5 Myths (and 5 Truths) About Selling Your Home

True or false: All real estate advice is good advice. (Hint: It depends.)

Everyone has advice about the real estate market, but not all of that unsolicited information is true. So when it comes time to list your home, you’ll need to separate fact from fiction.

Below we’ve identified the top five real estate myths — and debunked them so you can hop on the fast track to selling your property.

1. I need to redo my kitchen and bathroom before selling

Truth: While kitchens and bathrooms can increase the value of a home, you won’t get a large return on investment if you do a major renovation just before selling.

Minor renovations, on the other hand, may help you sell your home for a higher price. New countertops or new appliances may be just the kind of bait you need to reel in a buyer. Check out comparable listings in your neighborhood, and see what work you need to do to compete in the market.

2. My home’s exterior isn’t as important as the interior

Truth: Home buyers often make snap judgments based simply on a home’s exterior, so curb appeal is very important.

“A lot of buyers search online or drive by properties before they even enlist my services,” says Bic DeCaro, a real estate agent at Westgate Realty Group in Falls Church, Virginia. “If the yard is cluttered or the driveway is all broken up, there’s a chance they won’t ever enter the house — they’ll just keep driving.”

The good news is that it doesn’t cost a bundle to improve your home’s exterior. Start by cutting the grass, trimming the hedges and clearing away any clutter. Then, for less than $50, you could put up new house numbers, paint the front door, plant some flowers or install a new, more stylish porch light.

3. If my house is clean, I don’t need to stage it

Truth: Tidy is a good first step, but professional home stagers have raised the bar. Tossing dirty laundry in the closet and sweeping the front steps just aren’t enough anymore.

Stagers make homes appeal to a broad range of tastes. They can skillfully identify ways to highlight your home’s best features and compensate for its shortcomings. For example, they might recommend removing blinds from a window with a great view or replacing a double bed with a twin to make a bedroom look bigger.

Of course, you don’t have to hire a professional stager. But if you don’t, be ready to use some of their tactics to get your home ready for sale — especially if staging is a trend where you live. An unstaged house will pale when compared to others on the market.

4. Granite and stainless steel appliances are old news

Truth: The majority of home shoppers still want granite counters and stainless steel appliances. Quartz, marble and concrete counters also have wide appeal.

“Most shoppers just want to steer away from anything that looks dated,” says Dru Bloomfield, a real estate agent with Platinum Living Realty in Scottsdale, Arizona. “When you a design a space, you need to decide if you’re doing it for yourself or for resale potential.”

She suggests that if you’re not planning to move anytime soon, decorate how you’d like. But if you’re planning to put your home on the market within the next couple of years, stick to elements with mass appeal.

“I recently sold a house where the kitchen had been remodeled 12 years ago, and everybody thought it had just been done because the owners had chosen timeless elements: dark maple cabinets, granite counters and stainless steel appliances.”

5. Home shoppers can ignore paint colors they don’t like

Truth: Moving is a lot of work, and while many home buyers realize they could take on the task of painting walls, they simply don’t want to.

That’s why one of the most important things you can do to update your home is apply a fresh coat of neutral paint. Neutral colors also help a property stand out in online photographs, which is where most potential buyers will get their first impression of your property.

Hiring a professional to paint the interior of a 2,000-square-foot house will cost about $3,000 to $6,000, depending on labor costs in your region. You could buy the paint and do the job yourself for $300 to $500. Either way, if a fresh coat of paint helps your home stand out in a crowded market, it’s probably a worthwhile investment.

Related:

Originally published April 1, 2014.

Source: zillow.com

The Pros and Cons of Renting Out Your Mother-in-Law Apartment

Also known as secondary units, these spaces can be handy when family visits or moves in. But if you’re not housing relatives, you can still put the unit to work.

Whether you’re buying your first home, looking to build one, or trying to make use of some free space, mother-in-law apartments (also known as accessory dwelling units or secondary units) are a great investment — even if you’re not planning to have relatives move in.

By renting out a section of your home, you can help ease the strain of a mortgage, or grow your savings. While these units can be difficult to find while house hunting, their advantages make them worth the extra effort — and if that doesn’t work, you can always build your own.

What is a secondary unit?

Similar to duplexes, secondary units offer an entirely separated living space that is part of a single building. They typically have their own entrance, bedrooms, kitchen, and living space. However, while duplex units are typically mirrors of each other, secondary units are a smaller part of a primary property.

In some cases, homes are built with a secondary unit in mind, and the design reflects an obviously segmented property. Other times, homeowners add a secondary unit to take advantage of underused space.

If the home has multiple bathrooms and kitchens, a retrofit can be as simple as blocking off a staircase. Otherwise, you’ll need to add basic amenities in order to rent to tenants.

While this construction may seem expensive, it can pay for itself in as little as a year or two. And as long as it doesn’t add to the square footage of the home, this type of addition may not even increase the property taxes (though your income taxes will increase).

