Daily News and Events
by Kathryn Godby Oram
It’s 7:30 am, the kids are off to school and I have the house to myself. Before I leave for work, I snap the leash on the dog and walk the few blocks to La Famiglia for a Latte. I love the walk, the greetings and the banter in the shop.
Why am I telling you this? No one really cares where I get my coffee. I relate this story merely because it’s illustrative of what’s happening around the country as well as in New Jersey. People are choosing to be a part of their communities not just to live in them. They are finding that the simple things and the simple connections that they have with merchants and neighbors are important and comforting. No one wants to see their favorite coffee shop or deli go out of business; and while we are all worried about money we still want the comforts that hometown stores can offer.
The bloom is off the rose, the economy is not what it once was. People are no longer moving from town to town for a better job or to get a bigger house. Families are staying put, laying down roots and choosing to stay where they are. Once roots are established, many families find that they enjoy being a part of a community and having all the benefits that membership entails.
What this means for the home buyer is this; as a country become less nomadic and more town centric, we are going to look for amenities that keep us close to home. As the workforce is able to spend more and more hours working from their houses the towns in which they live will benefit from those workers doing all of their errands in those towns. In that vein, New Jersey has begun an incentive program aimed at home buyers who would like to live where they work. This program Live Where You Work, offers mortgage incentives for home buyers of a certain income range.
Community living and working benefits both homeowners and business owners. A thriving town has more stable home values and is better able to weather bad markets. A stable and consistent population can keep small business alive and well in a bad economy. The 3/50 project was created to make the shopping public see what they can do to keep their local businesses afloat in these uncertain times. Join us in Supporting the 350 Project!
When looking into different towns, evaluate what kinds of things you will take advantage of. If you’re a runner; where is the safest path? Are there streetlights for running at night or early in the morning? If you are primarily interested in activities for the kids: How close are you to a park? Can your kids walk to school, tennis courts, or a community pool?
As value is always on the mind of today’s buyer, remember that if the town you live in is appealing to you than it will be appealing to a future buyer as well. That great street with the wide, bike accessible sidewalks will attract the same type of buyer that you once were.
Finally, I love my neighborhood restaurant. I can’t say that the food is the best. I can’t say much about the food actually, but I eat it. I always enjoy going there. I am greeted by a warm smile, familiar faces and while it’s not “Cheers”, it’s home. My husband buys a local police detective a beer, says hi to a neighbor and we sit. The kids are home, three blocks away, and we have a night out on the town, our town.
Showing posts with label Home Buyer. Show all posts
Showing posts with label Home Buyer. Show all posts
Wednesday, October 28, 2009
Wednesday, October 21, 2009
The Two-family revisited
by Kathryn Godby Oram
Two heads are often better than one; the same holds true for houses. In tough economic times we can use all the help we can get and for some, that help can come in the form of a two-family. Garage apartment, side-by-side, duplex or carriage house, all of these options offer income that can offset your living expenses.
The multi-family market, once dominated by owner/landlords, took a very different turn during the recent housing boom. Rising rental rates made multi-family homes very appealing for the investor. As market values and demand continued to rise the multi-family market went through the roof.
Today, overbuilt rental markets, plummeting rental rates and multi-family loan default have created the perfect storm for the multi-unit buyer. Prices on these homes have dropped dramatically yet investors are not rushing in to snatch them up. Consider this; you may be able to have a great house plus a little income to offset your mortgage and taxes. By changing your idea of what your dream home is you may be able to get your home to work for you instead of you working for it. Most recent buyers (pre-crash) got into the residential multi-family market (four units or less) to become landlords. They banked on high rental rates to pay their mortgages and taxes. When the market began to shift the income was just not there and many over-levered two-four families had to be sold at a loss. Those deals are still out in the market. They are good investments and even better homes.
