A new startup called “Roam” has launched a service to make assuming a mortgage painless.
The company is backed by some prominent real estate figures, including Opendoor co-founder Eric Wu and former Fannie Mae CEO Tim Mayopoulos.
The goal is to help more home buyers take advantage of the many low-rate mortgages in existence via a loan assumption.
This includes FHA loans and VA loans, both of which are assumable by home buyers.
Roam acts as a hands-on guide for buyers and sellers to ensure the process goes smoothly in exchange for a 1% fee.
How Roam Makes It Easy to Assume a Mortgage
While many home loans are assumable, including all government-backed loans (FHA/VA/USDA), the process isn’t so straightforward.
Roam notes that the loan assumption process is “opaque and time-consuming,” and often requires buyers to fill out forms with paper and pen and fax them to the lender or loan servicer.
There’ also uncertainty for the home seller, who might not be sure if they’re still liable for the loan post-assumption.
To alleviate some of these pain points and ensure the process is done correctly, Roam manages all the operational details on behalf of the buyer, seller, and real estate agents.
Additionally, it makes it easier to find homes for sale that feature an assumable mortgage.
Once you sign up via their website, they’ll compile a set of for-sale listings that feature an assumable, low-rate mortgage.
These listings will also be tailored to fit your other criteria, such as location, home price, number of bedrooms and bathrooms, and so on.
At the moment, it seems only FHA loans and VA loans are included, not USDA loans.
If you come across a property you like, they will work with the lender and loan servicer to begin the loan assumption process.
As noted, this includes obtaining a release of liability of the loan for the home seller, which should ease their concerns as well.
Bridging the Gap Between Old Loan Amount and New Purchase Price
One sticking point to a loan assumption is the shortfall between the sales price and the remaining loan balance.
For example, the existing loan balance might be $450,000, while the new sales price is $550,000.
The buyer could come in with the difference, but it’s unlikely they’ll have the funds unless they have very deep pockets.
In this case, Roam has “preferred partners” that can provide additional financing, typically in the way of a second mortgage.
Together, this should still provide a blended rate that is well below current market rates.
If we consider a 2.5% first mortgage at 70% loan-to-value (LTV) combined with a second mortgage for an additional 10% at a rate of 8%, the blended rate is roughly 3.2%.
At last glance, the 30-year fixed is priced around 7.25%, so that represents quite the discount.
To that end, only mortgages with rates below 5% are included in the Roam listings.
How Much Does It Cost to Use Roam for an Assumable Mortgage?
While this service sounds pretty great, there is a cost to use it. At the moment, Roam is charging 1% to the home buyer via closing costs. I assume the 1% is based on the assumable loan amount.
In exchange for this fee, Roam says it will “coordinate every detail on behalf of sellers, buyers, and agents,” including connecting buyers and sellers, handling paperwork, and overseeing the financing.
Home sellers do not need to pay anything to take part and Roam will ensure the seller’s name is removed from the mortgage.
This means sellers will not be associated with the mortgage or held liable once the process is completed.
That should provide peace of mind to the seller, who might be concerned about their credit score being affected by the buyer’s subsequent mortgage payments.
If it’s a VA loan that is being assumed, Roam can help find a qualified military buyer if the seller would like to free up their entitlement.
This allows military homeowners to take out a new VA loan when it comes to their next home purchase.
Roam may also make money from their second mortgage partners, though they are fine with home buyers using the lender of their choosing.
Same goes with real estate agents. If the home seller doesn’t have a listing agent, Roam can recommend one. This may also earn the company a fee.
But the company can work alongside any listing agent, loan servicer, or mortgage provider to complete the process.
Is This a Good Deal?
Over the past couple decades, assumable mortgages weren’t a thing because mortgage rates were constantly falling.
In fact, mortgage rates hit record lows in 2021 and have since nearly tripled in just over two years.
This has finally made the assumable mortgage a thing, and a potentially very powerful thing.
If a home buyer is able to obtain the seller’s mortgage, possibly in the 2% range, it would be a huge feat, even with a 1% fee.
For example, take a $500,000 home purchase that has a $400,000 outstanding loan balance set at 2.5%.
The $400,000 loan amount would be about $1,580 per month. But let’s suppose the home buyer needs a second mortgage to bridge the gap with the new purchase price.
A $50,000 second mortgage set at 8% would be another $367 per month, or about $1,950 all in.
Compare that to a single new mortgage at $450,000 with an interest rate of 7%, which would be roughly $3,000.
And it could be subject to mortgage insurance as well if it’s one loan at 90% LTV.
The only thing you’d really need to watch out for would be an inflated purchase price if the seller believes they can charge more thanks to their assumable mortgage.
But even then, the property would need to appraise and the savings could still eclipse a slightly higher price, as explained in the scenario above.
Roam is initially available in the states of Arizona, Colorado, Florida, Georgia, and Texas, with other markets expected soon.
Despite her initial misgivings, Boston U.S. District Court judge Patti Saris granted preliminary approval of MLS Property Information Network’s (MLS PIN) settlement agreement in the class action buyer-broker commission antitrust lawsuit.
In court documents filed last Thursday, Saris approved the agreement, stating that the releases in the agreement were “fair, reasonable, and adequate to the Settlement Class.”
Originally filed in December 2020, the Nosalek lawsuit, named after its lead plaintiff, alleges that the broker-owned MLS PIN is not directly required to abide by the National Association of Realtors (NAR) rules. However, it has nonetheless adopted a rule similar to an NAR rule requiring listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN.
Other defendants in the lawsuit include Anywhere, RE/MAX, Keller Williams and HomeServices of America. Unlike the two other buyer-broker commission lawsuits, Moehrl and Sitzer/Burnett, NAR is not a defendant in the Nosalek lawsuit. Additionally, while Anywhere has filed settlement agreements in the Moehrl and Sitzer/Burnett suits, it has not tried to settle the Nosalek suit.
MLS PIN, which is New England’s largest multiple listing service (MLS), filed the settlement agreement in late June. In the agreement, MLS PIN denied any wrongdoing, but stated that it agreed to the settlement in order “to avoid the further risk, expense, inconvenience, and distraction of burdensome and protracted litigation, and thereby to resolve this controversy, to avoid the risks inherent in complex litigation, and to obtain complete dismissal of the Action as to MLS PIN.”