Tally the benefits

Immediately and long term, the biggest advantages to owning a property with a secondary unit are financial. A tenant can be a huge help for first-time home buyers saddled with a steep mortgage payment. If the mortgage isn’t necessarily a concern, that rent money can help with bills or savings contributions.

Looking ahead, some homeowners will put their tenant’s rent money toward a down payment on their next home, which opens up the possibility of moving out and renting both units.

For parents whose children have recently left the nest, adding a secondary unit to rent out can help them save for retirement or provide income in twilight years. Taking recent trends into account, having this type of unit available can also be great in case adult children need to move back in, but don’t want to sleep in their old bedroom.

Beyond the initial return on investment, secondary units have long-term advantages. Along with savvy home buyers, real estate investors and property management companies are always on the lookout for these types of properties, driving up demand and price. And as any house hunter in the last decade can tell you, they go fast once they hit the market. This means that anyone planning to build their own house should definitely consider the possibility of adding a secondary unit, which may help boost the resale value and interest in the property.

The downside

Once you begin renting a secondary unit, you are no longer just a homeowner — you are a landlord. For first time homeowners, this may be a bit too much to handle; the unexpected costs and problems that creep up on new homeowners are magnified when managing two units. Repairs that you may normally leave for another day become immediate when they’re in your tenant’s unit.

You’re also responsible for finding a good tenant who will not only pay the rent on time, but will take care of your home. Tenants are sometimes harder on properties than property owners, which can be jarring for inexperienced landlords. Keep in mind that any damage your tenants do is damage done to your home.

So while houses with secondary units may seem like a cash machine, that machine requires a lot of time and maintenance to keep running. Make sure you have the time and energy to be on-call for repairs, emergencies, bill collection, complaints and more.

Finally, make sure you’ve done all your research before you start bricking up that basement staircase. State and local regulations vary, and while you’re probably okay to buy a home with an existing secondary unit, building your own may come with additional fees and paperwork.

Despite these potential issues, property management provides valuable experience that will benefit any homeowner. For many, the benefits of owning a property with a secondary unit far outweigh the disadvantages. Paying down a mortgage, building a nest egg, or increasing a home’s value are all great reasons to look into properties with secondary units.

Related:

Source: zillow.com

How to Start Reselling Shoes and Make Some Serious Money

Looking for ways to make money remotely? How about a socially-distant side hustle that could turn into a full-time business?

You might want to consider reselling sneakers. Not used sneakers from the dark reaches of your closet but new or gently used shoes that you buy for a bargain and then sell for more using handy apps. During the pandemic, demand in the sneaker market hasn’t gone down. Instead, almost everything has moved online, making it ideal for aspiring entrepreneurs who want to make money with a potentially lucrative side hustle.

How One Hustler Makes $100,000 a Year Flipping Sneakers

Bryson Honjo is a sneaker reseller, owner of United Hawaii and star of a prospering YouTube channel that teaches viewers how to start reselling shoes. Honjo started his journey in the sneaker business in 2016, and now makes anywhere between $50,000 and $100,000 per year.

“I do attribute a lot of that to the fact that I have a social media presence,” says Honjo, referencing the higher end of his potential income bracket in any given year.

He says that while his social media presence makes selling easier, it’s not a mandatory requirement to success in the sneaker resell game. He has seen resellers make up to $50,000 per year by posting inventory exclusively on reselling apps. No YouTube channel required.

Get Started Reselling Shoes

The mechanics of making money in this niche are fairly simple, but that doesn’t necessarily mean it’s easy. You can’t come in with zero knowledge of the industry. To get started, you’ll need to learn about the product, how you’ll make money and how to anticipate overhead costs.

Here’s how the sneaker resale market works in a nutshell:

Sneakers are released in limited quantities. As a sneaker reseller, you can purchase shoes brand new direct from retailers or manufacturers at retail prices. Like-new and gently-used shoes can be thrifted or purchased on any number of apps. You might also be able to use these apps to find a good deal from another reseller on what’s known as the “aftermarket.”

After you’ve built your inventory, you sell your shoes directly to consumers at a markup.

Building Inventory

There was already an online presence for sneaker reselling prior to the pandemic, but in the past year Honjo says that almost everything has moved online. As you build your inventory, he suggests looking to these retailer apps:

  • Adidas
  • Adidas Confirmed
  • SNKRS (for Nike shoes)

“Oftentimes, obtaining sneakers direct from a retailer is the most difficult part of the process because the quantities are extremely limited and the demand is also very high,” explains Honjo.

He says to make things easier, you can look to these aftermarket apps:

    • Goat
    • Sneakercon
    • StockX
    • Ebay

After checking the aftermarket apps, he says you can also explore online sneaker shops, other resellers’ Instagram pages, Facebook groups and Reddit to find additional inventory.

“Personally, I think Goat app is the best app on the market for reselling sneakers,” Honjo says.

He uses Goat as his buying and selling platform, on top of using it as a pricing guide to make sure his listings are competitive. He also notes that it’s also one of the “safer” apps when it comes to product authenticity.