Invest in your new home; Live in one unit, rent out the other. The best part of the current market belongs to the seller that can accommodate the growing number of ‘downsizers’; many of whom may become renters. Historically, in a depressed Real Estate market, the rental market is generally better. That is not currently the case but with interest rates having nowhere to go but up, many buyers will have no choice but become renters. Morris County presently has an overabundance of apartments; which is a worry for fledgling and seasoned landlords. Keep in mind, that renting out half or a third of a home has benefits that renting an apartment may not and most often the perspective tenants are not coming from the same pool. That said, time is needed to absorb the newly built product that is coming to market. So, take your time; start looking into the idea of a multi-unit dwelling. Research rental rates in good areas with low vacancy rates. Make a list of the amenities that your unit(s) can offer that will differentiate you from the competition. Think of this purchase as a step towards your dream house. Use this Real Estate down-cycle to make a smart and inexpensive purchase that will offer a home and an income.
In an age where we are encouraged to re-use and re-cycle, re-think the idea of the multi-family.
Two heads are often better than one; the same holds true for houses. In tough economic times we can use all the help we can get and for some, that help can come in the form of a two-family. Garage apartment, side-by-side, duplex or carriage house, all of these options offer income that can offset your living expenses.
The multi-family market, once dominated by owner/landlords, took a very different turn during the recent housing boom. Rising rental rates made multi-family homes very appealing for the investor. As market values and demand continued to rise the multi-family market went through the roof.
Today, overbuilt rental markets, plummeting rental rates and multi-family loan default have created the perfect storm for the multi-unit buyer. Prices on these homes have dropped dramatically yet investors are not rushing in to snatch them up. Consider this; you may be able to have a great house plus a little income to offset your mortgage and taxes. By changing your idea of what your dream home is you may be able to get your home to work for you instead of you working for it. Most recent buyers (pre-crash) got into the residential multi-family market (four units or less) to become landlords. They banked on high rental rates to pay their mortgages and taxes. When the market began to shift the income was just not there and many over-levered two-four families had to be sold at a loss. Those deals are still out in the market. They are good investments and even better homes.
Invest in your new home; Live in one unit, rent out the other. The best part of the current market belongs to the seller that can accommodate the growing number of ‘downsizers’; many of whom may become renters. Historically, in a depressed Real Estate market, the rental market is generally better. That is not currently the case but with interest rates having nowhere to go but up, many buyers will have no choice but become renters. Morris County presently has an overabundance of apartments; which is a worry for fledgling and seasoned landlords. Keep in mind, that renting out half or a third of a home has benefits that renting an apartment may not and most often the perspective tenants are not coming from the same pool. That said, time is needed to absorb the newly built product that is coming to market. So, take your time; start looking into the idea of a multi-unit dwelling. Research rental rates in good areas with low vacancy rates. Make a list of the amenities that your unit(s) can offer that will differentiate you from the competition. Think of this purchase as a step towards your dream house. Use this Real Estate down-cycle to make a smart and inexpensive purchase that will offer a home and an income.
In an age where we are encouraged to re-use and re-cycle, re-think the idea of the multi-family.
Wednesday, October 14, 2009
For the Love of Investing
by Kathryn Godby Oram
“Don’t fall in love with the Real Estate!” Experienced real estate investors will tell you that. You fall in love, then you over pay, over improve and so on. Growing up in a Real estate family I heard that line over and over. That voice was my mothers’, ever the pragmatist, ever the sensible businesswoman. My father, on the other hand, was a self described visionary. He walked into an old house or building and waxed poetic about mortar and lathe. He had a romance with the form and the function.
My folks were married from 9 to 5 and after. They were in business together. That marriage worked because they both had very different ideas on business and on life but together they made a great pair. That vision of my fathers’; that love for the grain of wood and the curve or an arched doorway, gave him an eye for what lay beneath. My mother made sure the investment would work then gladly fell in beside him, breathing new life into old spaces, her artistic eye tempering his wild renovation fantasies.
The most successful people I know love what they do. You have to have passion to engender passion in others. My parents had a symbiotic relationship, vision paired with practicality. They always loved each project and the buyers or the renters loved them too. They bought and renovated and sold. They bought and renovated and rented. They had few and short vacancies because their units had charm and beauty. They put themselves into every project.
