Flipping a House – Is it Right for You?
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The first step is analysing your finances to see if you can afford to take on a second home and remodel it. You should have an idea as to how much your total budget is going to be for the project, and make sure to factor in closing costs on the project home, contractor overruns because things are bound to take longer than you thought, and then money for incidentals and accidentals, as well.
Once you’ve got an iron clad budget, the next step is to find a home that you think is flappable. Most people go into these projects with a property already in mind, but for some, searching for a saveable house that is within their budget and at the same time will be sellable can be extremely difficult. There are many people out there looking to flip houses, so finding one for yourself can be a real chore.
Once you’ve picked your property, you have to go through the buying process. Expect delays and make sure you have the property appraised by an independent appraiser. Also, be aware that closing costs can fluctuate dramatically.
So, the house is all yours. Now what? The best thing to do is to bring in an expert to help you see everything that needs to be done. From electrical to plumbing to interior design, flipping a house right is a huge job, and you have to be prepared to spend the money.
Once renovations have started, be prepared to dedicate as much time as needed to the project. The things that you can do yourself will save you money, but don’t be afraid to call in an expert for the big jobs.
Once the property looks like it should, have it reappraised, and once you’re ready to sell, don’t be afraid to embrace non-traditional methods of selling it, like the Internet or out-of-town newspapers. You need as many eyes on your flipped house so you can unload it as quickly as possible and stop making payments on it. The longer the property sits there, the less successful your house flip will be.
House-flipping has become one of the most fashionable ways to make money for hard working people. But be prepared to go into your investment with your eyes, and your wallet, wide open.
Saturday, June 21, 2008
Realty Trac: Gulf Markets
Gulf Markets Experience Slow Recovery
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According to sources in the affected areas, the biggest problem facing reconstruction is labour. A catch-22 has the New Orleans construction market treading water. More hands are needed to build more homes, but the bodies attached to those hands have no place to live in New Orleans, so they don’t come.
The housing market isn’t doing much better. Predictably, the price of undamaged homes shot up during the immediate aftermath of Hurricane Katrina, and are still anywhere between 10-40 percent higher than pre-storm levels throughout most of the gulf coast area.
The amount of inventory is most of the storm-ravaged area is still very small, and the areas that did manage to escape damage tended to absorb a large amount of homeless from areas that were harder hit. This influx of demand has kept supply very, very low.
Areas such as Pearl River County in Mississippi found themselves with a doubled population almost overnight as people from flooded areas flocked there. The area had been reporting just over 400 properties for sale at any given time before the storm, but the influx in population has shrunk housing availability down to 275. As for prices, they are up significantly, from around $90,000 to $150,000.
A much larger area that took in hundreds of thousands of people was Houston, Texas. Unlike many of its counterparts, Houston has taken the influx of people quite well. New home construction is way up, and the inventory is only down from 45,000 to 40,000.
Middle-of-the-road areas like Baton Rouge essentially doubled in population, much like Pearl River. Today, the population is still 50% higher than it was before Katrina hit. There is almost no inventory here, as soon as a house goes up on the market, it is inundated with offers and sells very quickly.
Hurricane Katrina was a legendary storm that changed the lives of millions of people. The real estate market will recover there, especially in a magical city like New Orleans, but it is going to take years. The surrounding areas may not be as lucky.
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According to sources in the affected areas, the biggest problem facing reconstruction is labour. A catch-22 has the New Orleans construction market treading water. More hands are needed to build more homes, but the bodies attached to those hands have no place to live in New Orleans, so they don’t come.
The housing market isn’t doing much better. Predictably, the price of undamaged homes shot up during the immediate aftermath of Hurricane Katrina, and are still anywhere between 10-40 percent higher than pre-storm levels throughout most of the gulf coast area.
The amount of inventory is most of the storm-ravaged area is still very small, and the areas that did manage to escape damage tended to absorb a large amount of homeless from areas that were harder hit. This influx of demand has kept supply very, very low.