Sneaker Reselling: Volume is King

When you’re starting, you don’t need to buy the most expensive sneakers on the market. In fact, what you should be looking for isn’t necessarily the most expensive sneaker; instead, you should be looking for the sneaker with the highest return on investment.

“Volume is king in the sneaker game,” says Honjo. “I’ve seen many successful resellers completely bypass the expensive, hype sneakers and go straight to the Nike outlets to find cheaper shoes that they can resell for a higher profit.”

He notes that not every shoe will go for a profit, though. It’s helpful to cross reference any prices you see at an outlet or retailer with an app like Goat. That way you can see what the shoe is reselling for in real time, estimating your potential profit margins.

Shoes to Buy: Best and Worst Returns

Let’s say you have $100, and you’re looking for a pair of shoes with a decent return on investment. You’re not going to be able to afford a pair of Nike Air Jordans, but there are other routes you can take.

Honjo says Jordan 1 Highs reliably turn a good profit, as do Adidas Ultraboosts. Either pair could potentially come in under $100 at retail. He recommends staying away from brands like Vans or Under Armour as they don’t have the same resale value as a pair of Nike or Adidas shoes.

Adidas’ Yeezy is another incredibly popular shoe brand you might think would be great for resale. But Honjo says the market has become oversaturated, making the potential profit before overhead costs about $30 per pair.

However, if you hold onto your inventory for a while, Yeezys can become more valuable over time. Honjo estimates that if you hold onto a new pair of Yeezys for at least 12 months, you could see the sneaker resale profits creep up to anywhere from $60 to $100 per pair.

Calculating Overhead Costs

Thirty dollars in profit on a new pair of Yeezys might not sound bad. But you don’t get to keep all $30 when you’re reselling sneakers.

First, you will have to pay fees to the apps. These fees aren’t huge, but they do eat away at your profit margin. This is especially noticeable when your profit margin is small.

Then, make sure to account for the costs of shipping. That’s not just postage. It’s also boxes, tape, packaging materials and any gas you may need to use going back and forth to the post office – if the post office doesn’t do pick-ups in your area.

You can recoup some of these costs by charging higher shipping fees. But if they’re dramatically higher than your competition, the consumer will notice.

On top of that, your side hustle is subject to income taxes. Honjo says he sets aside about 20% to 25% of his reselling profit for federal, state and local income taxes.

“You really want to keep accurate books when you are doing high volume,” he explains. “This will save you tons of stress when tax season comes around.”

Finding Customers

You’ve built your inventory, considered potential profit margins and accounted for your overhead costs. Now that you have your sneakers, how will you find customers?

Honjo’s No. 1 tip for reselling sneakers is to be active in your digital community. This is particularly true if you’re using social media to promote your business.

Whether it’s Facebook, Instagram or Youtube, commenting, posting and engaging will help build your reputation. Not every interaction has to be about securing a sale – those will come once you’ve established yourself as an authority in the sneaker resale market.

Of course, you don’t need to become an influencer to become a sneaker reselling entrepreneur.

“If you are just starting off, reselling platforms like Ebay and Goat have enough of a customer base where you really don’t need a social media presence,” says Honjo. “Your sneakers will still sell regardless. It just might take a bit longer.”

Is Becoming a Sneaker Reseller the Right Side Hustle for Me?

If you’re a self-driven entrepreneur, you can make good money selling sneakers. Possibly even enough money to replace your 9-to-5 income if you hustle hard enough.

If you’re going to build a business, it’s easier to put in the work if it’s something you’re passionate about. If you enjoy sneakers as a fashion statement or consider yourself a sneakerhead, this side hustle could be a particularly good fit.

It can also be ideal for those who might already know they enjoy collectible industries. Even if the product is different, the experience of the work is similar. It’s that same thrill from searching for a great deal, getting your hands on it and then raking in the profit.

Brynne Conroy is a contributor to The Penny Hoarder.

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Source: thepennyhoarder.com

How to to Start Reselling Shoes and Make Some Serious Money

Ready to stop worrying about money?
Whether it’s Facebook, Instagram or Youtube, commenting, posting and engaging will help build your reputation. Not every interaction has to be about securing a sale – those will come once you’ve established yourself as an authority in the sneaker resale market.

How One Hustler Makes $100,000 a Year Flipping Sneakers

Source: thepennyhoarder.com
You can recoup some of these costs by charging higher shipping fees. But if they’re dramatically higher than your competition, the consumer will notice.
Sneakers are released in limited quantities. As a sneaker reseller, you can purchase shoes brand new direct from retailers or manufacturers at retail prices. Like-new and gently-used shoes can be thrifted or purchased on any number of apps. You might also be able to use these apps to find a good deal from another reseller on what’s known as the “aftermarket.”

Get Started Reselling Shoes

Privacy Policy
Let’s say you have 0, and you’re looking for a pair of shoes with a decent return on investment. You’re not going to be able to afford a pair of Nike Air Jordans, but there are other routes you can take.
“Personally, I think Goat app is the best app on the market for reselling sneakers,” Honjo says.
If you’re a self-driven entrepreneur, you can make good money selling sneakers. Possibly even enough money to replace your 9-to-5 income if you hustle hard enough.

