with a licensed loan officer and obtain pricing and loan options.

Or you can fill out a short quote request form on their website and wait for a loan officer to call you back.

Alternatively, you can visit their website and click on “Apply Now” and begin immediately by creating an account.

My recommendation is to always get pricing first, then decide if the company is competitive enough to follow through with the application. After all, you don’t want to waste your time or theirs.

Triumph says they offer an “all-online mortgage application,” which I assume means they use a digital platform that allows you to link financial accounts, scan/upload documents, and eSign disclosures.

You also get paired with a dedicated loan officer, processor, and closing team who will guide you step-by-step from start to finish.

Applicants can manage their loan 24/7 via the secure online borrower portal, which provides real-time updates and current loan status.

Based on their many positive testimonials, it sounds like they make it super easy to apply for a home loan.

Loan Programs Available at Triumph Lending

  • Home purchase loans
  • Home renovation loans
  • Refinance loans: rate and term and cash out
  • Conforming loan backed by Fannie Mae and Freddie Mac
  • Jumbo home loans
  • FHA loans
  • VA loans
  • USDA loans

Triumph Lending offers both home purchase loans and mortgage refinance loans, including rate and term refis and cash out refis.

If you’re buying or currently own a fixer-upper, you can also apply for a home renovation loan.

You can get a conforming loan backed by Fannie Mae and Freddie Mac, or a jumbo loan if your loan amount exceeds local loan limits.

They have the full slate of government-backed loan programs available, including FHA loans, USDA loans, and VA loans.

With regard to loan types, you can get a fixed-rate mortgage such as a 30-year or 15-year fixed, or a hybrid adjustable-rate mortgage, including a 5/1 ARM or 7/1 ARM.

They lend on all the usual property types, including single-family residences, condos/townhomes, and 1-4 unit investment properties.

Triumph Lending Mortgage Rates

While they do say they’ve got the “most competitive rates and terms on the market” right on their website, they don’t actually reveal their mortgage rates anywhere.

Some of the bigger banks and lenders will show you daily mortgage rates just to give you an idea of pricing, which is a nice touch.

Unfortunately, this isn’t the case with Triumph Lending. So if you want to get pricing, you’ll either need to call or submit a free rate quote request on their website.

This is probably the best way to get started as you can determine how their pricing stacks up to other mortgage companies out there.

As always, be sure to compare both the interest rate offered along with the closing costs, since you need to get an apples-to-apples comparison, and cannot do so without both.

Triumph Lending Reviews

Where Triumph Lending really seems to shine is in customer satisfaction. In fact, they’re nearly perfect based on their reviews.

Per LendingTree, they’ve got a 5-star rating out of 5 from over 1,100 reviews, with all 5-star reviews expect for two, which are 4-star reviews. That’s pretty impressive.

Additionally, they are a “Certified Lender,” which is defined as having demonstrated organizational commitment to employee development while providing “exemplary service” to LendingTree customers.

They also landed in the top-10 for customer satisfaction on the LT platform in both the second and third quarter of 2020.

On Zillow, it’s the same story – a near-perfect 4.99-star rating out of 5 from more than 350 reviews.

As I scanned through the reviews, I noticed that many of them highlighted the fact that the interest rate received was lower than expected, as were the closing costs in a lot of cases.

They’ve also got a 4.5-star rating on Google from about 15 reviews and a 5-star rating on Yelp from about 25 reviews.

While they’re not an accredited company with the Better Business Bureau, they do have an ‘A+’ rating based on their complaint history.

This means they’re generally good about resolving any customer issues that may come up quickly and competently.

Triumph Lending Pros and Cons

The Good

  • You can get started directly from their website
  • Offer a digital mortgage application using the latest tech
  • Can apply for a mortgage in both English or Spanish
  • Plenty of loan programs to choose from
  • Amazing customer reviews (nearly perfect ratings)
  • A+ BBB rating
  • Free mortgage calculator on their website

The Not

  • Do not publicize mortgage rates or lender fees
  • Not licensed in all states

(photo: Neil Ransom)

Source: thetruthaboutmortgage.com

7 Insider Secrets About House Flipping To Put You on the Path to Profitability

Is 2021 the year you’re going to buy a real estate investment property? If you have your sights set on flipping a house for a big profit, you likely know how much work is involved. Sure, popular real estate reality shows like “Flip or Flop” and “Flipping Across America” make fix-and-flip investing look like a feasible endeavor, but you’re wise to the magic of TV, right?

