Navy Fellas Realty Group

Real Estate, Residential sales and purchase

What Is Pooled-Funds Investing?

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What Is Pooled-Funds InvestingUnder the Jumpstart Our Business Startups (JOBS) Act, which was signed into law by President Obama on April 5, 2012, the Securities Exchange Commission (SEC) relaxed the rules about advertising investments. This allowed the trend of crowdfunding to expand dramatically giving real estate investors more opportunities for pooled-funds investing.

What Is Polled-Funds Investing?

A pooled investment fund takes in money from a group of investors to use to acquire real estate for larger amounts than each investor’s money would support. Prior to the passage of the JOBS Act, these pooled investment funds were only accessible by large investors through private placements and private real estate investment trusts (REITs). The minimum investment might be up to $250,000 or more. High-net-worth individual investors and institutions were the only investors capable of the buy-in to gain access to these investments, which usually offered better and more stable returns.

After the JOBS Act came into being, the advertising of these pooled investment funds was possible under the new law. The phenomena of crowdfunding came out of this. Money from many investors creates a larger investment fund managed by a professional team, intending to obtain strong performance results.

Better Investment Opportunities For The Smaller Investor

These new investment opportunities allow the smaller investor to participate in a greater diversity of real estate than they could achieve on their own. Moreover, an investor can create a pooled fund to acquire a property with the help of other investors. To use this technique to buy real estate, it is helpful to work with a qualified real estate agent or broker who understands this concept of pooled investment funds.

Due Diligence Required

Not all investment pools succeed in producing decent returns for investors. The SEC is no longer regulating these polled investments carefully. This means that the challenge of due diligence falls on the individual investor. Before investing, it pays to conduct exhaustive research about the pooled investment fund, the cost of the fund management fees, the expertise of the fund’s management, and their past investment-performance history. Always remember past results are no guarantee of future performance and never invest any funds that you cannot afford to lose.

Summary

The relaxing of SEC regulations in 2012 allowed many opportunities for pooled investments to flourish. While there is the possibility of strong returns on investment, there is also some risk. Investors considering a pooled investment fund, such as a crowdfunding deal, should conduct thorough due diligence and get advice from a qualified REALTORS® in the market where the property will be located before making any investment.

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.

What’s Ahead For Mortgage Rates This Week -March 17th, 2020

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What’s Ahead For Mortgage Rates This Week -March 17th, 2020Last week’s scheduled economic reports included readings on inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

Inflation Holds Steady in February

The Consumer Price Index rose 0.10 percent in February and matched January’s reading. Analysts expected no inflationary growth for February and noted that the Coronavirus had not yet impacted national inflation.

Higher rents and grocery prices caused inflation to rise in February. Year-over-year, the Consumer Price Index rose 2.30 percent in February after posting its highest reading of 2.50 percent in January; analysts expect inflation to decrease in the coming months.

The Core Consumer Price Index, which excludes volatile food and energy sectors, grew by 0.20 percent and matched expectations and January’s growth rate.

Mortgage Rates Mixed as New Jobless Claims Fall

Freddie Mac reported that the average rate for 30-year fixed-rate mortgages rose seven basis points to 3.36 percent last week after posting the lowest rate on record the prior week. The average rate for 15-year fixed-rate mortgages fell two basis points to 2.77 percent.

The average rate for 5/1 adjustable rate mortgages dropped by 17 basis points to 3.01 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.

New jobless claims fell to 211,000 claims filed from the prior week’s reading of 215,000 first-time claims filed. Consumer sentiment dropped to an index reading of 95.90 in March as compared to February’s reading of 101.00; analysts expected consumer sentiment to fall to an index reading of 95.00.

The March reading was the weakest in five months and was attributed to fears of the Coronavirus. The current consumer sentiment index covered data through March 11 and index readings are expected to fall lower as impacts of the Coronavirus unfold.

What’s Ahead

This week’s scheduled economic news includes readings from the National Association of Home Builders on housing market conditions, sales of pre-owned homes reported by the National Association of Realtors® and Commerce Department readings on housing starts and building permits issued.

