Author Archive
How to Add Value to a House
Posted on April 8, 2014 byAs if there isn’t enough to do, real estate investor, contractor, business owner, host to my video blog and busy husband, father and grandfather, I’m adding new books to my list of activities.
Finding the time to write has been challenging with a wife in graduate school, five children and two grandchildren to keep up with. I figure my next full book will take me a good year to write.
For those of you already connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of houses as they come to market, against other less reliable sources is a no brainer.
But back to the book, the title I am thinking of is something like “How to Add Value to a House, which will represent responses to repeated questions I’ve had over the years and is more of a “what to and why to” rather than a “how to”.
It will talk about the specific renovations you should target; it talks about why some areas of a house are valued more than other areas. It will actually be about how to maximize the potential of any house you are renovating. Read More→
7 Mistakes Investors Make
Posted on March 10, 2014 byThere is money to be made in real estate, but you need to think about real estate investing as the business it is. Allow me to share some common mistakes that beginning and even seasoned investors should avoid.
For those of you connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of houses as they come to market, against the recent sold comparables, will provide you a solid position to “make your profit when you buy”.
- Getting emotionally involved. This is the biggest and most common mistake beginning investors make. Emotions and business do not mix well.
- Paying too much. To make money investing, you have to find a good deal. Look for properties that need a little fixing up. Your goal is to find a distressed property that you can purchase at 60- 70 percent of other sold comparables. REIAComps makes that part of your investing business much easier.
- Ignoring schools. Good schools attract good renters. Conversely, only the most desperate renters are willing to subject their children to failing schools. Read More→
Profit From Shadow Inventory In 5 States
Posted on February 10, 2014 byWhen you know the best pockets or market areas around the U.S. to find discounted real estate, you are half way home. All that is left is evaluating the inventory for maximum profit. For those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of “Shadow Inventory” houses as they come to market, against the recent sold comparables, will provide you a solid position to “make your profit when you buy”.
First, let’s define “Shadow Inventory”. The general definition goes like this; the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers, but not currently listed on multiple listing services MLS’s.
CoreLogic released its November National Foreclosure Report with a supplement featuring quarterly shadow inventory data as of October 2013. According to CoreLogic analysis there were 46,000 completed foreclosures in the United States in November 2013, down from 64,000 in November 2012, a year-over-year decrease of 29 percent. On a month-over-month basis, completed foreclosures decreased 8.3 percent, from 50,000 in October 2013. Read More→
Selling a Property: Identifying Comps in the Area
Posted on January 4, 2014 bySelling an investment property can be a very challenging process. One of the preliminary considerations in selling the property is what price you should ask. Evaluating the prices of comparable houses in the neighborhood may sometimes solve this problem. However, for those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the prices of houses, which are comparable to your deal, that have recently been sold will provide you a solid value to set the sales price.
Now there are several methods by which you can discover prices of comparable houses in your market area. The first, most costly, but probably reliable method is by hiring a professional home appraiser to conduct an appraisal of the property. Professional appraisers typically evaluate your home and similar homes in the same geographic area and provide you with a report stating the price of your house and comparing its features with other houses that have recently sold in the area. The challenge is these appraised values don’t typically represent the savvy needed for an investor like you. You need not just what a home might sell for, but what you should acquire the dwelling for in the first place. You always want to “make your profit when you buy”. Read More→
You Can Rely on Assessed Value
Posted on December 6, 2013 byAs a trainer of appraisers for nearly 15 years, to those who hold private and public roles, one thing is certain, local assessor offices around the country make relying on their values rough on investors. However, for those of you connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. The stuff going on in places like Clark County, NV or even your own area won’t shake you.
Most municipalities across the country use a formula tied to market value for assessing residential property taxes. In many parts of the country some form of non-disclosure is the norm. Thus, relying on assessed value is a second option.
However, when the decision to reduce the assessed value of a property from $19.5 million to $2,500 was decided by the State Equalization Board in NV, you can just imagine the problem this caused. The use of any assessed values to develop an offer price or ARV is literally eroded. There goes any hope of making a good offer to buy or sell. Read More→
Local Market Actually Does Equal Location
Posted on November 6, 2013 byAs a regular writer for the Atlanta REIA and Tampa REIA, I look forward to sharing with readers current, timely concepts and ideas regarding the valuation of real estate in many markets. Perhaps even better than sharing in these articles, is knowing REIAComps helps to quickly see how the location of your market impacts the profit of a deal year to year and in some cases, month to month.
Each month, I will share facts on local real estate statistics, market trends and provide useful tips for buyers and sellers. Additionally, I sometimes will discuss the lending process, real estate appraisals and other topics residential real estate investors can benefit from.
Now, in most cases nearly all investors are familiar with the “age old rule” concerning real estate: “Location, location, location.” Many times, the high importance of location is overlooked when examining broader national or even regional real estate trends.
In your own market, property values and selling trends will frequently differ vastly between counties, subdivisions, school districts and neighborhoods. Often there is a huge difference in home values between streets within even assumed stable neighborhoods. To prove out this point, consider the three-mile radius around your very own home. Note the variables impacting its value either positively or negatively. Some examples include the home’s proximity to traffic congestion, a school, amenities, places of worship or a busy commercial district. Read More→
What Do Underwater Mortgages Mean For You?