The MLS also agreed to pay $3 million in the settlement, with up to $900,000 going towards attorney’s fees, up to $200,000 going towards expenses, $250,000 going towards notifying settlement class members, and each of the three named lead plaintiffs will get up to $2,500 for being class representatives.
According to the settlement agreement, the plaintiffs will use the remaining funds of at least $1.6425 million to pay for further expenses for the litigation against the remaining defendants “for the benefit of Settlement Class Members.”
In early August, Saris expressed skepticism over the financial portion of the proposed agreement.
“I’ve never seen a settlement agreement like this in my 30 years,” Saris said at an August hearing.
With the payment structure outlined in the agreement class members in the case will not be getting any money from the settlement agreement, however the plaintiffs’ class-action attorneys, “get fully funded for expenses to date, and they basically get a litigation fund open-ended for the future for as long as it takes, which may be another three to five years,” Saris said. A final approval hearing for the settlement agreement is expected before the end of the year.
In an emailed statement, a spokesperson for MLS PIN said the firm was “pleased with the Judge’s decision to move the settlement forward,” but would not comment further.
Attorneys for the plaintiffs did not return a request for comment.
If you’re itching to make improvements to your home with hopes of upping your resale value, you may be tempted to renovate your bathroom, kitchen or closets. Although these updates can increase buyer appeal, as well as add to your own enjoyment of your abode, the return on investment for these projects typically is low.
The home improvement projects that will pay back the most aren’t as glamorous, but you’ll recoup more of the expense when you sell your home.
Here are the five projects that offer the most value by boosting your home sale price and allowing you to recover most of the money you spent—possibly even more than you spent—according to the 2015 Remodeling Impact Report by the National Association of the Remodeling Industry and the National Association of Realtors.
1. Replacing your roof
Although putting a new roof on your home may not feel quite as satisfying as upgrading your kitchen appliances or installing a shiny new spa tub, it’s the home improvement with the best return on investment, according to the report. Homeowners who replace their roof can expect to recoup 105% of the value, meaning they’ll actually make money on this project.
The NARI estimates you’ll spend $7,600 to tear off an old roof on a 2,450-square-foot, two-level house; install laminated, architectural asphalt shingles; place new flashing around pipes and chimneys; and install a new ridge vent. The project isn’t cheap, but you can recover $8,000 in costs for your effort.
There’s no need to replace a perfectly good roof, but if yours has wear and tear, it could be a good investment before you sell.
2. Refinishing your hardwood floors
The home renovation project with the second-highest ROI is refinishing your hardwood floors. Transforming dull, scratched wood floors into shiny, good-as-new flooring is a great deal: Homeowners typically recoup 100% of the expenses.
Freshening up scuffed wood flooring in an 18-by-20-foot family room costs approximately $2,500, the NARI estimates, which includes sanding floors to bare wood, refinishing them with polyurethane and adding new matching baseboards. Because homeowners typically are able to gain back the full value of this project when selling their home, it’s a worthwhile project.
3. Upgrading your insulation
An insulation upgrade offers the third-best potential for recovering the value of the project, at 95%. Expect to spend about $2,100 for adding 10 inches of blown-in cellulose insulation to your attic, according to NARI estimates, but you’ll recover approximately $2,000 of that cost. And you’ll lower your energy bills by upgrading your insulation.
4. Installing wood flooring
The NARI estimates that it costs homeowners $5,500 to replace worn carpet with new, solid oak flooring and baseboards in an 18-by-20-foot room. But the value recovered is $5,000—91% of the expense—making it the home improvement project with the fourth-highest ROI. Although you won’t regain the full value when you sell your house, new wood floors can significantly improve the look of your home, boosting buyer appeal.
5. Replacing your garage door
Replacing a creaky, slow garage door with a new one also has relatively high value for homeowners. You won’t recover the full value of the upgrade, an estimated $2,300, but you’ll gain back 87%—that’s $2,000—when you sell your home, the NARI estimates.
Next steps
If you’re ready to kick off some of these projects but don’t have enough cash in your bank account, a cash-out refinance is one way to fund home upgrades. Try NerdWallet’s refinance calculator to see whether that option makes sense for you.
The home-selling process can be challenging at times. This is especially true if home sellers are trying to move quickly or are hoping to avoid costly renovations. That’s why homeowners sometimes choose to sell and advertise their houses as is.
Selling a House As Is
Selling a house as-is means the homeowner will not make repairs or renovations before selling it to a buyer, even if the home has structural concerns or is in poor condition. If you’re considering selling a home as is, you can expect a couple of nice perks, yet there could be a few limitations you’ll want to be aware of.
The following article will break down the pros and cons of selling your house in its current condition and provide other helpful insights for an as-is home sale or purchase.
The Benefits of Selling a House As Is
First, let’s go over some reasons why you might opt to sell your house as is.
Sell fast
If you want to get more equity from your home without putting in a ton of effort, it’s possible to just sell it as is. Home-buying companies may be eager to take a home off your hands. Other cash buyers, like investors, may also be ready to buy your house quickly. Especially in a seller’s market, you will likely be able to sell successfully.
Save money on home improvements
When you sell your house more traditionally, you want to get the most money from your sale by fixing up your home. You may also be required to make repairs to meet certain state standards in order to sell your home. Buyers will have an inspection done and the cost of some repairs or updates, especially those regarding safety, often falls to the seller. Selling as is means you can usually avoid those possibly expensive repairs.
Attract home rehabbers and house flippers
A lot of buyers want to make renovations and changes based on their own preferences and may actually prefer paying a bit less for an as-is home.
Less hassle and negotiating
A home inspection that uncovers a lot of issues can cost a decent amount of money upfront. While the seller isn’t necessarily required to make all renovations or repairs, the buyer and seller must negotiate who will pay for what in a typical sale. If you don’t want to spend the time and money tackling those projects, it may be harder to sell your house at your previous purchase price. By selling the home as is, you won’t have to do as much negotiating with a buyer or agent, at least in terms of home upgrades and repairs.
The Cons of Selling an As-Is Home
Selling a home as is can be a great option for some people, but selling your home like this also has its challenges.