The Federal Reserve will issue its post-meeting statement of its Federal Open Market Committee and Fed Chair Jerome Powell will give a press conference after the FOMC statement. Additional economic news and policy announcements related to the Coronavirus may also be released.

Most Renters Are Paying Far More Than Their Landlord’s Mortgage

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Most Renters Are Paying Far More Than Their Landlord's MortgageIn the overwhelming majority of the 50 largest cities across the U.S., monthly rent is more than the mortgage payment for single-family homes. In several cases, much more. 

Global answering service and chat support company Moneypenny compiled data from Zillow on median rent and mortgage payments from July 2014-July 2019.

In order to calculate the monthly mortgage payments, Moneypenny took the median home sale prices during the same time period and in the same major cities and then used nationally-average mortgage terms: 30-year fixed rate at 4% with approximately 6% down. 

Once the two figures — median monthly rent and median monthly mortgage — were calculated for each city, they were compared side-by-side. The data may surprise you. 

From Less Than Half To More Than Triple

In just seven of the 50 cities analyzed, tenants pay less rent than the owner’s mortgage payment each month. In 28 of the cities — well over half, tenants are paying more than 150% of their home’s mortgage. The city with the highest rent-to-mortgage ratio, Miami, shows that renters pay more than 300% of their landlord’s monthly mortgage payment on average.

Rounding out the top five are New York (276%); Riverside, California (231%); Boston (230%); and San Diego (221%). At the opposite end of the spectrum is New Orleans, where tenants pay just 49% of their home’s mortgage each month, followed by Richmond, Virginia (57%), and Kansas City, Missouri (82%). 

An interesting data point is that the median monthly mortgage payment in Miami is $720, while in New Orleans it’s $2,857. 

Not-Necessarily-For-Profit

While it makes perfect sense that rent prices in hot real estate markets are higher, some may still be surprised by the disparity between rental amounts and monthly mortgage payments. However, it’s important to note that even in the cities with the biggest gap, landlords are not necessarily pocketing the excess and enjoying a nice profit. While it’s certainly possible that they may be, homeowners are more likely putting some of that money back into the house in the form of improvements and maintenance, as well as setting some of it aside for large emergency repairs. 

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

Disruptive Technology And The Real Estate Market

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Disruptive Technology And The Real Estate MarketRecent advancements in technology continue to disrupt the real estate market. This includes the use of “Big Data” for data mining, artificial intelligence combined with machine learning, augmented and virtual reality, use of drones, blockchain technology, and the ongoing deployment of 5G.

The Use Of Big Data

Consumers have access to more information about real estate market conditions because of the collection and online presentation of the results of data mining “Big Data.” For example, it is easy to learn if a market is a buyer’s or a seller’s market by searching for the median number of days a house will be on the market before it sells in a certain area.

Artificial Intelligence And Machine Learning

Artificial intelligence (AI) combined with machine learning works with data mining of Big Data to make the information more actionable. Real estate investors can set up search parameters to look for the exact type of properties that they want and let the AI software do the grunt work to find the investment opportunities.

Machine learning allows AI chatbots to learn correct responses to inquires from the questions previously asked. AI chatbots provide customer service 24/7 non-stop to handle leads and make sure to neglect no one.

Augmented And Virtual Reality

Virtual reality allows interested buyers to do a digital walk-through of a property and be able to imagine what it looks like. Augmented reality is used by some REALTORS® to digitally stage a home, listed for sale, by using digital furniture in the virtual walk-through. This furniture is selectable based on a potential buyer’s taste. Staging a home digitally is far less expensive than using real furniture.

Use Of Drones

The exciting use of drones captures a beautiful fly-over and fly-around a property to show what it looks like on the outside and its surrounding environment.

Blockchain Technology

Blockchain technology, which is the type of software used for cryptocurrency, will have an application for digital verification and signatures in real estate transactions. This technology allows the reduction of all the massive paperwork for a title closing to a secure, digital format.

Deployment Of 5G

The 5G mobile technology allows the connections to a smart device that can broadcast information about a property listing to the local environment. This allows for digitally-assisted home viewing, which is responsive, interactive, and for a potential buyer to ask questions about a property.