Building Inventory

“You really want to keep accurate books when you are doing high volume,” he explains. “This will save you tons of stress when tax season comes around.”

  • Adidas
  • Adidas Confirmed
  • SNKRS (for Nike shoes)

However, if you hold onto your inventory for a while, Yeezys can become more valuable over time. Honjo estimates that if you hold onto a new pair of Yeezys for at least 12 months, you could see the sneaker resale profits creep up to anywhere from to 0 per pair.
If you’re going to build a business, it’s easier to put in the work if it’s something you’re passionate about. If you enjoy sneakers as a fashion statement or consider yourself a sneakerhead, this side hustle could be a particularly good fit.

    • Goat
    • Sneakercon
    • StockX
    • Ebay

He notes that not every shoe will go for a profit, though. It’s helpful to cross reference any prices you see at an outlet or retailer with an app like Goat. That way you can see what the shoe is reselling for in real time, estimating your potential profit margins.
Adidas’ Yeezy is another incredibly popular shoe brand you might think would be great for resale. But Honjo says the market has become oversaturated, making the potential profit before overhead costs about per pair.
“Oftentimes, obtaining sneakers direct from a retailer is the most difficult part of the process because the quantities are extremely limited and the demand is also very high,” explains Honjo.

Sneaker Reselling: Volume is King

On top of that, your side hustle is subject to income taxes. Honjo says he sets aside about 20% to 25% of his reselling profit for federal, state and local income taxes.
“I do attribute a lot of that to the fact that I have a social media presence,” says Honjo, referencing the higher end of his potential income bracket in any given year.
When you’re starting, you don’t need to buy the most expensive sneakers on the market. In fact, what you should be looking for isn’t necessarily the most expensive sneaker; instead, you should be looking for the sneaker with the highest return on investment.

Shoes to Buy: Best and Worst Returns

After you’ve built your inventory, you sell your shoes directly to consumers at a markup.
You’ve built your inventory, considered potential profit margins and accounted for your overhead costs. Now that you have your sneakers, how will you find customers?
Here’s how the sneaker resale market works in a nutshell:
Honjo’s No. 1 tip for reselling sneakers is to be active in your digital community. This is particularly true if you’re using social media to promote your business.

Calculating Overhead Costs

He says that while his social media presence makes selling easier, it’s not a mandatory requirement to success in the sneaker resell game. He has seen resellers make up to ,000 per year by posting inventory exclusively on reselling apps. No YouTube channel required.
Honjo says Jordan 1 Highs reliably turn a good profit, as do Adidas Ultraboosts. Either pair could potentially come in under 0 at retail. He recommends staying away from brands like Vans or Under Armour as they don’t have the same resale value as a pair of Nike or Adidas shoes.
You might want to consider reselling sneakers. Not used sneakers from the dark reaches of your closet but new or gently used shoes that you buy for a bargain and then sell for more using handy apps. During the pandemic, demand in the sneaker market hasn’t gone down. Instead, almost everything has moved online, making it ideal for aspiring entrepreneurs who want to make money with a potentially lucrative side hustle.

Bryson Honjo is a sneaker reseller, owner of United Hawaii and star of a prospering YouTube channel that teaches viewers how to start reselling shoes. Honjo started his journey in the sneaker business in 2016, and now makes anywhere between ,000 and 0,000 per year.
First, you will have to pay fees to the apps. These fees aren’t huge, but they do eat away at your profit margin. This is especially noticeable when your profit margin is small.
“Volume is king in the sneaker game,” says Honjo. “I’ve seen many successful resellers completely bypass the expensive, hype sneakers and go straight to the Nike outlets to find cheaper shoes that they can resell for a higher profit.”

Finding Customers

The mechanics of making money in this niche are fairly simple, but that doesn’t necessarily mean it’s easy. You can’t come in with zero knowledge of the industry. To get started, you’ll need to learn about the product, how you’ll make money and how to anticipate overhead costs.
There was already an online presence for sneaker reselling prior to the pandemic, but in the past year Honjo says that almost everything has moved online. As you build your inventory, he suggests looking to these retailer apps:
“If you are just starting off, reselling platforms like Ebay and Goat have enough of a customer base where you really don’t need a social media presence,” says Honjo. “Your sneakers will still sell regardless. It just might take a bit longer.”
Thirty dollars in profit on a new pair of Yeezys might not sound bad. But you don’t get to keep all when you’re reselling sneakers.
Then, make sure to account for the costs of shipping. That’s not just postage. It’s also boxes, tape, packaging materials and any gas you may need to use going back and forth to the post office – if the post office doesn’t do pick-ups in your area.

Is Becoming a Sneaker Reseller the Right Side Hustle for Me?