Make less money off the sale
Usually, you will make less money selling your home as is than listing it traditionally.
Since as-is homes often need repairs the owner wants to avoid paying for, these home listings are more likely to attract buyers looking for a deal. Unfortunately, even if your home is in excellent condition, people will expect you to sell an as-is home at a lower price.
Fewer buyers available
Marketing an as-is home can be more challenging, plus many lenders require the home to meet certain living conditions.
If a home needs a lot of work and the seller isn’t going to contribute to the cost of fixing it up, fewer buyers will be able to afford a mortgage for such a house. Not to mention, a less-than-ideal home may look worn, which can make buyers uninterested.
Buyers don’t want the hassle of hiring contractors
Buyers may not want to hire contractors to assess the home and estimate a fair purchase price.
Buyers may already be hesitant about taking on a project and feel the cost of hiring contractors isn’t worth it. That being said, sellers are still legally and ethically obligated to disclose major issues to buyers, which can lower the home’s value.
Alternatives to Selling a House As Is
If selling your house as is isn’t right for you, there are a few viable alternatives to consider:
Update and repair. Invest some money and time to fix and update your home. With a few repairs and renovations, you may be able to command a higher price than selling as is.
Rent your home out. If you don’t need to sell your home for a down payment on your next home, you may be able to rent it out. This may be an especially practical option if you live in a tourist area, college town, business district or other strong rental market location.
Tips for Selling a House As Is
If you’re ready to sell your house as is, here are some tips to help with the process.
Know the Type of Buyer You Want To Attract
There will be a big difference between your average buyer seeking a home to live in and an investor looking to flip your house. Investors specifically go after as-is homes and have the upfront cash needed to buy your home, so your house doesn’t need to meet too many conditions to be competitive.
Conversely, someone in the market for a home to live in will have much different expectations. While they won’t expect you to fix your home, they will expect to pay less for your home than it would typically go for. Keep in mind that even if a buyer is seeking an as-is home, they will still likely hesitate to make an offer on homes that have too many major issues.
Consider the Condition of Your Home
Like with a more traditional sale, your home will still have an appraisal and an inspection, affecting the purchase price.
If your home is in moderately good condition and still livable, your house could be an optimal option for more typical homebuyers. If your house will be a big reno project, you should target investors to get the most money off the sale.
Sell in the Right Market
A seller’s market — when there’s more home demand than supply — is the best time to sell your home as is. You can sell your home for a more competitive rate because, despite the extra cost, buyers may be more willing to fix up a home than not move into a new home at all. The market conditions will always affect how much you lose by selling a house as is.
Emphasize Other Property Selling Points
For most buyers, money is a significant factor in selecting a home — and a home with lots of repairs and renovations means lots of extra expenses. However, some as-is homes may have other desirable traits that make the purchase worthwhile. For example, location is of primary importance for a lot of people. If you have a home in a highly sought-after neighborhood, there’s a better chance that you’ll be able to sell your house as is.
The Bottom Line: How Much Money Can You Lose Selling a House As Is?
You usually won’t make the same kind of money selling your home as is as you would selling it the traditional way. While there’s no one answer to this question, most sellers can expect to get between 75% and 95% of their home value.
Tips If You Are Looking To Buy a House As Is
If you are considering buying an as-is home, here are some tips to keep in mind.
Plan for a Home Inspection
You should always get a home inspection if you’re seriously considering buying. This is especially essential for as-is homes.
Sellers shouldn’t hide issues with their homes, but they may not always be forthcoming or even be aware of certain problems. A home inspection lets you know what you’re working with so you don’t invest all of your time and resources into a never-ending money pit.
Know the Required Home Inspection Standards for Lenders
If you’re like most people, you don’t have hundreds of thousands of dollars in cash to splurge on a house, which means you’ll need a mortgage loan to purchase a home, even a fixer-upper. Make sure you can afford the necessary repairs to your prospective home; otherwise, the home may not qualify for a mortgage loan.
Rely on Experts
A good real estate agent will help you navigate and negotiate buying a home as is. Sellers have every right to sell their home exactly as it is, but they are also legally required to disclose details about their home, including the challenges. As a local expert, your agent should know the market conditions and can help you determine whether or not you should commit to an as-is home.
Also note that if a lender won’t loan you a certain amount of money for a home, that indicates the property isn’t suitable for living in and may not be worth your efforts and time unless fixed.
What Does Market Condition Mean?
Market conditions are the factors that influence the value of your home depending on the area. This includes the cost of living, mortgage rates, supply and demand, demographics and the overall economic status of the housing market.
For example, let’s say employment levels are high and a larger percentage of the population has steady employment and income. If this is the case, it’s also likelier that people are in the market to buy a home because they can afford it. This means the price of housing will usually go up. The opposite is generally true, too — if unemployment is high and people aren’t buying homes, the cost of homes will go down.
Depending on the market condition of your area, you may or may not be able to easily sell your home. If housing is competitive and favors the seller, then the market conditions will favor an as-is home sale. If the cost of homes is low, then buyers would benefit from purchasing a turn-key home if they can afford it rather than taking on an as-is home with projects.
What To Know About the “As-Is Condition” Clause
Sellers of as-is homes are responsible for revealing known problems with the property. An “As-Is Condition” clause is part of the real estate contract that protects the seller from liability should the buyer discover unknown or other defects with the home after purchasing it.
The as-is clause explains that the buyer is willing to accept the home in its current condition and agrees to forego requesting the seller to make repairs or a price reduction based on property problems. However, the as-is clause does not relieve a seller from liability should it be found that the seller intentionally misrepresented a defect or did not disclose a known problem.
Curious How Much Your Home Is Worth?
Visit the Pennymac home value estimator and see an instant estimate of your home’s current value and view recent home sales in your area.
I don’t think it would be much of a stretch to assume nobody likes high mortgage rates.
They make it more difficult for prospective home buyers to get to the finish line, especially with lofty asking prices.
And they’ve led to countless mortgage layoffs and job losses in a number of related industries.
Sure, investors might earn more interest on loans with higher mortgage rates, but only if the loans are held onto to.
There’s a good chance they’ll be paid off sooner rather than later, making them a little less enticing. But there is one silver lining to these stubbornly high mortgage rates.
