Homeowners vs. Investors

 

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“I’ve never bought a home.  Should I look at my first home as an investment?”

This question came up recently at my Fox Valley Investors Group MeetUp.  (details: Fox Valley Investors  ) .  Our group is open to everyone and we get folks of all experience levels, backgrounds and ages when we do our on-site property evaluations.  It was great how this person took the first step into a broader world of real estate by coming out to the property evaluation, and didn’t have any expectations about investing in property.

I took the liberty of explaining how a personal home is not the same as an investment property. Everyone needs a roof over their head,  but a property investor has a few extra.  The difference between investing and home ownership is huge.  Here’s my take:

99 problems plus your own home
A homeowner has one roof, one furnace, one set of pipes and one water heater to worry about.  An investor typically has their own home plus several others on their worry list.  Investors inherit new problems from other locations such as running background checks, deciding on lease terms, fixing broken furnaces in winter,  leaky roofs, calls in the middle of the night on plumbing and weekends, too.  Working a regular 40 hour/week job?  Consider how you’ll handle those extra fixes and issues on your nights and weekends year round.

“But I love this house!” said no investor ever.
Investors don’t love their investments, they love with the profits and checks that come along with a successful business.  Falling in love with a house is not good for business and can undermine a sound business plan. However, falling in love with a house and envisioning cozy family holidays, Super Bowl parties with friends, a big garden, relaxing nights or a remodeled kitchen,  are the exact right reasons to make a purchase to enjoy for years to come.

X marks the spot
Homeowners live in their homes to enjoy them, to maintain them, and to do with as they please.   They might want a home close to work, by a nature preserve, something without stairs, or with a huge back yard.  Their personal preferences trump the investor card every time.  That’s important because building your life in a new home can be a great perk of home ownership. Often people move to a single family home after years of renting and paying a landlord.  The freedom to own your walls, ceiling, garage and basement without needing to share it can be alluring.  I’ve had new homeowners so excited to have a laundry room that they install the washer and dryer before unpacking a single box on Day One!  And if you’re ready to paint the walls in Fired Up Orange, now you can go for it!

Make it personal
Knowing the difference between a detached, professional business approach to buying an investment and falling in love with a white picket fence is important to understanding your first home purchase.

So go and search out those dream homes on the internet.  It’s an adventure to boldly walk through a front door of a house for sale to see if it is right for you!  Will it be as great in person as it looked online?  Maybe.  But one thing is for certain: your first home will be a great “investment”.  Absolutely, yes!  As long as you’re loving the roof over your head and the lifestyle it offers, you’ll be ahead every time you pay the mortgage.

So, what’s your motivation for buying a home?  Interested in investing in properties?  Have you tried a house hack like buying a fixer upper to live in as you fix it?  Find out if a house hack is right for you!  Attend our next meet up and learn from the local property pro’s.  Join us here:  Fox Valley Investors

Free Property Report
Property markets change every 90 days!  But folks sell homes all year long.  Take the first step and get a free market report by going here:
Free Property Report

 
Questions?  Contact me:
Jennifer Kinzle, e-PRO Broker
Charles Rutenberg Realty of Illinois
Email: Jkinzle73@gmail.com
Twitter: @Jkinzle
Web: St. Charles Fox Valley Homes

 

 

Kelly Blue Book-For Your Home!

Elgin Fox Valley, IL –
Checking out the Kelly Blue Book for cars is easy.  You simply go online, make a few clicks to select your make, year and model and viola! You have an instant estimate from Kelly Blue Book on what the value of your car is for a private sale or a trade in to a dealer.

Now, Kelly Blue Book already knows there is a big mark up between a private sale versus a trade in to a dealer, so why wouldn’t there be a difference on a home sale too?  Wouldn’t it be great if you could do the exact same for your home?  Go online, make a few clicks and get an estimate to print off and post to the front of your house for potential buyers to view?  FSBO’s would love to have it also add -No Investors!-under the price tag, too.

Just like with used cars, there are plenty of private cash buyers out there who will gladly step up to take your property off your hands, for 20% or more below market value.  If you need proof, visit Fast Home Offer.com and see how far they will undercut the value.  It’s a no-obligation offer, so you won’t have to accept it if it is too low (and I can almost guarantee it will be by approximately 20%).  I can tell you now, any investor who knows what he or she is doing will not lose a penny in making a deal with you.  Just like Fast Home Offer.com, they structure the deals to cash out upfront, which means that unless they make their mark up, they won’t do the deal and they walk away. For them, it’s nothing personal, it’s just business.  Exactly like Zillow.  Zillow also knows that everyone wants to see their home have a nice, hefty number for their property value.  How long would Zillow be in business if they gave stingy numbers based on real time sold listings?