After checking the aftermarket apps, he says you can also explore online sneaker shops, other resellers’ Instagram pages, Facebook groups and Reddit to find additional inventory.
Of course, you don’t need to become an influencer to become a sneaker reselling entrepreneur.
It can also be ideal for those who might already know they enjoy collectible industries. Even if the product is different, the experience of the work is similar. It’s that same thrill from searching for a great deal, getting your hands on it and then raking in the profit.
Looking for ways to make money remotely? How about a socially-distant side hustle that could turn into a full-time business? <!–

–>




Brynne Conroy is a contributor to The Penny Hoarder.

What Criteria is Required for a Business Loan

Getting a Business LoanGetting a Business Loan

If you have an idea for a new business, or a plan for expanding your existing business, your ability to achieve your goals could depend on your ability to receive financing. A transparent understanding of small business loan requirements can better prepare you for the types of questions a bank might ask and the things you will need to provide.

You & Your Business

While business and personal loans are different, you will likely find that your ability to secure financing for your small business is contingent on your own history and characteristics.

Banks expect borrowers to provide fundamental personal insights. This includes current and previous addresses, educational level, criminal record, and a credit report, along with other information. A lender’s willingness to give your company credit is going to depend directly on your financial situation, such as your current income to debt ratio, debt history, and ability to contribute personal assets as collateral.

Obtaining a small business loan may also be determined by your ability to convince your loan specialist that your business plan is viable. This will come down to your experience, education, credibility, and ability to present a well-conceived plan.

Small Business Loan Bank Requirements

What exactly do lenders expect of you when considering your company for a small business loan? Here are some general loan requirements to check off before you submit a loan application:

1. Personal Credit History

Unless your business is already well-established and profitable, your personal credit history will take the place of your company’s financial history. Before you try applying for a small business loan, it’s a good idea to understand where your credit stands with each credit bureau and if any improvements need to be made.

2. Business Plan

In most cases, your ability to repay your business loan will depend directly on the success of your business, so lenders are going to want to see a viable business plan. Business loans are only distributed when there is a predictable rate of return on investment for the capital provided. Your business plan should be a strategic document that includes an overview of your business goals, a competitive analysis, a marketing plan, and well-researched data on price points and cost factors.

3. Business History and Projections

If you have an existing business, your lender is going to want to review a list of the organization’s liabilities and assets to ensure that your business is not financially over-extended. Balance sheets and cash flow statements provide lenders a dynamic representation of whether your business is growing and succeeding, or failing. If your company has not had the chance to build up this type of history, you will need to demonstrate credible projections that give your creditor confidence in your ability to repay the loan.

4. Asset Base

Most banks won’t release finances without securing it against an asset. For a larger corporation, assets may include machinery, office equipment, or any real estate the organization owns. Businesses can also use stock and intellectual property as an asset if it has a fair market value. In some cases, the bank will request collateral. However, it is generally only necessary for low-rate installment debts and start-up loans. Using personal assets is possible, but not always preferable.

5. Industry Experience

Banks rarely gives loans to individuals in a business that they don’t have any experience in. Most creditors will want to know to see the company founders or board members who have experience and knowledge in building a profitable business. If you don’t have experience in your desired industries, add valuable members to your time by seeking business advisors. This will not only help you in obtaining a loan, but these advisors can play an essential role in problem-solving while you feel out a new industry.

Keep in mind that the entire application process is about getting the lender to believe in you and your business. While the above criteria are important, your organization, thoroughness, and belief in yourself while presenting the information can make or break your ability to receive a small business loan.

Source: creditabsolute.com

Buying a Rental Property vs. a Typical Mortgage or Second Home

If you’ve purchased a home or property at some point in your life, you might think you’re prepared for the process of buying a rental property. That may not be the case, though. The financing process for rental properties can be quite different than it is with other properties.

When you buy a rental property, don’t expect the loan steps to be like they were for a mortgage on your primary or vacation home. Banks treat these types of loans differently because you won’t be living in the house and will be treating it as an income source, which makes it a riskier move for them to finance. If a financial crisis occurs, it’s less likely that a rental mortgage would be paid than the mortgage on a primary residence, so it’s harder to get a loan for this type of property.

If you want to invest in a rental property, you need to know everything about the financing process before you take the leap. Whether it’s info on mortgage rates or insight into the down payment requirements, here’s what you need to know and what to expect before you get started.

In this article

What is a rental property?

A rental property is a property that you purchase with the intention of renting to someone else after you purchase it. This type of property is considered an investment property. The initial investment is the price of the property and any upkeep that’s necessary. The return on the investment is the rental income the owner brings in.

Rental properties can take many different forms. A rental property you purchase could be a single-family home or be in a multi-unit building. It could be a commercial building, a standalone house in the country or a condo in a metro area. There are also different forms of rentals. The property could be rented out to long-term tenants or used to make money through short-term rentals like Airbnb.

It’s also important to differentiate between residential and commercial rental properties. A residential property could be a house, duplex, apartment, townhouse or another type of property that someone might reside in. A commercial property is one where the units are rented out to businesses rather than individuals.