What I’m getting at is this; Real Estate is about more that the dollar. Sure, the dollar is paramount but I’ve seen what happens when a house or an investment project has been created from a passionate desire to build something wonderful. Those are the places and spaces that give you a feeling that you want to be there. I supposed what you’d call the “It factor”. That is the crux of this sentimental Real Estate monologue; you put passion in, you get money out. Emotional marketing is playing to those emotions that make people buy jewelry they don’t need and flowers from a street vendor. Impulse is important in today’s market. If you can make someone fall in love with your property you are a Real Estate God. In turn, if you feel a tingle in your gut when you see a house you want or an old apartment building, go with it. Run your numbers, check comps, let common sense and a great Real Estate Broker guide you in your purchase; But remember, that crush you have will keep you going when problems arise. When old pipes burst and when tenants complain or when your kids flood the bathroom you’ll still believe you made the right choice. In life and in business the right combination of whimsy and work makes a marriage stand the test of time and a mortgage.
That feeling in the pit of your stomach can sometimes be described as love. It can happen. As an agent I often discourage falling in love too soon. I caution my charges and explain that rushing in can make us fools at the negotiating table. On the other hand, I want my clients to love their homes, investments. I want them to see potential. With the market so flat and values still declining, we need a little love back in this business.
“Don’t fall in love with the Real Estate!” Experienced real estate investors will tell you that. You fall in love, then you over pay, over improve and so on. Growing up in a Real estate family I heard that line over and over. That voice was my mothers’, ever the pragmatist, ever the sensible businesswoman. My father, on the other hand, was a self described visionary. He walked into an old house or building and waxed poetic about mortar and lathe. He had a romance with the form and the function.
My folks were married from 9 to 5 and after. They were in business together. That marriage worked because they both had very different ideas on business and on life but together they made a great pair. That vision of my fathers’; that love for the grain of wood and the curve or an arched doorway, gave him an eye for what lay beneath. My mother made sure the investment would work then gladly fell in beside him, breathing new life into old spaces, her artistic eye tempering his wild renovation fantasies.
The most successful people I know love what they do. You have to have passion to engender passion in others. My parents had a symbiotic relationship, vision paired with practicality. They always loved each project and the buyers or the renters loved them too. They bought and renovated and sold. They bought and renovated and rented. They had few and short vacancies because their units had charm and beauty. They put themselves into every project.
What I’m getting at is this; Real Estate is about more that the dollar. Sure, the dollar is paramount but I’ve seen what happens when a house or an investment project has been created from a passionate desire to build something wonderful. Those are the places and spaces that give you a feeling that you want to be there. I supposed what you’d call the “It factor”. That is the crux of this sentimental Real Estate monologue; you put passion in, you get money out. Emotional marketing is playing to those emotions that make people buy jewelry they don’t need and flowers from a street vendor. Impulse is important in today’s market. If you can make someone fall in love with your property you are a Real Estate God. In turn, if you feel a tingle in your gut when you see a house you want or an old apartment building, go with it. Run your numbers, check comps, let common sense and a great Real Estate Broker guide you in your purchase; But remember, that crush you have will keep you going when problems arise. When old pipes burst and when tenants complain or when your kids flood the bathroom you’ll still believe you made the right choice. In life and in business the right combination of whimsy and work makes a marriage stand the test of time and a mortgage.
That feeling in the pit of your stomach can sometimes be described as love. It can happen. As an agent I often discourage falling in love too soon. I caution my charges and explain that rushing in can make us fools at the negotiating table. On the other hand, I want my clients to love their homes, investments. I want them to see potential. With the market so flat and values still declining, we need a little love back in this business.
Wednesday, October 7, 2009
Small and Perfect: When too big is too much
by Kathryn Godby Oram
In the US housing market, having the best has always meant having the biggest. The recent market correction has lead many to doubt that adage.
Perhaps the best is; what you can afford, fits your stuff, and keeps out the rain, snow and wind. Luxury does not have to mean large. A well designed smaller home can be more enjoyable and more cost effective at the same time. Think about how you live your life in and out of your home. Take stocks of your needs and list them against your desires. Decide what you can do without. Why is the smaller house trend growing in popularity and what does it mean for you as a buyer?