But there is good news!   There is a mysterious Kelly Blue Book for Homes!  It’s called a real estate agent with access to the MLS.  Why?  Because licensed agents have access to the next best thing: actual sold prices of homes in your area, from the past 6-12 months.

Send me your local ugly homes, your pretty homes, your homes that need fixing and those that need none.  I can help with a complete CMA and get a true market snapshot of your property value.

 

Jennifer@ElginFoxValley.com
630-854-4360

Download my new mobile home search app Midwest Homes here:  http://t.ikenex.com/?k=n0t
Note: Use 240766 for agent ID to log in.

 

 

HARP your way to savings!

Elgin Fox Valley, IL – Don’t throw away free money!   Many of my clients have enjoyed much lower mortgage payments by simply obtaining a new lower interest rate via the HARP program.  If you are a homeowner who hasn’t refinanced their mortgage, there is still time to save.  The federally subsidized HARP program is still in effect and saving homeowners money now through December 31, 2015. Restrictions apply.   See the link below for details.

http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx

Eligibility:

“You may be eligible for HARP if you meet all of the following criteria:

• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you are eligible for HARP.”

 

Check with your local mortgage provider for more details.  Freddie and Fannie Mae loans only.

 

Midwest Homes mobile app is now available

Elgin Fox Valley, IL – Saint Charles, Elgin, South Elgin and surrounding towns, here’s a free new mobile app called Midwest Homes just for you!  This super easy, 100% free mobile app offers a ZIP code search, radius search, map overview of active listings, save to favorites feature, send to friends and all the pictures that come with every single home.  Search like a licensed pro and see what the brokers see, live, up-to-the minute active listings!

Try it out today and let me know what you think.

Download the mobile app Midwest Homes here:  http://t.ikenex.com/?k=n0t

Note: Use 240766 for agent ID to log in.  In case the setup gets interrupted, simply tap the link above again.

 

Jennifer Kinzle, e-Pro Broker
Charles Rutenberg Realty, Elgin

Midwest Homes mobile app is now available

Elgin Fox Valley, IL – Saint Charles, Elgin, South Elgin and surrounding towns, here’s a free new mobile app called Midwest Homes just for you!  This super easy, 100% free mobile app offers a ZIP code search, radius search, map overview of active listings, save to favorites feature, send to friends and all the pictures that come with every single home.  Search like a licensed pro and see what the brokers see, live, up-to-the minute active listings!

Try it out today and let me know what you think.

Download the mobile app Midwest Homes here:  http://t.ikenex.com/?k=n0t

Note: Use 240766 for agent ID to log in.  In case the setup gets interrupted, simply tap the link above again.

 

Jennifer Kinzle, e-Pro Broker
Charles Rutenberg Realty, Elgin

Realtors Renew Licenses in Bubbly Spring Market

Fox Valley, IL – According to the NAR, Realtors are expecting a modest uptick in home prices over the next 12 months.  In reality, brokers are nearly bubbling over with excitement and finally brushing the dust off their residential licenses this spring.  The housing market trend, finally pointing home values in an upward direction, has launched many brokers into giddy springtime joy at the sudden (as in only 7 years) turnaround.  Ever the eternal optimists,  they’ve begun chanting a new verse: where’s the inventory?

http://economistsoutlook.blogs.realtor.org/2014/03/24/realtors%C2%AE-generally-expect-prices-to-increase-modestly-in-the-next-12-months/

I know where the inventory is in Elgin, Saint Charles, South Elgin, Batavia, and Geneva!

Jennifer@ElginFoxValley.com

Single women snap up sales on homes

Saint Charles, IL – Wouldn’t it be great if the housing market had BOGO sales?  Buy one house, get another half off; now that would be the ultimate sale.  Or, how about a “Pay It Forward Program” of buying one home, helping another woman buy a condo? That sure would beat the write off Subaru gets when you a buy a new vehicle from them and they donate $250 to a charity on your behalf.