There Will Be a Mortgage Refinance Boom in the Near Future
The longer mortgage rates remain elevated, the larger the number of high-rate home loans in existence.
It’s pretty straightforward. If lenders keep doling out new loans, they’ll undoubtedly have high interest rates.
If you look at the chart above from Black Knight, the average interest rate on outstanding mortgages is around 3.94%, but is inching higher as time goes on.
As more high-rate mortgages are originated, this average rate will climb, thereby replenishing the very dry refinance pool.
At last glance, the popular 30-year fixed mortgage is going for over 7%, up from the 2-3% range in 2021 and early 2022.
Mortgage rates are now close to their 21st century highs, with the 30-year fixed reaching 8.64% in May 2000.
Hopefully we don’t go that high, but anything is possible these days.
Even 7% mortgage rates have caused home loan volume to drop considerably, with mortgage refinances basically nonexistent and home purchases also dropping off due to sheer unaffordability.
We’ve never seen mortgage rates double in such a short span of time, and it’s clear this is taking a massive toll on the industry.
It’s hurting loan officers, mortgage brokers, real estate agents, title and escrow officers, and many others.
But despite this more than doubling in mortgage interest rates, there is still considerable business taking place.
Mortgage Lenders Are Still Expected to Close Nearly $2 Trillion in Home Loans This Year
While the boom years have come and gone, the Mortgage Bankers Association still forecasts $1.7 trillion in 1-4 unit residential home loan volume for 2023.
That’s on top of the $2.3 trillion or so in home loan originations in 2022, for which the 30-year fixed was priced in the 6s and 7s for a decent chunk of the year.
Of course, these numbers are down significantly from 2021, when mortgage lenders originated a record $4.4 trillion or so in home loans.
Coming off a record year to a doubling in mortgage rates is one of the reasons it’s been so hard for those in the real estate and mortgage industry.
Because business was going gangbusters right before this unprecedented mortgage rate spike, lenders were fully staffed, as were real estate brokerage houses, escrow and title companies, and so on.
This sudden and violent shift meant staffing levels were going to need major adjustments. It wasn’t a slow trickle down in business, it was a rapid decline.
Because of depressed sales volume, many will leave the business and not come back.
But as we’ve seen time after time, there will be opportunity, especially if there are fewer players left after the dust settles.
Once mortgage rates do come down, which they invariably will, trillions in home loans will be ripe for a refinance once again.
It’s still not clear when this will happen, but it will happen, that much is true.
Homeowners Also Stand to Benefit from Lower Mortgage Rates in the Future
While the industry is going through some tough times, recent home buyers are also suffering.
The 30-year fixed was a screaming bargain a couple years ago, and is now a thorn in the side of homeowners.
Due to supply shortages, home prices have stayed near record highs, despite a major decline in affordability.
This has pushed the typical home buyer’s monthly payment up to $2,605, per Redfin, up about 20% from a year ago. It’s now hovering around an all-time high.
Meanwhile, months of supply is still lingering around the 3-month range, well below the 4-5 months that represent healthy levels.
So today’s home buyer still has to compete with many others, despite record high home prices and equally expensive mortgage rates.
However, a time will come when mortgage rates come back down, allowing those who stick it through to see some relief.
Lately, real estate agents and loan officers have been pitching the so-called date the rate, marry the house line.
Simply put, the interest rate is just temporary but the home can be yours forever. And if rates go down, you can refinance your existing loan and ideally pay a lot less for it.
This has yet to transpire, which hammers home the importance of being able to afford the housing payment in front of you, not some prospective future one if the stars align.
But as time goes on, interest rates will come down. And those stuck with rates in the 7s will be able to snag something a lot more reasonable.
So each day, as more and more 7% mortgages are funded, more opportunity is being created.
Are laundromats profitable? Or, are laundromats a dying business? Learn how much laundromats make and if laundromats are a good investment.
Are laundromats profitable? Is buying a laundromat a good investment?
Ever wondered if owning a laundromat is as profitable as people say?
I’ve been seeing a lot of videos on social media lately talking about how much money laundromats make (seems like it’s a popular small business idea right now!). So, I wanted to do my own research and learn as much as I could on the topic of laundromat businesses to see why it’s trending so much.
Whether you are looking to make extra income or if you plan on opening several laundromat businesses, there are some things to think about before you get started.
In today’s article, we’re going to talk about:
How profitable a laundromat can be
The pros and cons of owning a laundromat
Why a laundromat may be a smart investment
Tips on how to find a laundromat to buy
And more.
Quick summary: Yes, laundromats can be a way to make money (and even passive income!) due to people needing to wash their clothes and low costs to run. However, the amount of money that you can make is based on factors such as location and maintenance costs (new machines can be expensive!). High-quality laundromats with lots of amenities are in, and the old days of dirty and hot laundromats are not.
Are Laundromats Profitable?
Is owning a laundromat a good investment? Is owning a laundromat a good way to make money?
According to the Coin Laundry Association, there are around 35,000 laundromat businesses in the United States and nearly 95% of laundromats succeed.
That is a pretty good success rate.
It’s important to understand that, like with any other business, laundromats require an investment of money—both initial and ongoing. You’ve got your rent, machines (you will need more expensive commercial laundry equipment), utilities, and insurance.
The good news is, your income would hopefully be higher than these costs, making you a profit at the end of the month. Some people are able to run a laundromat as their full-time income, and for others it may simply be one of their side hustles.
The amount of money that you can make from a laundromat depends on your management skills, the location of your business (the average laundromat user lives within 1 mile of the laundromat that they use, so you want to be close to your customers!), and more.
Related content:
Is a Laundromat A Smart Investment? Do Laundromats Make Money?
This is a hard question to answer, as everyone is different!
For some people, a laundromat can be a smart investment, for others it may not be. The good thing, though, is that you are reading this article so that you can figure out if owning a laundromat is for you or not.
Yes, many laundromats make money. On average, a laundromat can earn a profit of around 20% to 30%.
Note: Before making a decision, I highly recommend reaching out to a financial advisor before making any decisions.