Areas such as Pearl River County in Mississippi found themselves with a doubled population almost overnight as people from flooded areas flocked there. The area had been reporting just over 400 properties for sale at any given time before the storm, but the influx in population has shrunk housing availability down to 275. As for prices, they are up significantly, from around $90,000 to $150,000.
A much larger area that took in hundreds of thousands of people was Houston, Texas. Unlike many of its counterparts, Houston has taken the influx of people quite well. New home construction is way up, and the inventory is only down from 45,000 to 40,000.
Middle-of-the-road areas like Baton Rouge essentially doubled in population, much like Pearl River. Today, the population is still 50% higher than it was before Katrina hit. There is almost no inventory here, as soon as a house goes up on the market, it is inundated with offers and sells very quickly.
Hurricane Katrina was a legendary storm that changed the lives of millions of people. The real estate market will recover there, especially in a magical city like New Orleans, but it is going to take years. The surrounding areas may not be as lucky.
Realty Trac: Home Affordability--Myth or Reality?
Home Affordability: Myth or Reality?
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For many young couples, the idea of owning their own house just like their parents is an attractive idea, but it’s not very realistic. A recent poll conducted by the Associated Press and America On Line Real Estate showed that 80 percent of respondents believe that it is hard for first-time buyers to afford a home. A majority of those polled – 59 percent – also said that they believe it is harder to buy a home now than it was five years ago.
Taking a closer look at the poll reveals that young adults and those that classify themselves as minorities consider the affordability of homes a bigger problem now than five years ago, compared to those over the age of 50 and those that identify themselves as white.
Broken down by region, almost 70 percent of those living in the western United States and almost 65 percent of those living in the Northeastern US say that it’s harder to buy now than five years ago, compared to only 54 percent of those living in the South and 51 percent of those living in the Midwest.
The poll also found that almost half of those surveyed thought that the real estate market in their home area was overpriced.
A recent report by the census bureau seems to back up the findings of the AP/AOL survey. The census report found that approximately one third of all homeowners in the US that have mortgages spent at least 30 percent of their income on housing and housing related costs. It’s widely considered excessive if your housing costs make up more than one third of your income. The census took things like mortgage payments, insurance and utilities and taxes into account.
The biggest reason for this lack of faith in new home ownership can be directly attributed to the recent housing boom over the last five years. Also, a recent increase in mortgage rates has also dampened optimism. And while incomes are up, as well, most don’t even keep up with inflation.
Another recent trend that has kept optimism for first time home buyers down is the 32 percent jump in median home value from 2000 to the end of 2005. The current median price is around $167,500.
While buying your first home is never easy, things may be a bit harder now than they have ever been. But bargains so still exist, and if you’re patient, a first home can still be yours.
HOMES FOR 1/2 PRICE
Enter ZIP or City, State:
For many young couples, the idea of owning their own house just like their parents is an attractive idea, but it’s not very realistic. A recent poll conducted by the Associated Press and America On Line Real Estate showed that 80 percent of respondents believe that it is hard for first-time buyers to afford a home. A majority of those polled – 59 percent – also said that they believe it is harder to buy a home now than it was five years ago.
Taking a closer look at the poll reveals that young adults and those that classify themselves as minorities consider the affordability of homes a bigger problem now than five years ago, compared to those over the age of 50 and those that identify themselves as white.
Broken down by region, almost 70 percent of those living in the western United States and almost 65 percent of those living in the Northeastern US say that it’s harder to buy now than five years ago, compared to only 54 percent of those living in the South and 51 percent of those living in the Midwest.
The poll also found that almost half of those surveyed thought that the real estate market in their home area was overpriced.
A recent report by the census bureau seems to back up the findings of the AP/AOL survey. The census report found that approximately one third of all homeowners in the US that have mortgages spent at least 30 percent of their income on housing and housing related costs. It’s widely considered excessive if your housing costs make up more than one third of your income. The census took things like mortgage payments, insurance and utilities and taxes into account.