According to the AHBA 59 % of Baby Boomers say that they want to move to a smaller, one level, more convenient home. With boomers driving the market and young families taking a back seat, the demand for smaller, reasonably priced homes is climbing. Many boomers would like to remain in their current homes but cannot due to finances, inefficient layout or maintenance worries. This trend, pushed by the market’s biggest buyers, is affecting how and where builders build. If small, perfect and efficient is the new “must have” then perhaps the era of the McMansion with a too big kitchen and no money left for furniture is over.
The recent downturn in the economy has every American, young and old, re-thinking their finances. For most of us, our home is our biggest expense. Disposing of old norms and re-envisioning homes that are better suited to efficient living can allow all consumers to enjoy beautiful surroundings at a fraction of the cost.
Young families have not left the market entirely. With prices down and interest rates still very low, many younger buyers do not want to miss the opportunity to get into a new home. In the past, the majority of buyers bought as big and as expensive a house as they could afford; that is no longer the case. Savvy buyers are taking stock of their finances and looking more closely at the way they want to spend as well as save their money.
Buyers from all age groups are buying smaller homes. What this means for the consumer is that buying a smaller home will not only save you money it may actually make you some. The “it” factor is what sells a house. Intimate family spaces, gorgeous kitchens, organized storage and great baths are the ingredients for a successful sale. Keep in mind that those renovations are more easily paid for in a smaller home. If those improvements are appealing to you when you look at a home for sale then they will be equally appealing to a potential buyer if and when you decide to sell your own home. By creating a home that is easy and affordable to manage you’ll be creating a home that is easy to sell. In this market, that’s piece of mind.
Should you decide to downsize follow a few simple rules: Buy a home with a layout that works well for your life. Focus your time and money on the parts of the home where you spend the most time. Do not neglect outdoor spaces. A smaller home can feel expansive with a three-season patio that hosts warm fires and pleasant conversation year round. When doing improvements consider energy efficient alternatives to old favorites and see if the costs are in line with energy savings. Use quality materials that make a statement and that will last. Just because your home is not a mansion does not mean that it cannot be a showplace. Hopefully, when you’re finished you’ll have the home you’ve always longed for and you may even have money left over to decorate it.
In the US housing market, having the best has always meant having the biggest. The recent market correction has lead many to doubt that adage.
Perhaps the best is; what you can afford, fits your stuff, and keeps out the rain, snow and wind. Luxury does not have to mean large. A well designed smaller home can be more enjoyable and more cost effective at the same time. Think about how you live your life in and out of your home. Take stocks of your needs and list them against your desires. Decide what you can do without. Why is the smaller house trend growing in popularity and what does it mean for you as a buyer?
According to the AHBA 59 % of Baby Boomers say that they want to move to a smaller, one level, more convenient home. With boomers driving the market and young families taking a back seat, the demand for smaller, reasonably priced homes is climbing. Many boomers would like to remain in their current homes but cannot due to finances, inefficient layout or maintenance worries. This trend, pushed by the market’s biggest buyers, is affecting how and where builders build. If small, perfect and efficient is the new “must have” then perhaps the era of the McMansion with a too big kitchen and no money left for furniture is over.
The recent downturn in the economy has every American, young and old, re-thinking their finances. For most of us, our home is our biggest expense. Disposing of old norms and re-envisioning homes that are better suited to efficient living can allow all consumers to enjoy beautiful surroundings at a fraction of the cost.
Young families have not left the market entirely. With prices down and interest rates still very low, many younger buyers do not want to miss the opportunity to get into a new home. In the past, the majority of buyers bought as big and as expensive a house as they could afford; that is no longer the case. Savvy buyers are taking stock of their finances and looking more closely at the way they want to spend as well as save their money.
Buyers from all age groups are buying smaller homes. What this means for the consumer is that buying a smaller home will not only save you money it may actually make you some. The “it” factor is what sells a house. Intimate family spaces, gorgeous kitchens, organized storage and great baths are the ingredients for a successful sale. Keep in mind that those renovations are more easily paid for in a smaller home. If those improvements are appealing to you when you look at a home for sale then they will be equally appealing to a potential buyer if and when you decide to sell your own home. By creating a home that is easy and affordable to manage you’ll be creating a home that is easy to sell. In this market, that’s piece of mind.
