Category Archives: Uncategorized

How to Invest in Real Estate If You Have Bad Credit

It seems like every time you turn on the television, there’s a new home improvement show dedicated to flipping houses and making bank—a popular way to invest in real estate. Investing in real estate and turning it for a profit might be tempting. But if your credit score is below 601—the number the credit bureaus mark as the dividing line between “fair” and “bad” credit—you might have a tough time finding funding.

So is investing in real estate out of the question for someone in that bunch? Not necessarily.

Buying an investment property vs. buying your own home

No matter what you’ve seen on TV, purchasing real estate as an investor is a lot more complicated than doing so as a homeowner if you are turning to a lender to help finance the deal.

“Those looking to finance the purchase of real estate as an investment—as opposed to a primary residence—can expect a higher interest rate and more stringent lending criteria from lenders before getting a mortgage,” explains Bruce Elliott, president of the Orlando Regional Realtor® Association and a broker associate with Regal R.E. Professionals in Orlando, FL.

Lenders typically require more money down and a better credit score for a real estate investment loan than for an owner-occupied home loan.

“They also look very carefully to ensure that investment home buyers are financially capable of sustaining the mortgage over an extended period of time in the event that the property doesn’t resell, and they even have formulas to calculate for shortages in expected rental income,” Elliott explains.

Can you invest in real estate with bad credit?

Unless you have spare cash or a loan from a friend or relative to finance your investment, obtaining a loan will likely be difficult.

That said, there are other options to help you one day become a real estate investor, Elliott says.

  • Improve your credit score. Resolve any collection-related issues uncovered by a credit check, and pay down existing balances. And be smart about other investments: Now is not the time to finance additional purchases such as a car or to open additional credit accounts of any type.
  • Find a hard money lender. No, this isn’t a back alley deal-maker. Hard money lenders are private individuals or groups who will put up cash for real estate ventures, and they are often more amenable to making a deal with someone who has poor credit. Of course, there will be some drawbacks: “Generally, these lenders will require anywhere from 40% to 60% down to purchase or close outright,” Elliott notes.
  • Skip putting money down. It might sound like a pipe dream, but Elliott says this is often the story behind those roadside “home for sale” signs that specify “cash only.” “The investor simply has purchased an option or received permission from a homeowner to try to sell the home,” he explains. “The investor makes money either from a back-to-back closing or from payment directly from the ultimate buyer.”

If you want to invest in real estate, bad credit can be a stumbling block, but it doesn’t have to derail the whole train.

Post courtesy of realtor.com

Advertisements

10 Modern Tablescapes to Try This Thanksgiving

By the time Thanksgiving rolls around, it’s understandable if you’re feeling tired of autumnal accents. If you can’t stand the thought of another pumpkin, these modern tablescapes are just what you need. Skip the standard dining setups, and opt for something a bit more unexpected to avoid decor fatigue this year.

1400970686959

Seasonal Chic

The chic settings and serveware you already own will look swoon-worthy when showcased in a seasonally-appropriate — but still minimalist — manner. A simple glass bowl filled with miniature apples captures those autumnal vibes without being overwhelming or too kitschy.

1484679234747

Gilded Accents

For those who really hate classic fall accents, look no further than this glam home that proves you can design a holiday-ready tablescape without traditional colors or stylings. Lush flowers, candles and linens come together to make a monochromatic table that is as gorgeous as they come. Store away everyday flatware and use a more festive option, like these gold beauties, to achieve a must-have holiday look that dazzles.

1415979774945.jpg

Modern Makeover

Modern decor doesn’t have to take away from the festive flair that’s associated with holiday get togethers — it can actually add to the seasonal style. Pairing matte white essentials with shiny gold accents creates a whimsical space that feels magazine-worthy. Want to take it one step further? Trade in generic shapes for bold, geometric ones for a centerpiece that stands out.

1400983221945

Harvest-Inspired Style

Now this is how you set a table that’s strong on Thanksgiving style, without following the standard decorating rules. Save the mums for curb appeal — mix and match different florals instead for the ultimate table upgrade. Succulents and ferns pair perfectly with moody maroon flowers for a modern arrangement that brings modern qualities to any dining room.

