Category: Tips For Buyers

Whether you are looking for a first home, investment property, or purchasing your dream home, buying real estate can, at times, be a difficult process to navigate.

Here are a few tips for any home or investment property buyer.
First Time Home Buyers:

• Make a wish list. Talk/meet with your realtor and discuss what you are looking for in your home, and what neighborhoods you are interested in. Their job is to get to know you and meet your needs, so don’t be alarmed if they suggest an area or home you haven’t yet considered.
• Don’t judge a book by its cover. Same goes for a house. Visit the property in person, look around, and visualize the potential. When you buy a house, it’s not just a place to live, it’s an investment.
• Consider all of the costs. Aside from the monthly mortgage payment, make sure you have a financial grasp and budget for what it takes to own a home.
• Make a reasonable offer. When it comes to negotiating with the seller, the three most important matters are information, preparation, and realism.

Investment Properties/Flippers:

• Find the right neighborhood. It’s important to know the dynamics of a neighborhood– are most homes owner occupied or do some rental properties exist? Location is also key when it comes to tenant retention and happiness.
• Be aware of local rental regulations. It is a safe assumption that you’ll need to bring your property into accordance with local rental regulations prior to earning any income from the property.

Luxury Real Estate:

• Learn about the search process. Many luxury homes go unlisted to protect the seller’s privacy. By hiring a local, luxury real estate specialist, you can use their connections to identify which homes are for sale, and meet your search criteria.
• Consider the financing. The loan process for luxury homes typically takes longer than for smaller mortgages. Since it can take extra time, you will want to be pre-qualified early in your home search process.
• Thoroughly inspect any property you are considering making an offer on. In many cases, luxury homes are larger and have amenities that may require specialized home inspectors.

Second Home or Vacation Property:

• Choose your location/destination carefully. You’ll want a place for you and your loved ones to gather that is easily accessible and offers a variety of activities for everyone to enjoy.
• Buy under your budget. If you are planning on hiring someone to maintain your house while you are at your primary residence such as landscaping, there will not be much wiggle room in your budget to afford it.
• Understand the tax implications. A qualified real estate agent should be able to provide details about taxes in the area, and possibly even tips on ways to save, such as buying just outside the city limits.

We all know the Portland market is saturated with excited and competitive buyers. If you are thinking about taking the leap, here are a few key things to do to make you stand out as a buyer. As always, I am here to answer any of your real estate questions!
 
1. Know your price point.
Having a firm idea of what your minimum and maximum price points are can help make the search and subsequent processes a lot smoother.
 
2. Get pre-approved.
This is key to putting your best foot forward. It makes finding the right home for you at the set price point a lot easier for your real estate agent. Being pre-approved also makes you look like a better buyer to the seller and their listing agent.
 
3. Don’t do anything drastic that can affect your credit.
This means keeping your debts at a minimum and your credit stable. For example, don’t switch careers in the midst of your home search or don’t purchase anything with a huge price tag like a car on credit. These can negatively impact your standing as a buyer.
 
Be realistic about your search. Knowing what you want is important, but knowing what you can afford and what makes the most sense is critical for you in the short and long term.

Our rental market is on fire right now. The initial draw is understandable – less hassle involved in moving, less responsibility for the home itself, fewer maintenance expenses, fewer financial barriers to start renting. Particularly for younger individuals, renting seems to be the norm. But things are changing. Unemployment is turning around. College-educated millennials are venturing out of their parents’ basements, starting to turn the tide in the battle against student debt, and looking toward the future.

 

Even with our aggressive rental market, many are still torn: rent or buy? Renting has the up-front advantages listed above, but the spell begins to break when considering the long-term picture. At some point in any given area, if you live in the same place, the expenses of renting will eventually become greater than if you lived in a home you own. That point is known in the industry as the breakeven horizon. A useful tool, the breakeven horizon factors in things like property taxes, closing costs, renovations, maintenance, and insurance.

In short, the breakeven horizon tells you one thing: when buying a home becomes less expensive than renting. According to this article, the breakeven horizon for Portland is 2 years. Compared to LA’s 5.1 years, Washington D.C.’s 4.2 years, or San Diego’s 3.8 years, buying makes financial sense much sooner here.

 

The rental market being what it is, widespread increases in rental cost are spurring more people toward buying a property of their own. Naturally, the breakeven horizon isn’t the only consideration when deciding the right time for home ownership, but it’s a great place to start. I would love to answer any questions you might have, and I’m always available to discuss the best real estate strategy for you.

Does Your New Year’s Resolution Include Owning Your Home?

Brent Lucas of Guild Mortgage, M Realty’s featured partner, details the benefits of owning your home versus renting.

Nearly a third of households are still renting. If you’re one of them, you could be paying a hefty price.

Estimates for 2015 are soaring. Analysts predict that growth in rents will outpace home values in 2015 due to skyrocketing rental demand. The combination of young adults renting longer, more young adults moving to Portland, and families needing to rent after losing their home to foreclosure has increased the rental market demand… and with higher demand comes higher rental prices. In fact, renting may be COSTING you a bundle.

Let’s look at an example…

If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it.

And speaking of having nothing to show for it, how about any improvements you might make to a rental property? It’s not uncommon for renters to freshen up the paint, install new light fixtures or plant some nice flowers outside. But guess what… all your efforts, labor and the benefit of that improvement belong to the landlord, not to you.

With convenient  down payment options  still available for qualified buyers, affordable home prices and low interest rates, the very same money could have been used toward home ownership.

Even using a standard 30-year fixed program, a mortgage of $300,000 could be obtained with a total monthly mortgage payment-including property taxes and insurance-of around $2,200. Assuming a 25% tax bracket, after your tax benefit this would be equivalent to the average amount spent on rent during the same period.

And the benefits of home ownership are quite considerable. Because the mortgage is being paid down each month, equity is being built. After five years, the $300,000 mortgage could be reduced to $279,000, potentially adding $21,000 to your net worth!

But if laying out the initial increase in monthly payment and having to wait for your tax benefit to show up next April is a tough nut to crack, the IRS wants to help. Instead of waiting to file for the tax benefits derived from your new home purchase, you can simply adjust the amount of your withholding. This allows you to have less tax withheld from each paycheck so you can handle the new mortgage payment more comfortably throughout the year. In essence, you are taking your tax refund as you go instead of letting Uncle Sam hold it all year, interest free.

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the impact that a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor.

Don’t fall victim to the national headline hype. Remember, buying a home is a big step, but it is almost always one in the right direction.

If you’d like to learn more about how home ownership might be the right fit for your current situation, now is the perfect time to reach out to your favorite real estate agent to be connected with a financial professional like Brent.