Should you decide to downsize follow a few simple rules: Buy a home with a layout that works well for your life. Focus your time and money on the parts of the home where you spend the most time. Do not neglect outdoor spaces. A smaller home can feel expansive with a three-season patio that hosts warm fires and pleasant conversation year round. When doing improvements consider energy efficient alternatives to old favorites and see if the costs are in line with energy savings. Use quality materials that make a statement and that will last. Just because your home is not a mansion does not mean that it cannot be a showplace. Hopefully, when you’re finished you’ll have the home you’ve always longed for and you may even have money left over to decorate it.
Wednesday, September 30, 2009
Real Estate - Is it time to buy?
by Kathryn Godby Oram
When the Real Estate Industry was hot everyone was an expert on the “market”. Home values were on everyone’s mind and we all watched in wonder as our homes gained thousands in value. Now, the “market” has suffered drastic losses and the world is again buzzing about Real Estate, but mainly to ponder where we go from here.
Over the past 18 months the Fed has actively supported the housing market by keeping rates low. Even more proactively, the Central Bank, has purchased the majority of Mortgage Backed Securities in 2009 effectively owning all of the mortgages written this year. So what happens when the Fed stops its unprecedented buying and the private sector comes back into the mortgage market? What happens when the Fed starts to raise interest rates back to historically normal levels? Mortgage rates will rise. If, therefore, you want to take advantage of some of the lowest rates on record, now is to the time to buy.
In general, when rates go up prices go down and conversely, when rates go down prices go up. Over the past 18 months prices and rates have gone down simultaneously. This is a phenomenon not to be dismissed. If you are waiting for the bottom of the market you may find yourself facing an affordability dilemma. Consider the following example. A $500,000.00 purchase with 20% down or $400,000 mortgage at current rates, 5.5% on a 30 year fixed would require a $2,271 monthly payment ($27,254 annually), Fast forward to the same home in the near future. Even if the value dropped an additional 20%, so the purchase price is now $400,000.00, an 80% mortgage of $320,000.00 with a rate of 8.5% on a 30 year fixed would require a $2,461 monthly payment ($29,526 annually). If prices hold or rise from here, the difference is even more profound. Record low rates, putting affordability at an all time high is the reason to buy now even if values have further to fall
Now
Value $500,000
Rate 5.50%
LTV 80%
Mortgage $400,000
Amo 30 yr
Payment $27,254
2,271
Ratio 0.068135
Drop/ Increase 20%
Later
Value $400,000
Rate 8.50%
LTV 80%
Mortgage $320,000
Amo 30 yr
Payment $29,526
$2,461
Ratio 0.09227
When the Real Estate Industry was hot everyone was an expert on the “market”. Home values were on everyone’s mind and we all watched in wonder as our homes gained thousands in value. Now, the “market” has suffered drastic losses and the world is again buzzing about Real Estate, but mainly to ponder where we go from here.
Over the past 18 months the Fed has actively supported the housing market by keeping rates low. Even more proactively, the Central Bank, has purchased the majority of Mortgage Backed Securities in 2009 effectively owning all of the mortgages written this year. So what happens when the Fed stops its unprecedented buying and the private sector comes back into the mortgage market? What happens when the Fed starts to raise interest rates back to historically normal levels? Mortgage rates will rise. If, therefore, you want to take advantage of some of the lowest rates on record, now is to the time to buy.
In general, when rates go up prices go down and conversely, when rates go down prices go up. Over the past 18 months prices and rates have gone down simultaneously. This is a phenomenon not to be dismissed. If you are waiting for the bottom of the market you may find yourself facing an affordability dilemma. Consider the following example. A $500,000.00 purchase with 20% down or $400,000 mortgage at current rates, 5.5% on a 30 year fixed would require a $2,271 monthly payment ($27,254 annually), Fast forward to the same home in the near future. Even if the value dropped an additional 20%, so the purchase price is now $400,000.00, an 80% mortgage of $320,000.00 with a rate of 8.5% on a 30 year fixed would require a $2,461 monthly payment ($29,526 annually). If prices hold or rise from here, the difference is even more profound. Record low rates, putting affordability at an all time high is the reason to buy now even if values have further to fall
Now
Value $500,000
Rate 5.50%
LTV 80%
Mortgage $400,000
Amo 30 yr
Payment $27,254
2,271
Ratio 0.068135
Drop/ Increase 20%
Later
Value $400,000
Rate 8.50%
LTV 80%
Mortgage $320,000
Amo 30 yr
Payment $29,526
$2,461
Ratio 0.09227
Tuesday, September 22, 2009
Should You Buy That Fixer-Upper?
