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Buying a Rental Property? These 4 Key Tips Will Ensure You Buy One That Turns a Profit

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Buying a Rental Property? These 4 Key Tips Will Ensure You Buy One That Turns a ProfitAre you starting to grow bored of watching your money go nowhere sitting in a bank account? With today’s interest rates doing little to encourage saving, many individuals are looking elsewhere for new investment opportunities. In today’s blog post we’ll share four essential tips for buying a profitable rental property. Let’s get started.

Buy A Property With Year-Round Potential

Many real estate investors agree that the best rental properties are those that generate income every day of the year. The most straightforward situation to manage is one where you have stable, long-term tenants in place that aren’t going to move or change often. Browse local property listings around schools, colleges, and large employers to see if there are any suitable homes for sale.

Once you gain experience and invest in other properties, consider branching out into vacation or short-term stay homes. But to get started, aim for stability.

Predict Your Income And Expenses

Next, you will want to craft a budget. Have a look through rental listings in your target communities to see what renters are currently paying. This will give you some idea of your potential rental income for a similar-sized home. You can then compare this to your estimated monthly mortgage payment, taxes, utility costs, and repairs. It is impossible to predict precisely how much you will need, but this exercise can quickly prove whether this area is likely to be profitable.

Treat Your Rental Properties Like A Business

Since you have already taken the first steps with a budget, you might as well continue down the path to a full business structure. Most real estate investors set their portfolio up in an incorporated or limited-liability company, which reduces personal exposure. It can also be an efficient way to manage any legal issues that arise as your investments grow. Also, there will be significant tax advantages, including being able to write-off expenses such as repairs, contractor work, and renovations.

Work With Experienced Professionals

Speaking of contractors, it’s worth reminding to only work with experienced professionals who are licensed, certified and have references. Paying for quality work up-front ensures that you won’t have to deal with hefty repair bills due to shoddy workmanship.

When you are ready to invest in rental properties, give us a call. Our professional mortgage team is happy to financing options that are perfect for investment and rental properties.

What’s Ahead For Mortgage Rates This Week – January 2, 2018

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Last week’s economic readings included Case-Shiller Home Price Indices, pending home sales and consumer confidence. Weekly readings on mortgage rates and new jobless claims were also released.

Case–Shiller: Home Prices Continue Growth

Case-Shiller Home Price Index reports indicated incremental growth in October with home prices growing month-to-month 0.70 percent for the S&P Case-Shiller 30-City Home Price Index. The 20-city index posted 6.20 percent gains year-over-year. Western cities continued to post the largest gains; Seattle, Washington led with a year-over-year growth of 12.70 percent. Las Vegas, NV and San Diego, California rounded out the top three with year-over-year home price growth of 10.20 percent and 8.10 percent.

Pending Home Sales Subject to Slim Inventory of Available Homes

Homes under purchase contract rose by 0.20 percent in November as compared to an increase in pending sales of 3.50 percent in October. Analysts expected pending sales to rise by 0.50 percent in November. Extremely low inventories of available homes continued to dampen home purchases in November. The National Association of Realtors® said there was a 3.40 months’ supply of homes for sale as compared to an average reading of a six months supply.

Small inventories of homes for sale constrict sales by driving up prices, increasing buyer competition and challenging buyers to find homes they want buy among limited choices.  Pending sales varied by region with the Northeast posting a 4.10 percent increase in pending sales; the Midwest posted an increase of 0.40 percent in pending sales The South posted a decline in pending sales of -0.40 percent. The West posted a decrease of 1.80 percent, which could indicate that rapidly rising prices in Western markets are topping out. Analysts said that the disparity between pending home sales and completed sales of pre-owned homes made it difficult to accurately assess the future housing market trends.

Mortgage Rates Rise, Consumer Confidence Highest in 17 Years

Freddie Mac reported higher average mortgage rates last week. Rates for a 30-year fixed rate mortgage averaged five basis points higher at 3.99 percent; the average rate for a 15-year fixed rate mortgage was six basis points higher at 3.44 percent. The average rate for 5/1 adjustable rate mortgages was eight basis points higher at 3.47 percent. Discount points were unchanged on average at 0.50 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages. Analysts had forecast a hike in mortgage rates after the Fed raised its target federal funds rate.

Consumer confidence rose to its highest rate in 17 years in November. December’s month-to-month index reading was 122.10 as compared to an expected reading of 127.5 and November’s reading of 128.6.  Although confidence dipped in December, analysts said that consumers are confident about jobs and the economy.

What‘s Ahead

This week’s economic readings include releases on construction spending, ADP and Non-farm payrolls and the National unemployment rate. Weekly readings on mortgage rates and first-time jobless claims will also be released

3 Dog Breeds That Are Perfect for the Allergy-Prone Pet Lover

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3 Dog Breeds That Are Perfect for the Allergy-Prone Pet LoverDo you find yourself itchy and sneezing after an encounter with a friendly, furry dog? You are not alone. The CDC estimates that around ten percent of Americans suffer from allergies related to dogs or cats. But, of course, that is no reason not to enjoy the love of a dog. So, if you are ready to push your suffering aside and adopt a furry pal, below are a few breeds that are perfect for those prone to allergies.