14267024805431

Understated Elegance

Mixing and matching different colors, prints and textures is a popular approach that can be applied to the dining room, too. Add just a small touch of Thanksgiving-esque style by working in a seasonal napkin at each individual setting. The simple gray charger and white dinnerware are perfectly complemented by a neutral print that instantly brings some warmth.

1506433381645

On-Trend Table

On-trend patterns, fabrics and materials can easily be incorporated to make a dining table appear fresh and totally of-the-moment. Floral linens, boho chargers and rose gold candle holders come together flawlessly to enhance the neutral backdrop. Top it off with carefully curated bouquets (and a little rosé) for a charming extra that will tie the whole thing together.

1442369428978

Stylish Settings

A complete tablescape overhaul can be a lot of work — and pricey. Instead, opt for budget-friendly updates to get a makeover that won’t cut your style short. Simple additions have the power to completely transform your interior into a Thanksgiving-ready space in a few easy steps. Just introduce a thematic placemat or charger underneath each place setting.

1400978586282

Unexpected Palettes

Festive hues of red, orange and yellow may be the norm when it comes to Thanksgiving, but this dining room proves that those shades aren’t the only ones that work. Switch things up by ditching those classic colors and incorporating some unexpected options. Glassware, serveware, linens and flowers in blue and green create a space that brings modern appeal, while maintaining those homey, charming qualities.

1479842940202

Minimalist Centerpiece

Thanksgiving may be synonymous with cornucopias and other bountiful additions, but we’re swooning over the less is more approach this time around. Let understated centerpieces steal the show by choosing trendy plants rather than traditional florals. Keep the linens and settings minimalist and have those leafy focal points be the major statements.

1472648696761

Wooden Upgrades

Just because you have a wooden table, doesn’t mean you have to go the rustic route. Consider introducing moody gray hues to make for a more dramatic ambiance. With a geometric pattern and slight sheen, these new textiles will have an undeniably impact. Add an ample amount of candles for the perfect glow to keep the modern touches coming.

Post courtesy of HGTV.com

3 Ways Real Estate Can Boost Your Retirement Income

 

There’s big appeal in the idea of investing in real estate right now. And it’s not just because of all the attention these days on President Donald Trump, who made his fortune in the industry.

Many real estate-related investments have done quite well in the last decade or so. The median sales price of single-family homes hit $315,700 at the end of the third quarter, up 23 percent from the prior peak for values in 2007 before the financial crisis hit.

At the same time, a low-interest rate environment has depressed yields in typical safe-haven investments like bonds and certificates of deposit. That has made income-generating real estate assets even more attractive.

And, of course, there’s the basic value of real estate as part of any well-balanced investment portfolio.

“Without alternative assets, a portfolio is limited to stocks and bonds. That means the portfolio is not fully diversified,” says Craig Cecilio, founder and president of real estate investment firm DiversyFund. “The other big advantage of real estate investing is that your investment is backed by real assets.”

Yes, real estate values do fluctuate – and sometimes drop significantly. But since properties are physical assets, they will always be worth something whereas other investments can go all the way to zero.

So if you like the appeal of real estate, how should you start investing?

Buy rental homes. This is the most direct way to invest in real estate – however, this approach does comes with a few drawbacks.

The first is the initial investment that’s required, since buying a house can require a big one-time payment or taking on significant debt. Then, of course, there is the hassle of being a landlord to fix leaky faucets or dealing with tenants.

That said, in many markets where rental rates are higher than mortgage payments on a similar property, a shrewd landlord can easily wind up ahead at the end of every month – and more importantly, have a reliable income stream that is independent of any appreciation in the underlying real estate.

Of course, renting versus house flipping is very different, and this latter strategy can be fraught with risks, Cecilio says.

“Investors need to ask whether the incentives of the investment issuer are the same as their own incentives,” he says.