The biggest reason for this lack of faith in new home ownership can be directly attributed to the recent housing boom over the last five years. Also, a recent increase in mortgage rates has also dampened optimism. And while incomes are up, as well, most don’t even keep up with inflation.
Another recent trend that has kept optimism for first time home buyers down is the 32 percent jump in median home value from 2000 to the end of 2005. The current median price is around $167,500.
While buying your first home is never easy, things may be a bit harder now than they have ever been. But bargains so still exist, and if you’re patient, a first home can still be yours.
Realty Trac: Credit History Problems
Credit History Can Bite you in the Butt
A recent study has shown that the number of people who pay more than they should for their mortgage is rising. And if you look at the surface, the number one reason this rise is happening is because of race.
A study done by the Federal Reserve shows that around 55 percent of African-American borrowers pay higher than normal interest on their mortgages. But it’s not just the African-American community. The same study showed that 46 percent of people who identify as Latino also pay more due to a higher than average interest rate on their loan. As for Caucasians, only 17 percent of borrowers fell into that category.
The overall numbers of people who pay more than the average interest rate is up considerably, from 11.5 to 24.6 percent in the last two years.
While these numbers appear to be caused by rampant racism amongst seemingly all lenders, there might be another explanation. The connection between the interest rate offered and the borrowers credit history.
The interest rate that is offered on a mortgage loan is directly proportional to the amount of risk the lender feels that they are taking. If you have sparkling credit, the chances of you getting the best possible interest rate are fantastic. On the other hand, if you have declared bankruptcy or if there are any other black marks on your credit history, the chances of you getting a great loan are almost zero.
Another possible culprit is the rise in speciality loans that have gained in popularity over the last few years. While the idea of buying a house without a down payment was once a rarity, these days, it’s fairly common. And in almost all cases when this happens, the interest rates are higher because the lender is taking an additional risk by not having a down payment.
Sometimes, home buyers are agreeing to let the closing costs associated with buying a home be figured into the interest rate. Again, this is a less than honest way for a family to buy a home with very little to no cash on hand. The catch is, of course, that you will end up paying significantly more over time than if you had just paid the closing costs up front.
While no one can suggest that racism is dead in America, it is possible that while African-Americans and Latinos pay more for their mortgages, it could be caused by various other factors that may or may not be connected to a persons’ race.
A recent study has shown that the number of people who pay more than they should for their mortgage is rising. And if you look at the surface, the number one reason this rise is happening is because of race.
A study done by the Federal Reserve shows that around 55 percent of African-American borrowers pay higher than normal interest on their mortgages. But it’s not just the African-American community. The same study showed that 46 percent of people who identify as Latino also pay more due to a higher than average interest rate on their loan. As for Caucasians, only 17 percent of borrowers fell into that category.
The overall numbers of people who pay more than the average interest rate is up considerably, from 11.5 to 24.6 percent in the last two years.
While these numbers appear to be caused by rampant racism amongst seemingly all lenders, there might be another explanation. The connection between the interest rate offered and the borrowers credit history.
The interest rate that is offered on a mortgage loan is directly proportional to the amount of risk the lender feels that they are taking. If you have sparkling credit, the chances of you getting the best possible interest rate are fantastic. On the other hand, if you have declared bankruptcy or if there are any other black marks on your credit history, the chances of you getting a great loan are almost zero.
Another possible culprit is the rise in speciality loans that have gained in popularity over the last few years. While the idea of buying a house without a down payment was once a rarity, these days, it’s fairly common. And in almost all cases when this happens, the interest rates are higher because the lender is taking an additional risk by not having a down payment.
Sometimes, home buyers are agreeing to let the closing costs associated with buying a home be figured into the interest rate. Again, this is a less than honest way for a family to buy a home with very little to no cash on hand. The catch is, of course, that you will end up paying significantly more over time than if you had just paid the closing costs up front.
While no one can suggest that racism is dead in America, it is possible that while African-Americans and Latinos pay more for their mortgages, it could be caused by various other factors that may or may not be connected to a persons’ race.
Tuesday, June 17, 2008
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