by Kathryn Godby Oram
In commercial real estate lingo, a fixer-upper is called a “Value-Add” deal. Either term refers to a real-estate property that will require maintenance work (redecoration, reconstruction or redesign) and can usually be lived in as it stands.
The idea that you can add value to a property is why buying a 'fixer-upper' has so much appeal. Market data shows that while housing sales have increased, prices have not.
In fact, prices are not predicted to hit bottom until the first quarter of 2010. For buyers, rates are still historically low, prices are down, government tax incentives are due to expire, and there is an abundance of homes to choose from in every market. Yet despite the appeal of buying, many new buyers are afraid to pull the trigger and loose value immediately upon closing.
Read more Research & Statistics by the New Jersey Association of REALTORS »
Buying a “Value-Add” house, if done right, can be a hedge against falling prices. The potential exists to buy the cheapest house in a desirable area way below market price, invest some time and money for renovations, and raise the property's potential value to get a return on your investment.
Make sure you have a realistic idea of what you're getting into. Here's a few things to look for:
Chances are if you’re reading this, you’ve not gone the fixer-upper route before. Finding your subject property is not an easy task. Even the best house with the best renovations will not pay you dividends if it is not in a good locale. Keep playing that old Realtor tune “location, location, location”; A great yard, a well sited home and nicer more expensive homes in close proximity are guidelines. In this market look for a house that has been overlooked because buyers cannot see past the orange shag carpet, the scary kitchen and the overgrown garden. Put on a pair of rose-colored glasses and squint. You can see it. I know you can! The best fixer-upper is a home that is out-dated but has been maintained. If the house is not sold because it needs paint and a new kitchen then there is your winner!
Once you’ve decided on a specific property find a good inspector. Cull recommendations from friends or co-workers. You might also use a screening agency such as service magic, or go to the American Society of Inspectors for help in finding a competent inspector. Your inspection report is your Golden Ticket; it tells you whether to halt or go forward. It can be your guide to assess what the house needs and if the process is manageable or will be too taxing on you and your checkbook.
Your inspection will cover everything from the roof to foundation. Pay close attention to water, mold, septic, oil tank and structural issues. Lead tests, Termite and radon may or may not be included. Pest and Radon inspections are a necessity but check with your Realtor to assess weather or not you need a lead test.
With your report in hand walk through your prospective purchase with a contractor get estimates on all proposed work. Remember that budgets expand not just because of unforeseen problems but because you may want to add more projects along the way. Add 20% to the estimate if your plan is simple. The more complex your job, the more overages you may encounter.
Keep in mind that the house was standing when you bought it and the nasty bathroom won’t kill you. If some projects can be done over time than let them. Waiting is it’s own reward. Many homeowners, myself included, have had to scale back projects because of budget and then come to realize that their original ideas were not optimal. Sometimes living in a space for a while gives you a vision that you may not have had before. Think about doing projects in phases to give yourself time to save more money and space out your expenses.
Doing a Value-Add project is not for everyone. Take stock of your time, your desire, your talents and decide if this is the right move for you. Can you do dishes in the bathroom? Do you like to paint? Can you use a hammer? These are only a few of the questions you should ask yourself. In the end, you need to decide if you are the type that likes to do things yourself. If so, this will be a trying but rewarding and profitable experience. At the end of your project, though these things never truly end, you will have a home that is absolutely yours.
I walked into the closing of my first home and signed the papers and cried. I was young, newly married, pregnant with my third child and wondering that the heck I’d just gotten myself into. Years later, I have a wonderful house, it’s nothing like the one I bought. I didn’t move, I renovated and I kept going. I bought a dump on a great street. It had good bones but a sad face. I stood in front of that house and squinted and saw what that house could be. It’s almost there. People always tell me that I have a great house and I say, “It will be” Once you get the bug you keep improving, take pride in your work, and enjoy the journey.