For instance, if a company benefits by selling you advice or issuing loans instead of sharing in the ups and downs of your investment portfolio, that’s a sign that they may not care much whether you ever make any money.

Buy into publicly traded REITs. A special class of companies known as real estate investment trusts, or REITs, are specifically designed to make public investment accessible for regular investors.

In fact, thanks to all the attention, the Standard & Poor’s 500 index added real estate as its 11th industry group in 2016 to show the importance of this segment on Wall Street.

The biggest appeal for income-oriented investors is that REITs are a special class of investment with the mandate for big dividends. These companies are granted special tax breaks to allow them to more easily invest in the capital-intensive real estate sector, but in exchange, they must deliver 90 percent of their taxable income directly back to shareholders.

As a result, the yield of many REITs is significantly higher than what you’ll find in other dividend stocks. Mall operator Simon Property Group (NYSE: SPG) yields about 4.8 percent. Residential housing developer AvalonBay Communities (AVB) yields about 3.1 percent.

And, of course, investors can purchase a diversified group of these stocks via an exchange-traded fund if they prefer. For example, the Vanguard REIT Index Fund (VNQ), yields about 3.9 percent at present and has a portfolio of 155 of the biggest real estate names on Wall Street. The VNQ has an expense ratio of 0.11 percent, or $11 per $10,000 invested.

Crowdfunding. A fast-growing form of real estate investment for the digital age is via “crowdfunded” properties. The concept involves pooling together the investments of individuals to purchase properties, and share in those properties’ successes.

DiversyFund is one provider of these crowdsourced investments, as is Fundrise, a Washington, D.C.-based firm that owns properties from South Carolina to Seattle.

“We allow investors to very simply invest in private real estate instead of public real estate, with much lower fees and greater transparency, through the internet,” says Fundrise co-founder and CEO Ben Miller.

Private real estate can offer much bigger yields than publicly traded REITs, Miller says, to the tune of 8 to 10 percent annually. But the challenge in the past was the burden of big upfront fees and a lack of liquidity or access to your initial investment after you buy in.

Miller says REITs offer low barriers to entry for investors and the ability to buy or sell stocks on a daily basis, but investors pay a steep “liquidity premium” for the ability to trade – and subsequently, suffer a lower return.

“That liquidity premium is theoretically a benefit, but it’s invisible for most people and it’s not free,” he says. “If you’re investing in the long-term for income, why would you pay that premium?”

Crowdfunding platforms like Fundrise, DiversyFund, Realty Shares and RealtyMogul all look to take the best of both private and public worlds. For instance, Fundrise has a minimum investment of just $500 in its “starter portfolio” and charges significantly lower fees thanks to the cost-saving benefits of technology and a lack of middlemen.

Post courtesy of usnews.com

Renting or Buying a Home: Which Is Best for You?

To find out whether you should rent or buy a home, crunch the numbers using this two-step process.

The most common question people have about their living situation is whether it’s better to rent or own a home. The answers they get are typically either too generalized mathematically, or cover lifestyle issues while leaving out economic factors. Here are two ways to answer the rent versus buy question.

Step 1: By the numbers

The first method is to understand the basic math of how to compare renting versus buying. There are four components to this step:

  1. Calculate the monthly cost of homeownership.
  2. Calculate the tax benefits of homeownership.
  3. Subtract the tax benefits from the cost of ownership to get the “after tax cost.”
  4. Compare the after tax cost to market rent for a comparable property.

Using this approach, let’s calculate the monthly cost of buying a home in Seattle, where the housing market is very hot and the median home price across the region is $478,500.

Suppose you’re buying a home of this price with 20 percent down and a top-tier credit score of 780, with a 30-year fixed mortgage rate of 3.625 percent (remember, rates change daily). A quick run through the mortgage calculator shows that this mortgage payment is $1,746, property taxes are $479, and homeowner’s insurance is $67, for a total monthly housing cost of $2,292.