Factors Impacting A Laundromat’s Net Income
There are numerous things that can impact how much money a laundromat can make such as:
Location– The location of a laundromat is important in how much money you can make. This is because a laundromat located in a populated area often makes more money than one in a less populated area. The reason is, that when there are more people, there are more people likely to use laundromats.
Competition– If there are other laundromat businesses nearby, this could impact your profit because you now have competition. This is because too much competition may mean that there are less customers coming to your business.
Demographics– The demographics of people living around the area of your laundromat are important. For example, laundromats tend to do better in areas with a lot of renters, college students, or households without a washing machine or dryer (of course).
We recently stopped to use a laundromat while we were traveling in our RV. One thing we noticed was that this laundromat had a ton of amenities. Now that I’m thinking about it, this laundromat business owner was smart. They knew what their potential customer needed. They opened a laundromat right next to a popular cross-country trail, and added great amenities such as snacks and even a pay-to-use shower. These factors helped this laundromat stand apart from its competition and probably led to more people using it because it was a one-stop shop.
Some laundromats can earn profits as high as 35% or more! These are usually high-volume operations in urban areas with lots of people living nearby and they tend to offer a wider range of services such as wash-and-fold or dry-cleaning.
Owning a laundromat can be a smart investment for some people because they can possibly have a stable flow of income.
However, you will want to keep in mind that success in this type of business still depends on careful planning, an understanding of your local market, and more. Not everyone will succeed, of course.
How To Find Laundromats For Sale
Jumping into the laundromat business begins with finding a laundromat business that is for sale, or starting your own business from the ground up.
If you are looking for a laundromat business that already exists and is for sale, here are some tips and strategies for locating a laundromat for sale.
Online platforms– Many websites list laundromat businesses for sale. Examples include BizBuySell and LoopNet. These platforms can be your first stop so that you can easily look at laundromat listings. I was able to find many laundromats for sale, ranging from around $100,000 to over $1,000,000. These sites will give you a lot of information too, such as the revenue, monthly rent that the laundromat pays, the year it was started, and some background on the business.
Broker assistance– There are commercial real estate brokers with experience in the industry that can be invaluable resources. These individuals often have connections and insights that you may not have as an individual buyer. You may want to search for commercial real estate brokers in your local area and see who can help you find a laundromat business for sale.
Local advertisements– Sometimes laundromats are listed for sale in your local newspaper. You can see if there is a business for sale section in your local paper to get started.
Important Things To Think About When Purchasing A Laundromat
When you come across a potential laundromat to buy, here are some things to think about:
Location– As mentioned in the earlier sections, the location of a laundromat plays a very important role in if the laundromat will be successful or not.
Condition of equipment– Commercial laundry machines are expensive. These are not the washer and dryers that you have in the home you live in. These are meant to take a lot of loads and be running nearly all the time. Due to this, you will want to inspect the machines thoroughly and, if possible, have a professional technician check them. This is because broken or old machines could result in costly repair or replacement costs.
Business finances– If you find a laundromat that you are interested in, then you should ask to see their financial records and carefully review them.
Lease agreement– Many laundromats do not own the building that they are doing business from. Due to this, you will want to look at the terms of the lease. A laundromat with a long-term lease allows for longer operations without the risk of eviction or a sudden rent increase.
Demographics and competition– As you read in an earlier section, knowing more about the demographics of the local area, as well as about your laundromat competition, is important too.
Remember to approach this process with patience. Investing in a profitable laundromat is a journey that requires careful planning, research, and due diligence.
Owning A Laundromat
Operating a laundromat is more than just collecting coins from machines. There are maintenance needs, customer concerns, and potential unexpected issues that you may come across.
Below, I take you through the typical day-to-day operations of a laundromat.
Day-to-Day Operations Of A Laundromat
Opening up– Regular, reliable hours are important in the laundromat industry. Therefore, opening up the store in the early morning is always a good idea as many people like to get their laundry done first thing. Plus, many of your customers will be repeat clients, so making sure that you open up at the same time each day is required.
Machine maintenance and cleanliness– When running a laundromat, you will need to check on the washers and dryers, perform required maintenance, and make sure that your business is clean. You will also want to make sure you are well-stocked with detergents and fabric softener.
Customer service– While the average laundromat only has 2 employees or less, you will want to have good customer service. After all, a happy customer is far more likely to return and recommend your services to others.
Financial management– Collecting payments and record-keeping is something that is done every single day.
Tips on Managing a Profitable Laundromat
Sell extra services– Successful laundromats tend to sell many more services other than just self-service laundry. Due to this, you may want to also try diversifying your income streams so that you can make more money from your laundromat. You can sell other services such as wash-and-fold services, dry-cleaning, dog washing stations, showers, or even have vending machines.
Maintain your machines– Regularly maintaining your washer and dryer machines minimizes downtime and expensive repair costs, so that your laundromat can run smoothly.
Promote your business– Word of mouth is so important in this type of business, but don’t shy away from using social media or local advertising to draw in potential customers.
Running a money-making laundromat is much more than keeping the machines running. It involves good customer service, finding more services to sell, and marketing your laundromat business.
Frequently Asked Questions About Laundromats
Here are common questions about owning a laundromat.
How much profit can you make from a laundromat? How much do laundromat business owners make?
The profits from laundromats vary depending on location, operation expenses, size of the laundromat, the amenities you sell, and more. The average laundromat business sees a profit margin of around 20% and 30%.
The national average income for self-serve laundromats ranges between $15,000 to $200,000 per year. As you can see, that is a wide range and that is because it just depends on so many different things.
What are the pros and cons of owning a laundromat?
Like with any business, there are positives and negatives. Owning a laundromat isn’t for everyone.
Owning a self-service laundromat can earn you money and can be a stable, low-risk investment with low operating costs. It can be a fairly passive income stream as well, as you don’t need many employees (the average laundromat has 2 or fewer employees). However, running a laundromat isn’t all easy, there are challenges such as high start-up costs, machines braking, and more.
The challenges of running a laundromat include that high-quality commercial laundry machines can be quite expensive and purchasing or leasing a location with enough space for machines and customers can be a significant portion of startup costs. Also, wear and tear is going to happen in a laundromat as machines get constant use, and the cost of repairing or replacing machines can add up.