I have six kids now and my old farmhouse works well for us, thank goodness. The reason is works is because I followed my own advice. I bought in a good neighborhood, I knew the floor plan would work for me and I was totally aware of the scope of the work that was needed. I never thought it would be simple or cheap and I never needed to have everything done immediately. That said, it was hard but it was worth it. While others in my neighborhood have loan to value ratios that are less than desirable, I am safe. Safe at Home.
In commercial real estate lingo, a fixer-upper is called a “Value-Add” deal. Either term refers to a real-estate property that will require maintenance work (redecoration, reconstruction or redesign) and can usually be lived in as it stands.
The idea that you can add value to a property is why buying a 'fixer-upper' has so much appeal. Market data shows that while housing sales have increased, prices have not.
In fact, prices are not predicted to hit bottom until the first quarter of 2010. For buyers, rates are still historically low, prices are down, government tax incentives are due to expire, and there is an abundance of homes to choose from in every market. Yet despite the appeal of buying, many new buyers are afraid to pull the trigger and loose value immediately upon closing.
Read more Research & Statistics by the New Jersey Association of REALTORS »
Buying a “Value-Add” house, if done right, can be a hedge against falling prices. The potential exists to buy the cheapest house in a desirable area way below market price, invest some time and money for renovations, and raise the property's potential value to get a return on your investment.
Make sure you have a realistic idea of what you're getting into. Here's a few things to look for:
Chances are if you’re reading this, you’ve not gone the fixer-upper route before. Finding your subject property is not an easy task. Even the best house with the best renovations will not pay you dividends if it is not in a good locale. Keep playing that old Realtor tune “location, location, location”; A great yard, a well sited home and nicer more expensive homes in close proximity are guidelines. In this market look for a house that has been overlooked because buyers cannot see past the orange shag carpet, the scary kitchen and the overgrown garden. Put on a pair of rose-colored glasses and squint. You can see it. I know you can! The best fixer-upper is a home that is out-dated but has been maintained. If the house is not sold because it needs paint and a new kitchen then there is your winner!
Once you’ve decided on a specific property find a good inspector. Cull recommendations from friends or co-workers. You might also use a screening agency such as service magic, or go to the American Society of Inspectors for help in finding a competent inspector. Your inspection report is your Golden Ticket; it tells you whether to halt or go forward. It can be your guide to assess what the house needs and if the process is manageable or will be too taxing on you and your checkbook.
Your inspection will cover everything from the roof to foundation. Pay close attention to water, mold, septic, oil tank and structural issues. Lead tests, Termite and radon may or may not be included. Pest and Radon inspections are a necessity but check with your Realtor to assess weather or not you need a lead test.
With your report in hand walk through your prospective purchase with a contractor get estimates on all proposed work. Remember that budgets expand not just because of unforeseen problems but because you may want to add more projects along the way. Add 20% to the estimate if your plan is simple. The more complex your job, the more overages you may encounter.
Keep in mind that the house was standing when you bought it and the nasty bathroom won’t kill you. If some projects can be done over time than let them. Waiting is it’s own reward. Many homeowners, myself included, have had to scale back projects because of budget and then come to realize that their original ideas were not optimal. Sometimes living in a space for a while gives you a vision that you may not have had before. Think about doing projects in phases to give yourself time to save more money and space out your expenses.
Doing a Value-Add project is not for everyone. Take stock of your time, your desire, your talents and decide if this is the right move for you. Can you do dishes in the bathroom? Do you like to paint? Can you use a hammer? These are only a few of the questions you should ask yourself. In the end, you need to decide if you are the type that likes to do things yourself. If so, this will be a trying but rewarding and profitable experience. At the end of your project, though these things never truly end, you will have a home that is absolutely yours.
I walked into the closing of my first home and signed the papers and cried. I was young, newly married, pregnant with my third child and wondering that the heck I’d just gotten myself into. Years later, I have a wonderful house, it’s nothing like the one I bought. I didn’t move, I renovated and I kept going. I bought a dump on a great street. It had good bones but a sad face. I stood in front of that house and squinted and saw what that house could be. It’s almost there. People always tell me that I have a great house and I say, “It will be” Once you get the bug you keep improving, take pride in your work, and enjoy the journey.