The federal tax deductions homeowners get for mortgage interest and property taxes save $490 per month in taxes. (To calculate estimated tax savings, multiply loan amount by interest rate and multiply purchase price by property tax rate estimate of 1.2 percent. Add these two numbers, and multiply the result by an income tax rate estimate of 30 percent, then divide by 12 to get a monthly figure. Always consult your tax adviser on any tax-related matters for a precise calculation specific to your situation.)

Subtract the monthly tax savings from total monthly housing cost of $2,292 to get an after-tax housing cost of $1,802. If we compare this to the Seattle median rent of $1,791, we can see that renting is $11 per month cheaper than buying — very close, even in a hot market.

If you do these calculations in other areas such as the Dallas-Fort Worth metro, where home prices are lower and rents are higher (relative to ownership costs), the math will more clearly support buying over renting. In some markets, buying can be cheaper than renting even before incorporating homeowner tax benefits.

Doing these rent-versus-buy calculations for your own market only takes a few minutes. Just look up home prices and rents in your area to get started.

Step 2: Time will tell

The second method for deciding if it’s better to rent or own is to understand how long it takes for buying to become more financially advantageous than renting. The point at which this happens is called the breakeven horizon.

This is a calculation Zillow created to analyze rent-versus-buy decisions at the household level. It incorporates all possible buying costs and benefits such as down payment, closing costs, mortgage payment, property taxes, insurance, utilities, maintenance, and tax benefits, as well as all renting costs for the same home. Calculations also incorporate home value and rental price appreciation.

Breakeven horizon is the year when buying costs become less than or equal to renting costs when accounting for all of the factors noted above.

For our Seattle sample area, the average breakeven horizon is 1.9 years, which (only coincidentally) is the same as the national breakeven horizon right now — meaning buying becomes more financially advantageous than renting after 1.9 years. The latest full list of breakeven horizons for major cities shows how various areas perform on this rent-versus-buy method.

The sample Seattle market calculations above show it costs about the same ($11 difference) to buy or rent right now if you account for tax benefits, and it costs more to buy than rent if you don’t account for tax benefits. If you then consider that buying becomes more financially advantageous than renting 1.9 years after your purchase, these two methods combined make a good case for buying.

Once you’ve analyzed both of these rent-versus-buy methods for your target area, you’ll have a strong command of which option makes the most financial sense. Then the rest of your rent-versus-buy decision is about lifestyle choices like whether of not you want mobility, maintenance responsibility, or freedom to upgrade your living space.

Post courtesy of zillow.com

New to Budgeting? Try the 50/20/30 Rule

Wondering how to budget your money? This simple formula makes it easy.

Managing your money is imperative to help you find the best home within your budget. And no, back of the napkin math won’t cut it. Not only do you need to organize, but you also have to make difficult budgeting decisions about how to spend your cash. This can be overwhelming, but there’s one smart and simple strategy that makes budgeting a breeze. It’s called the 50/20/30 rule, and it can help you track how much you spend and where you can save more, by bucketing your finances into three categories: living essentials, savings, and personal spending. Here’s how it works.

What it is

The 50/20/30 rule helps you build a budget by narrowing your spending into three categories:

  • 50 percent of your income should go to living essentials. This includes your rent, utilities, and necessities like groceries and commuting to work. Keep in mind that this percentage is the maximum you should spend.
  • 20 percent of your income should go to financial goals, meaning your savings, investments, and debt-reduction payments. If you have loftier than average financial goals—like those who don’t have employer-supported retirement or those whose student debt consumes the whole 20 percent—might want to consider raising that figure.
  • 30 percent of your income should be used for personal spending. This is everything you buy that you want but don’t necessarily need: vacations, entertainment, and shopping. This lets you enjoy the money you earn, without going overboard—and you can certainly save if you spend less than 30 percent each month.

Why it works

  • Clarity and precision. Having just three simple categories lets you stay focused on your budget and goals as you move toward better financial stability.
  • Flexibility and freedom. It works across income levels by having three categories that are alterable depending on your individual circumstance. “The 50/20/30 budgeting guideline can work whether you are renting or paying down a mortgage,” says Kayse A. Kress, a certified financial planner in Hartford, Connecticut. “This type of budgeting approach allows for flexibility, which is key since everyone’s financial picture is different.”
  • Focus on the future. The savings category gives you a sure-fire way to pay down debt and save for major purchases, such as a down payment and retirement, says Doug Bellfy, a certified financial planner with Synergy Financial Planning in South Glastonbury, Connecticut. He recommends breaking the 20 percent category into 15 percent for retirement and 5 percent for a down payment on a future home.