Is owning a laundromat a smart investment? Is owning a laundromat worth it?
Owning a laundromat can be a smart investment, and it can be worth it for some people. But, it will cost you money.
It costs around $100,000 to $300,000 to start a laundromat. Starting or buying a laundromat can be high, but it can also earn you a steady income. But, that doesn’t mean that it’s a smart investment for everyone. There are many factors that go into running a successful laundromat.
How to find laundromats for sale?
You can find laundromats for sale through websites, commercial real estate agents, or business brokers. You can also network with existing laundromat owners or associations who can provide insights into potential sale opportunities.
Are laundromats a dying business?
The laundromat business has changed over the years, but they are still very much needed. People use laundry facilities all the time, including myself such as when I am traveling in my RV or boat. Everyone needs to wash their clothes.
There are ways to keep your business up to date, such as having a laundromat that accepts different methods (such as credit card and cash), having a drop-off service, and making your facility comfortable (such as with WI-FI, TV, beverages, etc.).
What are the key success factors for running a laundromat?
Successfully running a laundromat depends on many factors like the location, maintaining clean and well-functioning machines, providing good customer service, having amenities (such as air conditioning or head depending on the temperature, TVs, etc.), and more.
Are Laundromats Profitable? – Summary
I hope you enjoyed this article on whether buying a laundromat is a good investment or not.
Here’s a quick summary of what we learned above about this business venture:
Running a laundromat can be a way to make money, but it depends on many different factors.
Laundry businesses typically have low labor costs (they are fairly passive businesses with a lot amount of workers needed) and can be recession-proof.
Owning a laundromat does have cons and challenges, such as the fact that commercial laundry machines can be quite expensive if they need to be repaired or replaced.
There are many laundromats for sale and you can start your search online.
Running a successful laundromat business in today’s world will likely mean running a higher-quality business and selling amenities for additional fees.
In all, the profitability of owning a laundromat may make the challenges worth tackling. The average laundromat is changing and improving, and there can be room to make money with this small business.
So, what do you think? Are laundromats profitable? Are you interested in owning one?
It’s not surprising these days to find many homes readied with a backyard pool. Depending on your motives, whether you are a seller trying to add value to your home, or a buyer on the hunt, this topic can be fairly debatable. So, will adding a pool to your backyard add value to your home? Yes…and no.
Typically, putting in the extra dollars and stressors of having a pool installed in your backyard will not substantially increase the value of your home when trying to sell. It would be more beneficial for you to make more physical interior and exterior improvements and additions to the house itself rather than adding an extra asset that may not be appealing to every buyer.
However, there are a few circumstances where a pool may add some value to your property.
1. Everyone in your neighborhood has a pool
If you happen to live in a wealthier and more established neighborhood where most homes have pools, not having one could very likely make it harder for your home to sell. It also could decrease the overall value of the home compared to the others built around you.
2. It won’t take up your whole yard
Similarly, if you can fit a pool into your backyard and still have some leftover yard space this is a huge bonus. Most buyers want the best of both worlds. A pool as well as backyard space for personal hobbies/entertainment purposes.
3. You live in a warm climate
Lastly, if you are located down South or out West, homeowners will most likely be looking for a home with a pool to cool off in because of the hot and humid temperatures. These factors alone or even collectively could potentially add value to your home.
Maximize your chances
Now, as mentioned before, even with the addition of a pool to your backyard, there is still no 100% guarantee of any return on your investment. Nonetheless, if you do happen to add this amenity to your property, you can take a few key factors into consideration that could help improve the selling point.
1. Appropriate design
For one thing, does the design and overall appearance of the pool somewhat coordinate and fit in with the rest of the neighborhood? If yes, you should be fine. If not, you should consider revamping the pool area to conform to the rest of the complementary neighborhood pools.
2. Keep it clean
Next on the list, is it apparent that the pool is clean and regularly kept? Or is it noticeably neglected and never maintained? An unkept pool would scare most buyers by giving the impression that it is too difficult and time-consuming to maintain and keep sanitary.
3. Newer is better
Lastly, how old is the pool? If you are adding a pool to your yard in an attempt to raise the value of your home and sell it, it is crucial to put your home on the market shortly after the pool is finished. You want a new and updated pool to ensure you recoup your costs/investment.
What is the ROI?
Now, the big burning question that everyone is dying to know: Will the money you put into the addition of your pool lead to a comparable increase in the value and sales price of your home?
Obviously, with all home repairs and enhancements, it is critical to not over-embellish your pool area. Whether you are repairing your current pool or building a brand new one from scratch, the goal is to add value to your home in an attempt to sell it.
You want to make sure your design is appealing and tasteful to buyers, not overly dramatic where they will be put off by it. You also want to take into consideration that you probably will not get the full value in return that you initially invested.
The cost alone to just build the pool can range from $30,000-$100,000 depending on how elaborate you want it to be. You then have to factor in extra costs such as filtration, maintenance, and insurance/taxes. While these costs are all very necessary for the addition of your pool, you may not receive the full value and dollar amount you put into it.
The bottom line
While a pool may not add monetary value to the home, it definitely can add value to the overall enjoyment and quality of living. Ultimately, the decision is up to you. Only the homeowner can decide the true return on the expenditure.
Deciding whether to transform your current house into your ideal home or start over with a fresh new space requires careful thought and consideration. There are two options to consider — stay and renovate or move to find something more suitable for your needs. This choice may make some people feel like they are at a crossroads.
Here are some steps you can take to help guide this important decision.
Get an Idea of How Much You Can Afford
If you’re considering moving, it’s important to understand how much of a mortgage you’ll qualify for and how much you can afford to spend on your new home. Connecting with a lender like Pennymac is a great first step. Our Home Connect resource can help set you up for success if and when you’re ready to begin your home search. Explore mortgage options, get BuyerReady Certified and receive advice from trusted real estate professionals.
Get a Comparative Home Analysis
Ask a realtor to provide you with a comparative home analysis to estimate the value of your current home. Determine if your home’s features align with your desires and needs. For example, do you need an extra bedroom to accommodate a new member of the household or your new work-from-home plans?
Understand Your Location Limits
Do you love where you live right now? Suppose you adore your neighborhood or town, but your house just isn’t appropriately sized for you and your loved ones. In that case, consider adding on to your house, whether that’s another bathroom or a second story.