Posted on October 9, 2013 byAcross the country there are cities which have high percentages of underwater houses. Cities like Tampa, FL have as much as 43 percent of area home mortgages seriously below its formerly established market value. Fortunately for investors there are numerous areas like Tampa which have a large volume of homes with a mortgage balance exceeding the home’s value by at least 25 percent. REIAComps helps to quickly see the number of foreclosure sales of these types of houses in your market month after month.
By looking at REIAComps valuation and sales data, we were able to actually verify the two market areas with a higher percentage of foreclosure than Tampa. They are Las Vegas, NV and Lakeland, FL. According to the local Tampa newspaper, The Tampa Tribune one additional factor is this market condition restricts the number of homes that can be listed for sale and exacerbates a region’s temporary shortage of homes on the market. Read More→
Does the Real Estate Market Follow Economic Trends?
Posted on August 6, 2013 byOkay, the media in general is touting the US economy is doing better than it has over the last bunch of quarters. People across the country are working again. Typically this news leads people to feel better about the overall economy. More directly, this has translated to a recovery in the real estate market.
Signs show home values are coming up from the lows of 2008-2011. It is easy to keep track of values using REIAComps. Sales in many markets have been increasing and there a good volume of houses to choose from and lastly the number of folks looking to buy are up.
These previously mentioned factors are good for people who purchased at the height in 2004-2007. This was the time period when negative equity was born. Upside down mortgages became common place far too often. Read More→
Are Property Values Really Rising Fast?
Posted on July 5, 2013 byI recently read an article which stated… “If you thought that all you wanted was skyrocketing appreciation on your home or investment property, then one real estate ratings firm is warning you to think again.” At REIAComps.com, along with its Property Valuation Support and Training, you will know the truth for yourself. Let’s continue with that ratings firm… According to a new report from the data analysis firm, recent home price gains may be “too rapid” and contributing to a “market imbalance that could eventually stall or reverse the positive trend.” The firm warns that in some markets an “artificially” constrained supply of homes for sale is keeping prices high even though buyers do not actually have the wherewithal, as a population, to sustain these purchase prices. Also they added that “strong institutional investor demand…is keeping the supply-demand balance…even more pronounced.” Read More→
What Values Do You Need To Know When Investing?
Posted on June 10, 2013 byYears ago I learned appraisers and other property valuation folks use three methods to build a value for a piece of property. The sales comparable or market approach basically look at what comparable properties sell for, the cost approach looks at what it would cost to build the property, and the income approach considers the value of the income stream that a property generates or could generate. Each of these methods has a different use and different type of property for which it is most appropriate. Let me share a little more detail before giving a slightly different investor focused concept.
Comparable Sales Approach
In the comparable sales approach, a value is created by looking at what similar properties in a similar market have sold for. Your REIAComps.com Membership is very useful here. For example, if three similar three-bedroom homes sold in the same neighborhood in a range of $75,000 to $85,000, it’s reasonable to assume that a comparable property would also sell in that range. The appraiser would choose a specific value by adjusting each comp for the unique characteristics of the property that they are analyzing. You can get assistance performing this same comparable analysis by using the Valuation Support Desk through your REIAComps.com Membership. Read More→
Finding Buyers for REO Properties
Posted on May 6, 2013 byThe process is a long one after a home is foreclosed by the bank. These days banks take weeks if not months or a year after foreclosure to get their paperwork together, do evictions, minor clean up and make the assignments to the real estate brokers who they have hired to handle their properties. But the time of clean up and eviction is not a problem for the savvy investor, it is an opportunity to round up buyers so that these properties sell almost immediately as you get them under contract.
I suggest as an investor gets a property under contract to start the process of rounding up buyers. Videos, photos and massive email lists are several ways to attract your potential buyers.
Whenever you advertise your properties use photos or better yet video. I’ll get to more video in a minute. This tends to get the buyer serious before they visit the property. Even for buyers of a 100K home, they like to see pictures and it helps the buyer make an emotional connection. Investors and the individual buyer now search the internet to find homes that they can get serious about buying. It is very important to give them enough information to make a decision. Read More→
The 5 Things You Must Know About Evaluating Deals
Posted on April 5, 2013 byFocusing on current real estate comps will prepare you for making deals happen in today’s real estate atmosphere. Are you ready to dive into the real estate market by investing in a rental property? The opportunities are ripe, but don’t make rookie mistakes. Follow these tips and you’ll be on your way to securing a successful deal.
- Don’t trust the owner’s numbers. Your due diligence should involve checking with unbiased sources to determine the expenses, maintenance fees, leasing commissions and other costs associated with any property. Double check data provided by the broker or seller using your own real estate comp source . Talk to another apartment owner. Check public records. Confirm all numbers so you know exactly what kind of expenses to factor into the deal.
- Don’t underestimate property taxes. Factor in the right property tax amount, not what the current owner had been paying, particularly if it’s a long-term owner. Your property taxes could be based on the sale price. Check with the county assessor for accurate numbers.
- Give special attention to the big-ticket items. The heating system and roof can be your biggest headaches and most costly repairs. Know what you’re getting into. Have them inspected by HVAC and roofing specialists, respectively, not a general inspector. Issues are not a deal killer, however. In fact, it can work in your favor and give you the negotiating room to improve the deal. Read More→
