You know the saying: “If it sounds too good to be true, it’s probably a house flip.”
Isn’t that how it goes?
Okay, maybe that’s not the original phrase, but the house flip frenzy is still happening for the same reason diet pills and spray tans are popular – we like things to be fast and easy.
Flipping houses is a gamble; and as in gambling, sometimes you win and sometimes you lose. If the stars align and you find an underpriced house in a great neighborhood that needs a little TLC before hitting the market, you’re probably going to make some money.
But. . .
If you find that same house and then uncover the creeping mold, the cracked foundation and the sketchy electricity, you can say goodbye to your profit and your sanity.
Don’t get me wrong here – I am not against house flips. On a big, big scale it can be good for the seller, the buyer, and the neighborhood. After all, updating an eyesore and finding owners to love and cherish a property is a good thing.
Still, with television shows such as Property Brothers and Flip or Flop, with all of their fancy lighting, hunky contractors and 30-minute timeframe, it’s easy to get swept up in something that appears to be fast and easy when, in real life, it can be slow and really, really (really!) tough.
Planning on buying a ‘fix and flip?’ Here are a few tips to keep you in the money, instead of landing you in a money pit:
Rely on a Realtor and Other Professionals:
Realtors, real estate attorneys and accountants can help you navigate the dollars and sense of an investment. Could buying this house put your financial future in jeopardy? Or your other properties? Or your bank account? Before taking this step, recognize what’s at risk with you and your investments.
When it comes to the nuts and bolts of things, surround yourself with reputable, experienced professionals. Make sure all of your contractors and suppliers are licensed, insured, recommended, honest, trustworthy and competent. Also, work with people you like. You’re going to be working side-by-side on a huge project, and you want to get along with the people who are literally putting your house together.
Don’t Be a Hero:
If you have questions, ask. If you don’t agree with a suggestion from a friend, investment partner, supplier, speak up. If you don’t know how to rewire the water heater, don’t! Just don’t!
Do Your Due Diligence:
There are insurance policies for building repairs that all licensed contractors must hold in order to be in the business. There are specialty policies for buildings that are vacant or under construction. There are home warranties that can protect the appliances already in the home. Looking into insurance is just a way of looking out for yourself.
Look Under the Hood:
Hire the best inspector you can find and don’t balk on the cost. I promise that in the end this expense will actually save you money. An inspector knows what to look for, what is an easy fix and what is a nightmare. Stay away from the nightmare. Nightmares are…scary.
And Back to the Realtor:
No matter how great the house looks, if you don’t have a savvy Realtor on your side, it’s not going to sell. Look for a Realtor who has pulled comps for your neighborhood. Look for someone with experience, a solid marketing plan, a list of recommendations and a network of buyers and sellers.
This blog is a first in a series on the frenzy over fix and flips. Look for part two in the weeks ahead. In meantime, do you have a fantastic or frightening fix and flip story to share? Let’s hear it!
A colleague outside of the real estate business recently asked me if he needed a Realtor when purchasing new construction.
Well – it depends.
If you are the type of person who can cut your own hair, perform your own knee surgery, or fit your own contact lenses, then no.
(And, also, you rock.)
If you are like the other 99.9 percent of the people in the world who happen to be great at some things, but not an expert in all things, then yes. A Realtor, even for a new build, is essential.
Why? Well, a Realtor works for you, not the builder. This means that your needs and wants are the number one priority during negotiation, purchase, construction and final walkthrough. A Realtor is looking out for you. A builder is looking out for the builder – aka: himself.
Here are some added benefits:
If you know where you want to live and the model build you want, you are ahead of the game. If you don’t, a Realtor can offer valuable, unbiased insight on floor plans, finishes, and even plot angles. A Realtor comes to the table with a vast amount of knowledge about the builder’s reputation and can help you avoid costly mistakes and long-lasting headaches.
Using a Realtor will not cost you extra money, but will save you dollars in the end. A Realtor’s commission is paid by the seller – in this case – the builder. But the Realtor is working for you, to protect you from unnecessary upgrades in the beginning and from not getting everything you’ve been promised in the end.
A Realtor has been through the process of buying before (probably dozens, if not hundreds of times). And while this may not be your first home purchase, it is still beneficial to have someone representing you in the transaction. And since you are the one who is spending your hard-earned money and you are the one who is waiting months for a new home and you are the one who is going to live in said home for the next chunk of years, it only benefits you to have someone on your side. Why be the Lone Ranger when you could have Tonto?
Final note: If you are touring a new construction model and the builder may ask you to ‘register’. It’s best to either decline this offer or tell the builder that you are already working with a Realtor and will be returning with him/her at a later date. Builders will always encourage buyers to spend on upgrades, and having a Realtor representing YOU will protect you and your bank account. Negotiating directly with a builder is doable, but not recommended – like cutting your own hair. Performing knee surgery on yourself. Fitting those lenses.
As much as things change, things remain the same. This is not news. But let’s talk about the news or, more specifically, the media.
I’ve been hearing complaints about the holiday season starting earlier and earlier every year (most of the complaints have been coming from yours truly, but it’s only because I am still busy with the leftover Halloween candy and I don’t want to be pushed towards candy canes just yet), but a recent article in The Denver Post points out that even as early as 1912, stores were promoting Christmas sales early in the season. One ad even boldly stated: “For the sake of humanity, shop early.” Wow.
So actually Christmas promos aren’t earlier every year, we are just led to believe that. In reality, things have pretty much remained the same.
So, imagine my surprise when I heard that owning a home was no longer the quintessential American Dream! And you thought the impending wine shortage was serious.