On the other hand, If you have children, you may weigh the desire for a new school district with better academic programs. Or maybe you want to move closer to work. It really boils down to what your main priorities are.
If you’re looking to move to a larger home, keep in mind that a bigger house in your preferred area will likely have higher taxes, utility bills, homeowners insurance premiums and maintenance upkeep costs. On the flip side, if a move means you’ll have a shorter commute, you will save time and transportation costs. Prioritizing your location needs and determining what you are willing to spend or sacrifice to achieve your goals will help influence your decision.
Renovation Reality Check
Choosing whether to remodel or move depends on a lot of factors. Can you be creative with your existing rooms and make relatively easy and straightforward renovations, or are your requirements complex, expensive and challenging to complete?
Hire an architect or contractor to help pinpoint issues with your current house and decide what you need from your home. Want to add a second story? Get estimates on how long that might take and how much it might cost, and determine if you’re okay with living through such a major renovation.
Understanding Your Time Commitment Matters
Buying and selling at the same time can be a lengthy process. Organizing your home and putting it on the market can take months, plus there can be some financial and emotional uncertainty when buying and selling. It may take time to get the sale price you want and to find your ideal next home.
If you decide to move forward with buying and selling your home simultaneously, you’ll want to work with a real estate agent and have a plan for how you’ll manage the process. Timing everything right is essential since you don’t want to be paying two mortgages at once if you’re still waiting to sell your current home.
You’ll also want a savings buffer to help financially manage any complications or slowdowns. For example, you may need to temporarily stay in a hotel or put your furniture in storage.
Contingency Acceptance
A contingency clause in real estate is part of a purchase agreement that outlines specific conditions that must be met in order for the contract to be valid and binding. In some markets, home sale contingency offers are allowed, which means your bid for a house is contingent on the sale of your former abode.
In other markets, home buyer-feeding frenzies can prohibit contingent offers. When you put your house on the market, you have to decide if you’ll buy a new house first or make a contingent offer. If contingent offers are out of the question, you may require a temporary rental after escrow closes on your old home and you’re still looking for your next one.
Closing Costs
In addition to your down payment, you’ll have to pay closing costs, just like you did when you purchased your existing home. After figuring in closing costs, commission, title insurance and additional transaction costs involved in your home sale and purchase, it may be much less expensive to stay in your house and renovate. So don’t forget to calculate closing costs when deciding whether or not to move, but don’t hesitate to negotiate any of those costs either.
Current vs. Past Mortgage Rate, Cash-Out Refinance and Second Mortgage Considerations
A cash-out refinance is when a homeowner refinances their existing mortgage, taking out a new loan for more money than they currently owe. The difference between the new loan amount and the old mortgage balance is given to the homeowner in cash. This allows the homeowner to tap into their home’s equity and use the money for various purposes, including home renovations.
If you have a higher interest rate than the current market, compare keeping your mortgage — and perhaps refinancing at a lower rate and taking cash out to make upgrades — to getting a new house with a new mortgage at a lower rate.
Either way, a lower-rate market can prove to be very favorable whether you stay and renovate or go and start fresh.
However, if your current rate is lower than the current market, it may be in your best interest to explore a second mortgage option that allows you to access the equity in your home while maintaining your low rate on the first.
Evaluate Your Motivators to Move
Many individuals who decide to sell have outgrown their current house and don’t want to build an addition or are too busy to manage an extensive renovation project. There are also those homeowners who have too small a lot to work with, need to move closer to work or are not that vested in remaining in the neighborhood.
Aside from the desire to upsize your home, some other motivators for selling can be:
The need for a less expensive home
Readiness to downsize
The ability to pay cash for the next home
The want or need to relocate for a job, school district, family situation, better climate, etc.
Favorable market conditions
Identifying the primary motivators for your move can help you decide if you should sell your house now or wait.
Ready to Downsize?
Those in a life stage where they are often uniquely ready to leave behind the maintenance of their current home. Trading in the three-bedroom house for a low-up keep city condo provides more opportunities for enjoying the retirement years.
Here are some signs downsizing may be right for you:
Housing expenses have increased and you want to cut costs
There are unused rooms in your home
You desire a more low-maintenance lifestyle
You want a change, such as being closer to family, relocating to a different climate or moving into an amenity-filled active community.
So, What Is the Bottom Line? Should I Sell My House Now?
Making a final decision as to whether or not you should sell your house is as personal and individual as the home you’re thinking about giving up or buying. But with the right calculations and information, you’re closer to finding a long-term solution that will work best for you. Ready to sell your home and begin looking for your new one? Chat with a Pennymac Loan Expert, or use one of our mortgage calculators and start your home buying journey today.
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Residential sale-leaseback platform EasyKnock continues to gobble up proptech startups. Home maintenance company Onder is EasyKnock’s latest acquisition, according to GeekWire, which first reported the story.
The terms of the acquisition were not disclosed.
Founded in 2021, Onder sells a subscription-based home maintenance service that deploys technicians to help with both interior and exterior property maintenance. Customers can request help for HVAC cleaning, plumbing, painting, power washing, gutter cleaning, and roof repair, and it covers more than 100 homes.
Onder raised an undisclosed amount of venture capital including a pre-seed round led by Rackhouse Ventures in 2021, but in late 2022, as the housing market slowed and economic uncertainty rose, the flow of venture capital funds slowed.
“The venture capital environment continued to be a headwind and we had been operating with very little margin for error,” David Krieger, the CEO and co-founder of Onder, told GeekWire in an email. “[S]o when we evaluated the landscape with our advisors, it just made sense to include mergers and acquisitions as an attractive path forward.”
Krieger said customers will not experience an interruption in their service due to the acquisition.
Through the acquisition, Onder’s services will be offered to EasyKnock’s customers. In a statement, EasyKnock said the acquisition is part of its larger goal of creating the “first nationwide property maintenance platform for homeowners.”
Kreiger and Onder’s employees (numbering fewer than 10) will join EasyKnock, and Kreiger will serve as EasyKnock’s chief product strategy officer.