Summary

Technology continues to make the search experience when buying more effortless and more pleasant. The promising news for REALTORS® is that even though around half of the homebuyers find a property online that is of interest, the vast majority (93%) use a real estate agent to close the transaction. Technology is making the process easier; however, smart buyers still work with a qualified real estate agent to buy a home.

Considering A Reverse Mortgage? Understand These Important Points First

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Considering A Reverse Mortgage Understand These Important Points FirstThere are many individuals who end up on a fixed income once they reach a certain age; however, their expenses aren’t always fixed. Sometimes, there is a large medical expense. In other cases, someone might need money for a new car or a home repair. In the event that someone needs cash quickly, one option is called a reverse mortgage.

Those who have equity built up in their home can draw upon this to help with unexpected expenses. This is a quick source of cash that many people overlook. At the same time, it is important to think about the pros and cons of a reverse mortgage.

The Pros Of A Reverse Mortgage

Taking out a reverse mortgage does have several benefits that everyone should know. First, there are no required monthly payments for any reverse mortgage loan. In addition, the money that people get from a reverse mortgage is not taxable. For many, this acts as a tax shield against any income that results from a reverse mortgage.

Next, nobody can ever owe more money than the value of the home when the building is sold. This prevents people from getting buried by potential interest payments. Finally, nobody will ever have to leave their home with a reverse mortgage. The owners retain the rights to the property.

The Cons Of A Reverse Mortgage

On the other hand, there are a few cons that people need to keep in mind as well. First, reverse mortgages are regulated by the federal government, which means that everyone needs to read the rules and regulations carefully. In addition, not everyone who owns a home will qualify for a reverse mortgage. They need to have enough equity built up in the home before the lender will consider it.

In order for someone to take out a reverse mortgage, a lien is going to be placed against the property. In the eyes of some, a lien must be paid off in the event the property is to be sold. Finally, in order to prevent a reverse mortgage from resulting in foreclosure, the building needs to be both maintained and insured.

Thinking about the pros and cons carefully can help someone decide if a reverse mortgage is right for them. 

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

The Narrowing Gap Between Renting And Buying A Home In The US

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According to data compiled by Realtor.com in the fourth quarter of 2019, it is still more affordable overall to rent versus buy a home — but just barely. The median monthly mortgage payment at the end of 2019 was $1,600, while the median monthly rent payment was $1,319. This is largely due to steadily-increasing rates, rising home prices, and near-record-low mortgage rates.

The Narrowing Gap Between Renting And Buying A Home In The USThe Realtor.com study looked at 593 counties across the country. As compared to the fourth quarter of 2018, the average monthly cost of renting a home increased 4%, up from $1,254, while the average monthly cost of homeownership actually declined 1%, falling from $1,658. These numbers represent exactly 30% of a homeowner’s gross income and 25% for renters, based on median household income. 

A Turning Tide

In a stunning 84% of the 593 counties that were part of the study, renting is less expensive than buying. The average home price in these areas is 260% higher than the national median, while rent prices average about 79% more than the national median. 

Interestingly though, 26 of the 593 counties experienced the opposite for the first time ever: It became more affordable to purchase a home than to rent, even if only by a narrow margin. The largest metropolitan areas in which homeownership is more economical than renting now include Bronx County, New York; the greater Cleveland area; Columbia, South Carolina, and the surrounding areas; Indianapolis, Indiana; and Camden County, New Jersey, which includes Philadelphia, as well as cities in Maryland and Delaware. In 16% of the counties analyzed, buying a home is less expensive monthly than renting, which is up from 12% in 2018. 

On the other end of the spectrum, several large counties made the switch from being more affordable to buy a home to more affordable to rent. The top five include the Wichita Falls, Texas, area; Harrisburg-Carlisle, Pennsylvania; Luzerne County, Pennsylvania; the Greensboro, North Carolina metro area; and Craven County, North Carolina. 

With the costs of homeownership becoming more favorable over the past year, the gap between renting and buying a home is more narrow than it ever has been in the U.S. If you are in the market for a new home, be sure to contact your trusted real estate professional.