A recent report stated that nearly one in four people between the ages of 18 and 24 defined the American Dream as being debt-free. That’s good, right?. But what the poll was trying to convey is that more young people would rather be debt free than own a home, which throughout history was cited as part of the American Dream thanks to the societal status associated with home ownership.
But wait! The National Housing Survey of Delinquent Mortgage Borrowers study, conducted by Fannie Mae, asked questions about the importance of homeownership to those delinquent on their mortgages and 74% still see homeownership as better than renting.
So who’s right?
You’re right. Yes – you. Research and studies and polls and data can be skewed, so the only right answers when it comes to the question of whether or not to buy a home is whether it is the best decision for you now and in the future.
If you are, in fact, ready to buy, you should read my recent blog: Five Steps That Will Lead You Home, and remember that you would not perform brain surgery (I hope) if you were not a brain surgeon and therefore should probably not attempt home-buying without a professional at your side. A full-time, full-service Realtor with credentials and references is a good bet. Someone with CRS and ABR behind their name knows the ins and outs of the business while negotiating on your behalf. Realtors who have been in the business a long time know the pros and cons of different neighborhoods including everything from school districts to walking trails to resale values to the best floor plans for that perfect view.
If you are looking to buy or sell, I can help. In the meantime, enjoy that glass of cabernet before it’s gone for good.
I’ve sold hundreds of houses over the course of my career and while every single client and every single house is unique, one thing always remains the same: houses cost money.
I know, I know – that’s the worst part, isn’t it? You’re all wrapped up in the glorious backyard and the stainless appliances and the fabulous school district and just as you are dreaming about paint colors and Thanksgiving tablescapes – WHAM – the money monster starts creeping in.
Don’t panic. Mortgage rates may not be at an all-time low right now, but they have found a nice, cozy spot at approximately 4.5 percent for a 30-year fixed loan. And while they may continue to rise, experts don’t foresee and huge jump on the horizon, which is good news for buyers now and in the near future.
So while luck (and a very good Realtor…ahem) may have led you to your dream home, finding the best mortgage deal takes a little more than good fortune. A recent article in The Denver Post simplified the process of securing a mortgage and, being the nice girl I am, I thought I’d share some advice:
Do Your Homework:
- Check your credit report with the three credit reporting agencies: Equifax, Experian and TransUnion. Don’t be nervous – I equate this to going to the dentist – it never is as bad as you expect.
- If you notice errors, get them corrected.
- If possible, pay down outstanding debt to improve your score.
- Resist buying new cars or other big ticket items (yachts, castles, Hope Diamonds) while applying for a mortgage and during the time until your closing date.
- Get pre-approved before shopping for a home – this will classify you as a strong buyer and sellers will be more attracted to your offer if they know it is solid. Looking for a good lender? Call me! I know the best lenders in town; people you can trust and who can get the job done quickly!
- Define how much you want to spend, or better yet, what you can afford. This will help you narrow your search and help you avoid over-spending when shopping for a home.
Find the Best Rates:
- A standard loan offers fixed interest rates for 30 years, while an adjustable-rate mortgage (ARM) provides a fixed rate for the first five to seven years.
- ARMs make sense for buyers planning to be in the house for a short period of time. Because ARMs offer a lower initial rate, but will grow exponentially in the years ahead, they aren’t the best bet for long-term, financially stable buyers.
Determine the Length of Your Loan:
- Ideally, a 15-year mortgage is a best bet for those buyers who can swing it. Actually, a cash purchase is fantastic (oh how I love the cash buyer!) but, alas, most of us are not floating in dough.
- A 15-year mortgage offers lower interest rates, but a higher monthly mortgage. Still, at the end of those 15 years, you will have paid significantly less in interest than those under a 30-year loan.
- A 30-year loan, the more typical choice for first-time or younger buyers, gives homeowners a little more financial freedom on a regular basis. For example, if your home carries a $300K mortgage, you pay approximately $1,520 per month on a loan with a 4.5 percent mortgage but a total of $248K in interest. That same mortgage with a 15-year term requires a payment of $2,182 per month, but the interest is significantly less at $93K. Either way, paying a bit more towards principle is always wise, if possible. And refinancing to a 15-year mortgage down the road is always an option. You know, once your money tree is in full bloom.
Lock It Down:
- Once you do land a great rate, lock it in. This can usually be handled at no cost or for a fee that is refunded at closing.
- Don’t play the guessing game when it comes to mortgage rates. Buyers trying to time their purchases to the fluctuating market usually wind up worse for the wear. And you’re going to need all your energy to pick out paint colors and get to work on those Thanksgiving decorations.
Thinking of Thanksgiving in a new home? Let’s talk turkey. Call me at 303-478-1201 or send me an email – firstname.lastname@example.org I’d love to help you!
You can spend a lot of time looking for the perfect home and end up feeling emotionally drained and exhausted, and still without a home. Preparation and letting your Denver Colorado real estate agent know exactly what you need in a home, will prevent misunderstandings, wasted time, and unneeded travel. Follow these tips to help your agent show you the house in the perfect location with the right amenities that you need.
Make Two Lists:
- Make a list of those things that are absolutely necessary, as well as a list of the things you want, but are willing to compromise on. The second list is just as important as the first to really prioritize what you are looking for.
- Before you contact a Denver Realtor, do some homework on the neighborhoods you are interested in. Research schools, shopping, and the commute distance to work. Take a drive through the neighborhoods to see if they have the right feel for your home.
Keep An Open Mind:
- This is where that second list becomes valuable. A house might have everything you are looking for, except one thing. Keep an open mind when viewing a home, especially if a missing feature is on the options list, and make sure it has everything else you need in the location you want.
Finding a home in the Denver area does not have to be an exhausting experience, simply make a list, research locations, and keep an open mind!To find your perfect house call Ann Meadows at 888-860-1931.