However, the spring housing market is not quite ready for a flash sale, but many more single women are stepping up to home ownership and finding it’s a great fit.   Think you can’t buy a home of your own?  Think again!  Hard working single women are breaking out of the old rental cycle and paying themselves back each month instead of a landlord.  If your long term career plans include staying in one place for more than 3 years, now is a great time to look into homeownership.  From affordable condos, maintenance free town homes and rent to own programs, many single women are taking control of their finances and becoming new home owners.  Mortgage rates are still low and lenders like to see a steady income with a solid credit score.  Down payment assistance programs may even be able to qualified applicants, so be sure to ask your lender.

Realtor.com offers a quick guide for single women looking to become first time homeowners:

http://www.realtor.com/home-finance/homebuyer-information/a-single-womans-guide-to-buying-a-home.aspx

Are you ready to see how far your housing market dollars can take you?  Find out today!

Jennifer @ElginFoxValley.com

 

Realtors vs For Sale By Owner

Elgin, IL – The calendar says March….the spring market has arrived!  Are you ready?

Lacing up the Training Wheels for the New Investor

Saint Charles, IL –
In some ways, jumping into property investing in the Fox Valley area is a lot like learning to rollerblade.  Both require a sense of adventure, both favor a narrow path on which to tread before landing in the tulips and both reward balance over speed.  If you don’t have balance, all the speed in the world won’t help you.  So, how does one prepare to buy property for investment?  Grab your roller skates (which are an oldfashioned, slower version of rollerblades), find your knee pads and helmets, and brace yourself, it may be a bumpy ride.

The first plunge is always too steep
With a plunger in one hand and a toolbox in the other, a new property investor can expect to roll through a lot of issues on their half pipe learning curve.   More often than they like to admit, whipping out their personal checkbook will solve matters but also drain profits.  Along the way, they’ll learn why a property is on the market and the ick factor associated mold, broken water pipes or defective septic systems.   Their  “To Do List” includes hiring a dumpster bigger than most garages to gut a home.  They will have a list of local handymen and various helpers, including electricians, locksmiths, window repairmen, plumbers, roofers, and 588-2300 in speed dial.  They also learn that no matter how good their first deal seems, experience will prove them wrong.  New investors hope they have a soft landing in the tulips when they go down, but too often end up in the thorn bushes.

Paved roads are smoother
A tip for all new investors is to leverage all your available resources and that means both on and offline.  Let someone else do the heavy work of breaking ground, remodeling an old dump or driving around endlessly searching for the best deals.  Buyer’s agents are already out in the field, culling the prospective houses on their own gas and time.  They are actively involved in the local market and they know something about investors:  even seasoned property investors need to get rid of a property every now and then.

Property investors occasionally need to liquidate or sell one property to free up cash to purchase another.  Oftentimes, this means selling a perfectly good rental property, fully rented and ready to go, and a new buyer can benefit from the built-in lease.  Owner financing can help even more, especially for new investors looking to make a deal work by skipping a conventional mortgage.  Does such a deal exist?  Actually, yes.

Saint Charles has such a deal this week:  at 905 Indiana Ave.

http://www.zillow.com/homedetails/905-Indiana-Ave-Saint-Charles-IL-60174/4659848_zpid/

Inside the Saint Charles market
Here is where a buyer’s agent has knowledge that the newbie can access.  The MLS database that agents use shows all the past home prices for the area (from yesterday to 7+ years ago, in fact).  The market history indicates that most properties under the $100K price point in Saint Charles are rare.  Usually the best ones that hit the market below $100K will be snapped up in all-cash deals, in record time, under multiple bids.  The remaining stragglers are typically properties with major defects and are ignored by the best trained investors as too much hassle.  New investors are too wobbly to handle foundation issues, expensive septic systems, running new underground lines or removing asbestos.

In the end, there are very few homes for sale in Saint Charles that are fully rented, on the market, with owner financing such as this one at 905 Indiana Ave.  A seasoned investor dismisses such properties because their profit margin is too low.  But, it can be the ideal property to purchase for a first time investor/house flipper to get your foot in the door.

Here’s why:
Better financing – An owner-financed deal will help the new buyer to purchase a property with different financing terms vs a typical bank loan.
Better knowledge – The current owner will have experience with the property and know the recent issues.  Many diligent property owners keep receipts of repairs and will know what to expect in up keep.
Turnkey rental – An tenanted property means the current owner has done the heavy lifting for you, saving you time and money to find, check and approve a new tenant.
Rental rates – There may be some wiggle room in the monthly rental rate from what is currently being charged.  Knowing the current rent range for the area is key to keeping pace.