How to get started

  1. Determine your monthly take-home pay. If you have a new job or salary, you can use a free online salary paycheck calculator. Use this starting point to split your money into the 50/20/30 guidelines. Remember that being self-employed may cause your income to fluctuate per month, so base your rental budgeting on your average monthly income.
  2. Examine your spending habits. Look at bank, debit card, and credit card statements and track all of your spending. Don’t leave out the mid-afternoon lattes, weekly happy hour with co-workers, or extra storage for your smartphone. If you live in a high-rent area, such as New York or San Francisco, you may find your living expenses surpass the 50 percent portion. If moving to a less-expensive area is not possible, the living expenses category should cut into the flexible personal spending category until your income rises to overcome the imbalance.
  3. Plan it out. If your spending doesn’t align with the 50/20/30 Rule, come up with a plan to shift some of your expenses into the correct categories buckets. You may need to cut back on splurges or look at a different set of rental listings than what you were planning. On the other hand, if you spend less on living essentials or personal expenses, allocate it to pay off debt or to save for the future.

Post courtesy of trulia.com

5 Things to Consider When Shopping for an Investment Property

Real estate investments can be challenging, but also very rewarding. Passive income, stability, return on investment, tax benefits, appreciation – the financial advantages of hold-to-rent real estate can’t be denied. Understanding what type of investment property you’re looking for and who your target renters will be is essential in delivering a desirable product to the rental market.

 

Focus on these five critical criteria when shopping for an investment property to ensure your money works for you.

 

1. Desirable location. Location, location, location. In real estate, that timeless phrase holds true. Your property’s location will ultimately determine the overall success of your investment, affecting the amount of rent you can charge, the types of renters applying and your vacancy rate. Offering a rental surrounded by attractive amenities, shopping, convenient traffic routes, parks, entertainment and more will draw a steady stream of prospective tenants.

 

Before purchasing, research the local school ratings, job market, shifts in the rental market, design trends, local crime rates and any city codes that could potentially affect your property. The more desirable your location, the lower the risk becomes.

2. The numbers. Underwriting is a critical element of deciding which investment property to purchase. Allowing emotion to drive your decision making when searching is a detrimental mistake. Separate yourself from your likes and dislikes and focus on what the market is demanding in a rental. Positive cash flow is the end goal, as this is a source of income for you, not the home you’re planning to live in.

Constructing a financial plan and budget prior to purchasing is key as you’ll be covering not only the mortgage, but also taxes, maintenance, design costs, improvements and unforeseen complications. Accounting for overhead and average vacancy rates is something to be factored in when underwriting a potential purchase. Calculating what your true profit will be against your initial investment is what matters.

 

3. Low overhead. One key way to ensure you maximize your return is to choose an investment property that won’t require much maintenance and overhead. Commonly, longer-term rentals are lower maintenance than, say, vacation or student rentals. Steady long-term tenants will yield the best returns on your investment.

 

Often the less flashy, more median-priced rentals yield the steadiest returns year-over-year as compared to high-end, luxury rentals that require more maintenance. Also, consider whether you’ll be hiring a property manager or if you’ll be doing any maintenance yourself. Proximity to your income property will be important if you’re handling this aspect on your own.

 

4. Appreciation. The smartest investment is one that appreciates in value. As an investor, appreciation is two-fold: When you buy the property and when you sell it. The best approach is to find a property where only a few cosmetic updates will allow you to charge more per month and won’t cost you a lot. You will also save on your initial investment rather than hiring contractors to do the work, like a fresh coat of paint.