Rental properties are a consistently popular investment opportunity. In a 2019 Gallup poll, 35% of Americans listed real estate as the best long-term investment. Many people who invest in real estate choose to finance the property rather than paying for it in full. Doing so allows them to receive a monthly cash flow, some of which goes toward the mortgage payments.

Rental property mortgages are available through many of the same lenders you might use to get a regular home loan. But while the lenders overlap, these loans often come with different terms and retirements than home loans do.

[ Read: What I Wish I Knew Before Buying a Rental Property ]

How are mortgage rates different for rental properties?

Mortgage loans offer some of the lowest interest rates you can get on any type of loan. Before you start shopping for a rental property, though, keep in mind that interest rates on investment property mortgages are almost always higher than the typical market rate.

When lenders approve a mortgage for a rental property, they take on more risk than they do for a primary residence. This is due, in part, to the fact that landlords often use their rental income to cover the monthly mortgage payment. If the property is unoccupied for a period of time, the landlord isn’t bringing in rental income. For many property owners, a long-term vacancy would mean they can’t make their mortgage payment, which would cause issues for the lender. Therefore, lenders charge higher rates to shield themselves from this type of risk.

In most cases, rental property mortgage rates are roughly 0.50% to 0.75% higher than typical mortgage rates. Mortgage rates in early December fell to 2.92% for a 30-year fixed-rate mortgage on a primary home. As a result, you could expect the rate on a rental property to range from 3.42% to 3.67%.

The difference between these rates might seem minor, but it adds up over the life of a mortgage. Let’s say you borrow $300,000 in the form of a 30-year fixed-rate loan. If the mortgage loan was for your primary residence, you might get an interest rate as low as 2.92%. Over the 30-year life of the loan, you could expect to pay just over $150,000 in interest alone.

Now imagine that you took out the same mortgage for a rental property. You’ll be using the property as an investment, which means you’ll get an interest rate of 3.67%. Over the 30-year mortgage term, you would pay more than $195,000 in interest. That’s a full $45,000 more than you’d pay in interest at the lower residential mortgage rate.

[ Read: The Best Cities to Buy Rental Property ]

Down payment differences

In addition to the higher interest rate, rental property mortgages also typically require larger down payments. In most cases, the lender will require you to put at least 20% down when you buy a home.

According to a 2019 survey by the National Association of Realtors, the average down payment for all homebuyers is about 12%. When you look at just first-time buyers, the average down payment is just 6%. With a conventional loan, buyers can typically put down as little as 5%. With some government-backed loans and first-time homebuyer programs, minimum down payment requirements can be as little as nothing down to 3.5%.

For a rental property, the down payment requirements are a bit steeper. You’ll typically have to put down at least 15% on a single-family home. For multi-unit properties, the required down payment is likely to be at least 25%.

As with the higher interest rates, lenders ask for a larger down payment to account for the fact that investment property mortgages come with greater risk. Additionally, PMI isn’t attached to rental property loans with less than 20% down, meaning lenders can’t protect themselves in the same way they could on a mortgage for a primary residence.

Keep in mind that it may be in your best interest to put down an even larger down payment than is required by the lender. There’s often a correlation between the down payment and interest rate on a loan, and it will cut down on your monthly payment costs, too. As the size of the down payment increases, the interest rate often decreases, so putting more down on your rental property is always a good idea if you can afford to.

If you want to save money over the course of the loan, a larger down payment may help you to do so.

Source: thesimpledollar.com

What Do You Need and Want in Your Next Home?

In this article:

While everybody knows that buyers shop based on price range, there are many additional considerations to make when looking for a home. And, most buyers end up refining their criteria once they start touring homes. Ultimately, your home criteria should depend on your personal lifestyle and needs. Regardless of what you’re looking for, here are some general rules you should follow to make sure you’ll be happy with the home you buy for the foreseeable future.

What are the top features buyers look for in a home?

Today’s buyers are juggling many different priorities when it comes to buying a home, but according to the Zillow Group Consumer Housing Trends Report 2019, here are the features that rank as very important or extremely important to most buyers.

Neighborhood wants and needs for buyers

  • Safety: 82% say a neighborhood that feels safe is very or extremely important
  • Walkability: 60% say it’s very or extremely important
  • Preferred neighborhood: 56% say it’s very or extremely important
  • Proximity to shopping, services and/or leisure activities: 53% say it’s very or extremely important
  • Optimal commute to work or school: 52% say it’s very or extremely important
  • Offers a sense of community or belonging: 48% say it’s very or extremely important
  • Close to family and friends: 46% say it’s very or extremely important
  • In preferred school district: 43% say it’s very or extremely important

Home features buyers want

  • Within initial budget: 83% say it’s very or extremely important
  • Air conditioning: 78% of buyers say it’s very or extremely important
  • Preferred number of bedrooms: 76% of buyers say it’s very or extremely important
  • Preferred number of bathrooms: 67% of buyers say it’s very or extremely important
  • Private outdoor space: 67% of buyers say it’s very or extremely important
  • Preferred size/square footage: 67% of buyers say it’s very or extremely important
  • Floor plan/layout that fits preferences: 67% of buyers say it’s very or extremely important

28% of buyers look for a home to rent out, 27% looked for smart homes, 58% of buyers looked for assigned parking

1. Search for the right price

Price will ultimately dictate what you can or cannot buy. While looking at homes above your price range can be fun, it’s not a good use of time — and it can lead to heartbreak when you realize it’s not financially feasible. Despite this, Zillow research found that in 2019, just 55% of buyers stayed on budget, while 26% went over their initial budget.