EasyKnock received $57 million in venture capital last year. Investors included Blumberg Capital, Gaingels, Moderne Ventures, QED Investors, Viola FinTech, and Zillow founder, Spencer Rascoff’s venture firm 75 & Sunny.
In May, EasyKnock acquired struggling power buyer firm Ribbon for an undisclosed amount.
The question many in capital markets have been asking since the GSEs were put into conservatorship is this: Without Fannie, Freddie, or the Fed, who will buy the agency MBS? Today we are seeing this play out with a shortage of MBS buyers to the tune of about $2 billion in demand per day.
Supply and demand — when demand is low, MBS prices will drop at sale and the corresponding yields will rise.
Late last year, Laurie Goodman, the famed MBS expert and a leader at the Urban Institute in Washington, penned an article in Barrons to explain why rates were so high. She gives a very thorough explanation as to why the 30/10 spread is so high, stating, “Before and during the Great Financial Crisis, the Fannie Mae and Freddie Mac portfolios essentially served as shock absorbers, buying mortgage-backed securities, or MBS, when spreads were wide, selling when they narrowed.
“In 2009-2010, the combined portfolios were over $1.5 trillion. In the wake of the Great Financial Crisis, Fannie and Freddie have been mandated to reduce their portfolio size. The two portfolios together are now under $200 billion. Meanwhile, the Federal Reserve was a fairly consistent buyer of MBS after the financial crisis, as part of its quantitative easing strategy. But as of June 2022, the Fed began to allow its portfolio to run off.”
Today, as Laurie points out, the GSEs are restricted in what they can buy. Per the 4th amendment to the PSPA (preferred stock purchase agreement), essentially the governing document for the two companies in conservatorship, it is stated clearly. Historically, the GSEs could make up for the short in demand if needed.
For example, if the current short was absorbed by GSE purchases, the spread between 30-year mortgages and and the 10-year treasury would likely collapse to it’s more normalized level, likely bringing mortgage rates down about 100bps +/-.
But the PSPA 4th amendment states the following: “Limit Future Increases to the Retained Mortgage Portfolio: The PSPA cap on the GSEs’ retained mortgage portfolios will be lowered from the current cap of $250 billion to $225 billion by the end of 2022, aligning with the FHFA conservatorship cap the GSEs are required to comply with today, while providing the GSEs with flexibility to manage through the current economic environment. As of November 2020, Fannie Mae’s mortgage portfolio was $163 billion, and Freddie Mac’s mortgage portfolio was $193 billion.”
So why haven’t we seen spreads wider more often since conservatorship in 2008 until now? It’s simple really, the Federal Reserve engaged in three rounds of quantitative easing post-2008 during the Great Recession and then another massive round in the spring of 2020 due to COVID-19 recession fears. They created the short in supply that pushes prices up and yields down.
The problem now is that we have the greatest quandary in the markets. We are missing the two largest buyers of MBS on this planet. And to top it off, the FDIC is auctioning off the MBS and Treasury portfolios of the failed SVB, Signature, and First RepublicBank, which only increases supply into the market.
In a recent article in International Banking, Viral V. Acharya, C.V. Starr professor of economics, department of finance, New York University Stern School of Business (NYU-Stern), and Satish Mansukhani, managing director, investment strategy at Rithm Capital, state, “The Fed is thus caught between a rock and a hard place, with the demand- and supply-side effects of its tightening working in opposite directions. Which way will the pendulum swing? It is hard to know, but this may precisely be why interest-rate volatility has remained high.”
This is not a small market. Agency MBS is the dominant feature of the mortgage market with an approximate $9 trillion in outstanding volume. The hole being created here is enormous.
So what are the options?
First is to just leave this alone and let the markets function without interference. This would likely be the goal of fiscal conservatives who have argued that this excessive involvement by the Fed and the GSEs over decades has resulted in the market dysfunction we see today. Industry vet James Johnson penned a great piece for Rob Chrisman’s daily report in which he describes the current supply/demand conundrum and calls the period we are in as the “great reset,” a very appropriate reflection on the scenario today.
But there are other options to consider, and the reason to consider other options is because this excessive mortgage spread is hurting the people that this current administration is the most concerned with protecting.
High rates make affordability a significant barrier to homeownership. And with no end in sight, we as a nation are likely to only widen the opportunity gap between wealthier Americans and those with less means. First-time homebuyers and people of color who often have less inherited wealth and lower wages are the ones impacted the most in a time like this.
More importantly, this scenario is the unfortunate outcome of putting too much stimulus into the economy during COVID-19 combined with supply chain shortages that resulted in hyper inflation, leading us to todays scenario.
So option No. 2 is this: let the GSEs use their roughly $119bb available in remaining capacity within the limits of the PSPA to begin some purchase activity. And if there was a modification to the PSPA to allow a slightly higher balance, the GSEs could do what they have done all during the Great Recession and the COVID-19 pandemic and act as a “shock absorber” as Laurie Goodman describes. They could become tools to help stabilize a scenario, much of which was the result of the same set of agencies that produced the environment we are in today.
The unfortunate reality is that the FHFA would likely come under fire for using the permissible balance sheet to at least help temporarily. And those attacks would be something the administration would like to avoid in a heated election period. But this is an option and one that could help — particularly those who need the help the most and are now victims of hyper inflation that they did not participate in creating.
America is a great nation that has risen to beat back the Great Depression, two world wars, a variety of other conflicts, the oil patch crisis, and more leading up to the Great Recession and the COVID-19 crisis. But for the American dream, now threatened by this supply/demand imbalance, actions by federal agencies that played a partial role in the current scenario are also the ones that can help to balance out this dysfunction. And the ones who would be most impacted to the better would be those that need the help from our nation the most as they have been literally priced out of the housing market altogether.
And yes, there are other challenges, beginning with this terrible dearth in housing supply. But to use other variables as an excuse to not help here is a difficult argument to justify.
The bottom line is this, we have lost the biggest buyers of MBS in the world and this could keep rates artificially higher than would be the case in a more balanced supply versus demand environment. This is a project for the Biden administration to lead, which should include the NEC, Treasury, the Fed, HUD, and FHFA.
David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story: Dave Stevens at [email protected]
To contact the editor responsible for this story: Sarah Wheeler at [email protected]