Generally, most land is going to appreciate a little over time, but you want an investment that increases in value more than the rest. Try and find an up-and-coming or already desirable area that has plans for future development. On the flipside, a neighborhood that’s safe and quiet for families could be just as desirable.

Consider the specific location of the property within its community. Is it on a busy thoroughfare or on a private cul de sac? Close to great local schools or in a high-density urban environment? These are all things that will help you forecast your property’s appreciation over time.

 

5. Practical wins the race. Of course you want your income property to be aesthetically appealing, but there’s a smart way to approach this aspect. A long-term rental is a strong, stable investment, but only when not trying to reinvent the wheel. Low risk equals “normal.” You don’t want to limit your audience of potential tenants by purchasing a highly specific property such as a historical Tudor-style home with unique interior features. You should be aiming for bright, open, clean and tasteful.

 

The more specific the rental is, the higher the risk your investment becomes. A practical rental property will ensure a steady flow of tenants, like a two-bedroom traditional house with 2 1/2 baths in good shape, close to shopping centers, local schools, nearby parks and on a quiet street. Or a more modern one-bed, one-bath in downtown with open layout and building amenities such as a gym and pool for a younger crowd. Educate yourself on the market where you’ll be investing, and choose a property that meets the demand and is appealing to a wide audience.

Post courtesy of realestate.usnews.com

Leafy Looks for Year-Round Enjoyment

Leaf-peeping is not just an autumnal activity, but a year-round pleasure in rooms where designers use foliage as a focal point or an eye-popping accent.

Designer Mitchell Hill says leaf motifs, like all florals, brighten rooms. In a kitchen, he used Schumacher’s Chiang Mai Dragon print, a leaf and floral pattern in an Art Deco-inspired chinoiserie motif, on the backs of island stools and for the curtains. By keeping the palette consistent throughout the room, he says, vibrant fabrics on chairs, curtains, and headboards offer color and texture, just like leaves do in their natural state. 

An abundance of leaf-inspired textiles with abstract patterns and unexpected palettes can help you layer the look in a room, even if the rest of the space isn’t outdoorsy. The patterns are painterly and loose, interpreted through the eyes of the textile artist, says designer Tami Ramsay of Cloth & Kind, a firm run by Ramsay and designer Krista Nye Nicholas.1508166836128

Cloth & Kind recovered a Palecek chair with the Hutan print by Caroline Cecil Textiles. Hutan, meaning “jungle” in Indonesian, brings foliage into the home with a hand-printed design on linen custom created using Pantone’s soft color palette. 

“It feels organic, and honestly, it’s also playful when you make a leaf pattern coral as opposed to green,” Ramsay says. “You’re not just seeing things that are a leaf in its normal state but kind of exploited and extracted out, not only in its color, but also in its shape.”1508166837192

Fall has swept leaves off the trees and onto a Donghia chair that Cloth & Kind upholstered in Menna fabric by Katie Leede & Co. The pattern is inspired by fan-shaped papyrus leaves falling in happy abundance, as Leede describes on her website.

1508166837091

L’aviva Home’s Khovar collection, with patterns called vine, leaf and flower, presents foliage that appears as a hand-painted mural on fabric. Women in villages in northeastern India were commissioned for paintings that resulted in the patterns.

1508166836883

Parker Kennedy Living’s preppy style took a tropical twist when it upholstered a CR Laine headboard with a banana leaf print for a Southeastern Designer Showhouse bedroom. Designers Lance Jackson and David Ecton showcased Dorothy Draper’s Brazilliance fabric in green and white with bamboo-pattern canopy drapes to channel Palm Beach chic in the Atlanta guest bedroom. 

You can use leaf prints in a variety of ways, from upholstery and draperies to framing fabrics and using remnants for cocktail napkins. A pillow, for example, is another simple leafy start.1508241284400

Claire Stevens Interior Design used the Banana Leaf print by Krane Home in sapphire on a lumbar pillow. 

“Just like it feels fabulous to have fresh flowers or even an arrangement with fresh greenery in it … adding those types of textural patterns bring a bit of that into the room all the time,” Ramsay says.
Post courtesy of HGTV.com