What Causes Dog-Related Allergies?

Do you know what the primary causes of pet-related allergies are? Many people believe that reactions are triggered by hair that has been shed, but this isn’t entirely accurate. Shed hair carries flakes of dead skin known as dander, and it is this dander which causes most typical dog-related allergic reactions.

In an allergy-prone individual, this dander is treated as a harmful invading virus or bacteria. The body issues an immune response with symptoms like sneezing, watery eyes, hives and coughing which can be treated with antihistamines.

Note that it is not just a dog’s dander that can cause a reaction. Dog saliva and urine are also known to carry the proteins that can trigger allergic reactions.

3 Breeds Perfect For Allergy Sufferers

The Poodle – if you are the energetic type that likes to get out and walk, a Poodle might be the right fit. Poodles are recognized as a cleaner dog as they do not shed much fur. They love to get outside and can be trained easily.

The Schnauzer – if you are more of an introvert or have a quiet side, you might find a Schnauzer to be a better companion. These are smaller dogs that aren’t going to beg you to run around for a few miles each day.

The Bichon Frise – this breed is an excellent choice for first-time dog owners and those who prefer smaller dogs. Bichon Frise are happy, friendly dogs that are very sociable. They are not incredibly high maintenance, but they do need daily grooming.

Renting A Home That Doesn’t Allow Pets?

If you are thinking about how great it would be to have a dog but can’t get one due to your current rental situation, contact us today. Our friendly mortgage professionals are happy to introduce financing options for a pet loving home.

Case-Shiller: Home Prices Rise in October

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According to Case-Shiller national and 20-city home price indices for October, home prices continued to rise.  National home prices rose 0.70 percent for the three months ending in October. Year-over-year, national home prices increased by 6.20 percent. The 20-City Home Price Index also rose by 0.70 percent in October and reported a year-over-year increase of 6.40 percent.

The top three metro areas in the 20-City Index were Seattle, Washington with a year-over-year increase of 6.40 percent; Las Vegas Nevada followed with year-over-year home price growth of 10.20 percent. San Diego, California had the third highest home price growth rate at 8.10 percent year-over-year.

The year-over-year percentage increase was 1.30 percent below the all-time high reading for the 20-City Index.

Home Price Growth, Sales Could Face Headwinds in 2018

David M. Blitzer, CEO of the S&P Indices Committee, said that 2018 may bring challenges to home price growth. Mr. Blitzer said that while strong labor markets, economic growth, and low mortgage rates were major factors driving home price growth, higher mortgage rates are expected next year. Rising rates would make buying a home less affordable for some. Home price growth continued to outstrip inflation and income growth.

Mr. Blitzer cited an Urban Institute report that indicated that high-priced metro areas may compel would-be home buyers to consider renting. High-demand metro areas are subject to high rates of buyer competition and bidding wars can drive affordable home prices beyond the reach of first-time and moderate-income buyers.  Significant numbers of buyers turning to rentals could drop the demand for homes and possible ease the rate of home price growth.

Analysts expected home prices to continue increasing due to low supplies and high demand. Millennials are entering their home-buying years and relatively low mortgage rates have supported affordability, but higher mortgage rates and continued competition from investors and cash buyers could stifle demand for homes in the new year.

Landlord Squeezing You for yet Another Rent Increase? It’s Time to Buy a Starter Home

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Landlord Squeezing You for yet Another Rent Increase? It's Time to Buy a Starter HomeDid you recently receive your annual notice that the rent is going up? If so, you’re not alone. Millions of renters are seeing more and more of their income drained away due to higher rents. To make matters worse, every dollar in rent is one that you are not saving, investing or using to build your net worth. If you’re feeling the pinch of higher rents, it might be time to buy your first starter home.

Comparing Rent With A Mortgage

Have you ever done the math to understand how close your monthly rent might be to a mortgage payment? Here’s a quick and easy exercise. Multiply your monthly rent by twelve, and then multiply that number by 25. For example, if your rent is $1000 per month, that is $12,000 per year and $300,000 over 25 years. So if nothing changed from today, you could afford a $300,000 mortgage.

Homes Are More Affordable Than You Think

Many first-time home buyers are convinced that they can’t afford to enter the market, but that is not the case. There are homes available that fit almost every budget or price range. In fact, it is less important to worry about the total cost and more important to worry about location, size and local amenities like schools and parks.

Remember, when you buy a house you aren’t just locking yourself into a rental contract. You are investing in a home and property have the potential to gain in value over time.

A Few Other Considerations

Of course, there are some considerations that you will need to make as you start down the path to homeownership. The first is that your mortgage is unlikely to be your only monthly expense. You will also encounter property and other taxes, utility fees and if you buy a condominium or apartment, homeowners’ association fees. You will also be responsible for maintenance and upkeep since you own the home. But that also means that you are free to customize and renovate as you see fit.

Keep in mind that it is never too late to escape the rental trap. When you’re ready to start building your future by investing in your first home, contact us. Our experienced mortgage team is happy to share financing options that will suit your budget.