I have six kids now and my old farmhouse works well for us, thank goodness. The reason is works is because I followed my own advice. I bought in a good neighborhood, I knew the floor plan would work for me and I was totally aware of the scope of the work that was needed. I never thought it would be simple or cheap and I never needed to have everything done immediately. That said, it was hard but it was worth it. While others in my neighborhood have loan to value ratios that are less than desirable, I am safe. Safe at Home.
Wednesday, September 16, 2009
Congratulations, you’re buying a home!
by Kathryn Godby Oram
Exciting and daunting at the same time, this experience can be very stressful. To reduce the amount of stress involved in purchasing your home the first thing you need to do, before you even peruse the Internet, is get pre-qualified.
Finding a Mortgage Broker is not difficult. Ask for referrals, talk to your friends, neighbors, or your Real Estate Agent. Get a few recommendations, talk over the phone to narrow down the choices. Choose someone who has experience and offers a range of products from which to choose.
Meet your new broker with the following information:
Be ready to give permission to your Broker to run your credit. Your credit score will determine your rate of interest. The best rates are available to people with a credit score of 740 and above. Your Mortgage Broker will further assist you in understanding how much you can afford to pay per month. He or she will also be able to advise you on the most expedient actions you can take to best optimize obtaining a mortgage. Should your credit score not be optimal, your Mortgage Broker will also be able to suggest ways to strengthen your numbers.
With a Mortgage Broker in place, you’ll have taken your first step towards becoming a homeowner. Having your pre-qualification gives you the knowledge you need to be an educated and confident buyer.
When you know what you can afford, get on that computer and start looking!
Exciting and daunting at the same time, this experience can be very stressful. To reduce the amount of stress involved in purchasing your home the first thing you need to do, before you even peruse the Internet, is get pre-qualified.
Finding a Mortgage Broker is not difficult. Ask for referrals, talk to your friends, neighbors, or your Real Estate Agent. Get a few recommendations, talk over the phone to narrow down the choices. Choose someone who has experience and offers a range of products from which to choose.
Meet your new broker with the following information:
- Two years W2’s
- Three months current bank statements including investment accounts
- List of all your monthly expenses
- Know how much money you have for your down payment
Be ready to give permission to your Broker to run your credit. Your credit score will determine your rate of interest. The best rates are available to people with a credit score of 740 and above. Your Mortgage Broker will further assist you in understanding how much you can afford to pay per month. He or she will also be able to advise you on the most expedient actions you can take to best optimize obtaining a mortgage. Should your credit score not be optimal, your Mortgage Broker will also be able to suggest ways to strengthen your numbers.
With a Mortgage Broker in place, you’ll have taken your first step towards becoming a homeowner. Having your pre-qualification gives you the knowledge you need to be an educated and confident buyer.
When you know what you can afford, get on that computer and start looking!
Saturday, September 12, 2009
Welcome to Morris County New Jersey Real Estate
MORRIS COUNTY, NEW JERSEY - Flanders NJ News is happy to announce our new section 'Morris County New Jersey Real Estate'.
Here you will find Weekly home buying and selling tips, articles and professional advice from Real Estate agents Kathryn Godby Oram, of Godby Real Estate and Laura Jacobus, of Remax Realty.
Look for great articles about Staging, Home Improvement Mistakes, Divorce Sales, Home Inspection, Mortage Loans, First Time Buyers, Best Time to Buy, Disclosures, Home Styles, and more.
Can't find what you are looking for? Drop us a line info@flanders-nj.com
Here you will find Weekly home buying and selling tips, articles and professional advice from Real Estate agents Kathryn Godby Oram, of Godby Real Estate and Laura Jacobus, of Remax Realty.
Look for great articles about Staging, Home Improvement Mistakes, Divorce Sales, Home Inspection, Mortage Loans, First Time Buyers, Best Time to Buy, Disclosures, Home Styles, and more.
Can't find what you are looking for? Drop us a line info@flanders-nj.com
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