How to set your home buying budget

Use Zillow’s Affordability Calculator: This handy tool gives you an initial budget range based on your income, existing monthly bills, and down payment amount. Once you have that range, you can set up Zillow alerts for homes on the market that fit your price range, along with other criteria.

Get pre-approved: Once you’re ready to really start your home search, you’ll want to get pre-approved by the lender of your choice. They’ll approve you for a loan up to a specific amount, based on your income, debt and credit history.

Forecast your mortgage payment: Even if you are pre-approved for a large loan from your lender, you should make sure you’re comfortable with your estimated monthly housing payment. When you use Zillow’s mortgage calculator to estimate your monthly payments, be sure the taxes, insurance, and HOA fees are accurate — those items can make a big difference in your monthly costs.

2. Prioritize the location

Next to budget, location is one of the most important things to consider when buying a house. The 2019 report uncovered that 24% of buyers found it difficult or extremely difficult to find a home in their desired location. If you can’t find or afford a home in your ideal neighborhood, you’ll want to ask yourself a few questions (and enlist the help of your agent) to find a location that fits your lifestyle, needs and budget. Remember — your home’s location can’t be changed, so take the time to really identify a neighborhood where you’ll be happy live.

Proximity to downtown

Unsurprisingly, homes closer to core downtown areas have better resale value, thanks to their shorter commutes. According to Zillow research, in 29 of the country’s 33 largest metro areas included in the analysis, buyers should expect to pay more per square foot for a home within a 15-minute rush-hour drive to the downtown core. That may be why 15% of buyers who compromise to stay within their budget add time to their commute.

Community attributes

If you like being able to walk to restaurants and shops, try walking the distance to town to see if it’s doable. Spend some time exploring the area, checking out nearby parks and figuring out what kinds of attractions are nearby.

Alternatively, if you’re someone who likes a more solitary life and doesn’t mind driving, you might prioritize a home that offers more privacy, perhaps in a location that’s off the beaten path.

School district quality

If you have kids (or are planning on having kids in the future), you want them to get the best education possible. Checking out the school district ratings is a starting point, but you should visit the local schools to gather your assessment of the education and programs. Even if you don’t have children, the school district that your home is in can impact your future resale value.

Flood zone status

Homes located in flood zones require additional insurance, and buying a home in a flood-prone area means you need to be prepared if a flood actually happens.

3. Think long term

According to the Zillow Group Report, the typical homeowner stays in their home for 14 years before selling. When shopping for a home, don’t just think of your immediate needs. Make sure the home you select will meet your long-term goals, so you won’t have to move again in the near future.

Bedrooms and bathrooms

If you plan to expand your family in the near future, make sure the new home can accommodate your plans, whether it’s an extra room for a new baby, an in-law suite for parents, or a guest bedroom if you’re moving out of state and anticipate lots of visitors. The same goes if you are planning to downsize or you have grown children who will be moving out soon.

Outdoor space

As mentioned above, most buyers rank outdoor space as important. If you have a dog (or plan to get one), have kids who need a safe place to play or are an avid gardener, you’ll want to make sure the home’s outdoor space meets your needs.

Potential to personalize

Many buyers look for a home that’s move-in ready, so they can avoid costly repairs and updates (especially right after moving in). But at the same time, it’s nice to be able to add some personal flair to make a house feel like home. If you’d like to add some of your own style, be sure to steer clear of homes that you won’t be able to change enough to fit your preferences.

Lifestyle amenities

Ideally, your new home should enhance your current lifestyle — and you’ve probably already envisioned what your life in a new home will look like. As you evaluate houses, consider your hobbies and what makes you happy. For example, if you love spending time outdoors, you probably want a home with a nice yard. If you love to cook, maybe a nice, big kitchen is on your wish list. And, think about your current living situation: What things do you wish were different?

4. Assess property condition

TV makes home renovations look easy, but in reality, they’re anything but. If you’re a first-time buyer who has never undergone a renovation, you may want to steer clear of a home in serious disrepair. The costs can add up quickly, and if the home needs structural work, it could delay your move-in, causing unnecessary stress. Here are the three major categories of property condition.

Move-in ready

A move-in ready home is new, close to new, or has been recently renovated. Zillow-owned homes are move-in ready homes that have been recently renovated by a licensed contractor, and are ready for new owners to start their lives.