The truth is that flipping a house is rife with challenges, from financial setbacks to breakdowns in communication with your construction crew. Plus, low interest rates mean properties are flying off the market, especially in up-and-coming neighborhoods.

So how can house-flipping newbies compete today? By learning from those with more experience. We spoke to successful home flippers about what they wish they had known when starting out. Hopefully their tips below will help you minimize pain and maximize profits.

1. Stick to your maximum allowable offer

Our experts all agree that buying a fix-and-flip investment should not be an emotional decision. There are certain formulas that every house flipper needs to calculate in order to make a profit.

“Real estate investing is a numbers business, and if the deal doesn’t make sense when you crunch the numbers, you should be able to walk away,” says Hayden Lyon of Cowtown Home Buyers, a real estate investment firm in Fort Worth, TX.

“Stick to your maximum allowable offer. Going above your MAO is just asking for trouble,” says Ryne Lambert, co-founder of Sell My House, a real estate investment firm in Green Bay, WI.

The general rule when determining your MAO is not to pay more than 70% of the property’s after-repair value, or ARV, minus repair estimates. For example, if the property’s ARV will be $150,000, you would subtract the costs to flip (including the cost of a loan, repairs, and other fees) and then multiply that number by 70%. That will give you the MAO you should make on the property.

However, Lambert recommends a more exact formula: “We calculate MAO as ARV minus rehab estimates, selling costs, and minimum gross profit,” he says. “Our detailed formula makes our offer more competitive for sellers while still providing us a nice profit.”

2. Build a buffer into your renovation budget

Anyone who’s undertaken repairs on their house or an investment property knows things rarely go as planned. Permit delays, bad weather, and unforeseen expenses can all throw a wrench in the works—and revise your bottom line.

That’s why Lambert advises new investors to build a buffer of up to 25% into their rehab estimate.

3. Don’t always go with the cheapest contractor

Finding the right contractor can help keep renovation costs in check—but right does not always mean the least expensive.

“When I was new, I thought in order to keep as much profit margin in the flip as I could, I needed to choose the lowest contractor bid,” says Jonathan Faccone of Halo Homebuyers, a real estate consultant in Bridgewater Township, NJ.

“You do have to manage costs prudently, but going with the lowest contractor bids usually end up costing you more in the long run,” says Faccone. “Be cautious about choosing the cheap price and, instead, go with the contractor who offers the best quality and most professional work for your money.”

4. Make sure the contractors have a clear scope of work

You may be able to head off issues with contractors—including plumbers, electricians, and general contractors—by ensuring they present a clear scope of work for the project, experts advise.

“The scope of work usually includes working with the city to obtain permits, ordering materials and equipment, and confirming the house plans. This section will save you a lot of time and money on the back end of the project,” says Shawn Breyer of Breyer Home Buyers, a real estate investing firm in Atlanta.

Most importantly, start building relationships with contractors in the areas where you invest, so you know whom you can trust for any project.

5. Provide a quality product

As fast as homes are selling today, the market is filled with many discerning buyers.

“Often, the ultimate buyer of a flip expects the home to compare with existing homes—or even new construction—in quality and value,” says Greg Kurzner, a Realtor ® for ERA Atlantic Reality in Alpharetta, GA.

Lyon agrees: “Focus on value-add renovations and amenities. Research shows buyers want a nice kitchen and bathrooms. Of course, everything should be functional and up to code, but you want to create an instant emotional connection for potential buyers.”

6. Get your own finances in order before you start

Several investors pointed out the importance of running your blossoming home-flipping company as a business—because it is. That means tracking all of your expenses so you can make better decisions for greater profits. Be extremely organized, and document every purchase order, utility bill, and closing fee that’s involved in the project.

It’s also important to have your own financial house in order before you start.

“If all goes well, you’re about to start making money in large chunks. If you lack proper discipline, you’ll wind up worse than when you started,” says Billy Ross, CEO at RFTA Properties, a residential real estate investment company in Winter Park, FL.

7. Expect to put time and money into marketing

James Fitzgibbons of Ledge Real Estate Solutions, in Windermere, FL, says he wishes he had spent more time in his early years learning how to market homes efficiently.

“We have a wrapped car that we drive around town,” he says. “We’ve driven for dollars, and we’ve used direct mail marketing. Today, we advertise online through Google and Facebook. All of these methods have potential if done right.”

Source: realtor.com