Finally, seasoned investors are a storehouse of information and may even share some of their experiences with a fresh investor.  Having someone who has skimmed down the path before you can shave years of time off your learning curve and save thousands of dollars along the way.  Many investors work creative deals with the same end goal in mind: buy more property.  Now, a new investor can too.

Tricks on training wheels
Here’s a favorite tip for finding those “owner financed” hidden gems.  It won’t work on Zillow, Trulia or Realtor.com.  Ask your preferred buyer’s agent to run a search on the MLS for key words “owner financing, special financing, or owner assistance”.  Agents often put these key words into the listing sheets for “eyes only” fellow agents to find under agent comments/listing remarks.  Listing remarks rarely make it to the public eye for viewing on sites like Trulia or Zillow and they don’t have a search feature robust enough to sort for it.

When you’re ready to lace up those training wheels, and find a great investment in the beautiful Fox Valley, give me a call at 630-854-4360 or email me at Jennifer@ElginFoxValley.com

Jennifer Kinzle, e-Pro, Broker
Charles Rutenberg Realty

Interest rates outgrow their skinny jeans

Saint Charles, IL – Mortgage rates are still under the label of Hot Topic  in early 2014 and it is not too late to lock in a low rate.  According to the Huffington Post, http://www.huffingtonpost.com/realtorcom/how-rising-mortgage-rates_b_4719700.html, mortgage rates are expected to rise to 5-5.5% by the end of the year.  This is a modest increase, not exactly a fattening up of rates, but the skinny jeans are getting uncomfortable for interest rates this year.

Watching the rates tick slowly back up will be a popular tipping point for a lot of home buyers this year, across Elgin and the Fox Valley area as well as the rest of the nation.  Regardless of whether your home loan comes from Cherry Creek, Mortgage One or Chase, home buyers still need to be pre-approved before house hunting and should be comfortable with their lender and loan amount.

Get the mortgage loan process moving today!

• Check your credit rate and straighten out any inconsistencies.  Visit a website like Credit Karma.com https://www.creditkarma.com/credit-report-card to get a free report or do a Google search to get a list of credit report companies.
• Shop around for a mortgage lender in your area who is in experienced in residential mortgage loans.  The longer they’ve been in business, the more likely it is that your loan officer has seen it all and can help evaluate the best loan products for your individual needs.
• Lock in your interest rate as rates are very likely to climb as the Federal Reserve Bank is slated to reduce the economic stimulus program in 2014.  There is no better hedge against rising rates than to lock in a low one today.
• Make sure your loan application paperwork is in order, such as paycheck stubs, bank statements, tax returns and more.  Your lender will walk you through exactly what you need to attain a pre-approval, be aware that final documents may require additional proof of income or other information.
• Skip the exotic loans.  The 1 year ARMS,5 year ARMS or mortgages that pay interest only are not the best option for a long term mortgage.  The standard, plain vanilla conventional loan is still the most enduring, most boring loan available and for good reason.  A 30 year loan means your payments stay the same from year 1 to year 5 to year 12 and so on.  Meanwhile, taxes and your pay rate may change, making your locked in mortgage rate (and monthly payment) consistent and possibly easier to pay as you go forward.
• Remember the 90 day window.  Mortgage lenders like to see a steady income and no large chunks of cash inbound or vanishing from your accounts.  If you are going to be accepting a gift for a down payment from a family member, move it now and let it sit for 90 days’ in one account.  Also, do not open any new lines of credit once you’ve applied for your mortgage loan.  Adding additional credit cards will skew your ratios that the lender takes into consideration for the amount you can qualify for on a home loan.
• Don’t panic.  Protect yourself with a locked in rate.  This way, if rates creep upward while you’re in the middle of the home buying process, your locked in rate will offer shelter and not price you out of the housing market overnight.  A small rate increase won’t affect the monthly payment too much.  But waiting until rates rise a full percentage point from 4.5%  to 5.5% will impact your buying power.  Don’t wait any longer if you’re ready to make a move.  This is the time to do it.

If you need more information and don’t have a mortgage lender, contact a local licensed buyer’s agent and ask for their list of referrals.  There is no obligation and it can be a great place to start.

Let me help you find your next home in the beautiful Fox Valley area!  Call or email me today:
Jennifer@ElginFoxValley.com
630-854-4360