Minor updates

A home that needs minor updates might have cosmetic issues you’d like to change, or have some dated mechanical systems that could be updated for energy savings. Learn more about minor cosmetic details below.

Major renovation

A home that needs major repairs is usually priced lower due to the work that needs to be done. One upside to a major renovation is the opportunity to personalize the home to your tastes. Keep in mind that the return on investment for a major renovation isn’t 100%, and you risk a delayed move-in if the repairs are more extensive than anticipated.

Check condition of costly systems

No matter the condition of the home you’re buying, make sure your inspector checks to make sure major systems and mechanicals in the home are functioning properly. If issues are uncovered, you’ll want to ask the seller to either repair them before closing or offer a credit so you can fix them yourself. Look out for the following costly issues:

  • Damaged roof
  • Older furnace or HVAC system
  • Flooding, water damage or mold
  • Old insulation
  • Plumbing issues
  • Exterior cracks
  • Uneven floors

5. Don’t focus on minor cosmetic details

No house is perfect, so try not to get hung up on little imperfections. For example, don’t eliminate a home from your list just because you don’t like the interior paint color. Cosmetic changes are fairly easy and affordable to make. Don’t let the following minor issues keep you from buying a house you would otherwise love:

  • Paint
  • Hardware
  • Furnishings
  • Landscaping

When you attend showings and open houses, or even when you’re just browsing through pictures online, it’s easy to get distracted by clutter. Try not to pay too much attention to the seller’s stuff — it’ll all be removed by the time you move in. Put in the effort to picture the house as a blank canvas for all of your belongings.

6. Stick with your must-haves

There’s a big difference between wants and needs, so create two different lists when searching for a home. For instance, a shorter commute may be a must-have, but smart home features are a nice-to-have. Practicality and functionality should always take priority over the bells and whistles.

Things to consider when buying a house: needs vs. wants

For example, your list of needs might look like this.

  • Need: shorter commute
  • Need: specific number of bedrooms and bathrooms
  • Need: parking

Other items might fall to your list of wants, like these.

  • Want: updated kitchen
  • Want: upstairs washer and dryer
  • Want: smart home features

Source: zillow.com

The Basics of Buying Residential Investment Properties

In a booming real estate market, buying residential investment properties can seem relatively low-risk. But ever since the reckless real estate boom days ended with the 2008 recession, “caution” has been the watch word. If you choose and buy wisely, investing long-term and even flipping residential investment properties can pay off. Here’s what to consider.

Location. Location. Did we mention location?

When you buy a home as a principal residence, you look for a property located somewhere with, say, good schools, nearby shopping, low crime rate, lots of green space. But when you scout an investment location, you must consider so much more.

Chose a location near your primary residence: You’ll be traveling to the investment property much more than you imagine. Things break that you must fix. Tenants come and go, and you’ll have to show the place. And even if you don’t strap on a tool belt and do maintenance jobs yourself, you’ll have to inspect the work being done. That’s why the majority of residential investment properties are located less than 50 miles from an investor’s home.

Are you looking for yield or growth? In the best of times, you’ll get both. But, mostly you chose one of those investment goals. If you’re looking for yield — annual income divided by cost — select the biggest investment property in the best location you can afford. Great neighborhoods are always in demand and command high rents. If growth is your goal — value rising over time — then consider properties in up and coming neighborhoods that will appreciate as the block becomes more fashionable. Real estate professionals can help you pinpoint the next big neighborhood.

Check zoning laws: Zoning laws, which regulate how a property may be used, differ from city to city, even neighborhood to neighborhood. If you’re planning on renting out a residential investment property, research zoning regulations to make sure tenants are allowed. And keep abreast of changes, because zoning rules change to reflect current community priorities.

Manage the money

Even in hot real estate markets, investment properties always cost you more than you think.

• If you take out an adjustable rate mortgage, monthly financing costs can go up, especially if inflation takes off.
• Taxes will increase with value.
• Maintenance costs will shoot up as the property ages.
• Tenants leave, default, or pay rent late, reducing your cash flow.

When analyzing a potential investment property, calculate its return on investment (ROI), the percentage of money you expect to make from your investment. Here’s the formula:

Return ÷ Total out-of-pocket expense = ROI

ROIs change depending on whether you finance a property or pay cash. Generally speaking, the less money you pay upfront, the larger the ROI.

To flip or not to flip … that is the question

Flipping is a risky business that can be quite profitable in an upward trending market. Generally, flippers seek to:
• Buy low by selecting a structurally sound but shabby property that needs a facelift — refinished floors, remodeled kitchen and bathrooms, a good coat of paint.
• Sell high by taking advantage of an appreciating market or a neighborhood coming into its own.
• Get out quickly by performing repairs and finding a buyer before financing costs mount and eat into profits.

If you love the hunt and know your way around a floor sander and putty knife, flipping houses could be a fun and profitable investment. However, if your time and patience for house hunting is limited, and you must hire a tradesman for every change or repair, then flipping’s probably not the best residential property investment for you.

Source: zillow.com