Navy Fellas Realty Group

Real Estate, Residential sales and purchase

What Is House Hacking?

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What Is House HackingSome clever millennials are teaching the older boomers a new way to invest in real estate, which goes by the name of “house hacking.”

What Is House Hacking?

House hacking has nothing to do with computers, although you may go on the Internet to find candidates for real estate investments suitable for hacking. The goal of house hacking is to acquire a multifamily rental property, live in one part of it and rent out the other parts for enough rental income to cover most, if not all, of the expenses of owning the property.

Live Rent-Free

As the on-site manager of a property that you own, you do not have to pay any rent. If you are clever, and the rental market is robust in the area that you choose for house hacking, then the rental income from the other units in the multifamily property will be sufficient to cover the property’s expenses. Then, you live rent-free.

Finding A Hackable Property

Multifamily properties, up to four units, are the best candidates for house hacking. A two-story townhouse that divides into two separate living spaces, a duplex, a triplex, or a small apartment building may be suitable.

Cash Flow

Calculate the cash flow from the portions of the property that rent to others. If the rent covers all the expenses then the property is said to have a positive cash flow. That is the goal. Have some funds set aside to cover any downtime when a unit is vacant between renters.

Financing

Owner-occupied properties qualify for lower financing rates than non-owner-occupied properties, which are held purely for investment.

Landlord Headaches

As the owner/landlord you will deal directly with any tenant relations and problems. If a pipe breaks in the middle of the night, you are the one who will have to deal with the problem. Be sure to screen tenants thoroughly and maintain the property. Some do not like dealing with tenants; however, if you are careful when selecting tenants and handle any problems professionally, this work provides an excellent experience for understanding further real estate investments to build up your portfolio.

Summary

House hacking came about especially for those from the younger generation of millennials simply because buying a property is very challenging on one income and even difficult on two incomes. If you consider the payment of rent by others as part of the total income that supports a property, the math may work out better. When the numbers work out, you may have found an investment opportunity with house hacking. Work with a qualified real estate agent who specializes in multifamily properties for the best results.

Home Improvements For A New Home Or When Getting Ready To Sell

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Home Improvements For A New Home Or When Getting Ready To SellSome simple home improvements increase the attractiveness of a home and may help with a sale. If you are getting ready to sell your home or if you just want to beautify it a little, here are some low-cost tips for home improvements to consider.

Go Green

Adding indoor plants is nice and improves interior air quality. If you have the room for it, consider a vertical garden. A vertical garden may use the entire ceiling-to-floor area of one wall. With the proper type of grow lights, it is possible to create the feeling of a lush tropical forest inside the home.

You can grow a herb garden in a window box, so you always have fresh herbs for cooking. Flowers, which make a lovely fragrance, are wonderful for aromatherapy to create positive feelings. Hang a sprig of fresh eucalyptus in the shower for a spa-like experience.

Water Elements

A water fountain or birdbath in the garden is a pleasant touch. Use a solar-powered water pump so there is no need to connect it to electricity. It will attract birds that are enjoyable to watch.

A small fountain in the home will have a soothing effect from the sound of the falling water. The Chinese art of Feng Shui recommends having some water elements in the home for a more peaceful living space. It can be something as simple as a desk or tabletop water fountain to have a nice effect.

Wall Decor

To spice up a room and give it a fresh look, consider changing the wall decor. Give the wall a fresh coat of paint or new wallpaper and hang new things on it in an attractive way.

Throw Rugs

Colorful throw rugs are helpful to cover a worn area of old carpet. Rugs improve the look of a room without the expense of replacing the carpet. In a larger room, a throw rug may create a space for a certain use, such as a sitting or dining area.

Add Some Color to the Front Door

One quick and easy technique to give a dreary home exterior a bit of curb appeal is to power wash the siding on the front and then paint the front door a dramatic contrasting color. A superbly-colorful front door is very attractive and welcoming.

Summary

With a little imagination and a modest budget, it is possible to make attractive home improvements that have appeal. Just try some of our suggestions and make improvements that you enjoy.

When It Makes Sense To DIY

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When It Makes Sense To DIYMany homeowners enjoy DIY, or Do-it-Yourself, home improvement projects. There’s nothing quite like the pride of knowing you used your own hands to put together or improve something.

With the explosion of social media sites such as YouTube, Pinterest,and TikTok, spending a weekend on DIY projects seems easier than ever before. After just a couple of minutes spent searching, you can find a step-by-step tutorial, before and after photos, or a time-lapse video of any project imaginable. Anyone can do this! Right?

Not so fast. In some cases, it may not make sense to DIY. How do you decide whether it will be worth the elbow grease or if you should leave it to the professionals?

To DIY Or Not To DIY

Building, fixing, painting, or any other -ing isn’t always easier or more affordable, despite what HGTV would have you believe. As you consider whether or not to take a project on yourself, here are some things to consider. 

  • Cost – Calculate the cost of materials you’ll need for your project, factoring in tools and equipment. If the job requires some you don’t already own, you’ll have to rent or buy them, which can be quite costly. However, if you already have some of the necessary materials or you can borrow tools from someone, going the DIY route may make sense. 
  • Time – As Greek philosopher Theophrastus said, “Time is the most valuable thing a man can spend.” Even if a DIY project offers substantial cost savings, it’s important to factor in the time you’ll have to spend on it. Consider whether saving money is a worthwhile trade-off for your time.
  • Skill level – No matter how many tutorials you study, some things are better left to truly skilled professionals. If you don’t have any experience working in electrical, you shouldn’t attempt to do a project that requires running wires. Knowing your limitations and when to hire someone can save you time, money, and stress.

Potentially saving money is certainly not the only thing to consider when it comes to DIY projects. Before deciding to take it on, ask yourself if you’ll truly enjoy the project and whether or not you have the necessary skills. 

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.

Millions Now Qualify For Home Refinancing To Save Money

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Millions Now Qualify For Home Refinancing To Save MoneyTo refinance or not to refinance, that is the question. How do you know when it is an appropriate time to refinance? Many factors influence this decision, besides just the cost of the mortgage loan. Here is a checklist to follow when considering a refinancing opportunity.

Check Your Credit Score

Refinancing is similar to getting the original home loan. The lenders will run a credit check and verify your current income. Your total debt level and your credit history are both important. If you have some “dings” on your credit record, you may be better off staying with the existing mortgage rather than attempting refinancing.

The opposite is also true. If your credit score has significantly improved since the time when you took out a mortgage, you may benefit from refinancing.

Be aware that every time you ask a lender for loan approval, and the lender runs a credit check, the credit inquiry will lower your credit score. It is highly advisable to check your credit history first before applying for any mortgage financing. If there is anything that is not correct in your credit file, then dispute the bad information to improve your credit score.

To get the best rates on mortgage financing, aim for a credit score of above 740, with a debt-to-income ratio of below 75%. The rule of thumb is that for every 20 points that your credit score goes up you will benefit from lower rates.

Private Mortgage Insurance

Another consideration on the checklist is whether you pay private mortgage insurance (PMI). PMI is usually a requirement for a low down payment loan. If the equity value that you have in the home increased significantly since the time you bought it, the PMI may no longer be necessary. Sometimes a lender will accept a new appraisal of the home and recalculate the PMI requirements. Ask your lender if they allow this. If they do, you may be able to get rid of the PMI without refinancing.

If a lender will not remove the PMI requirement, and the equity value of the home is substantially higher, then refinancing may be beneficial, if the new loan does not require PMI.

Closing Costs

Covering the closing costs is a mathematical calculation. The amount saved on the monthly mortgage payment needs to be larger than the closing costs on a refinancing loan. The amount of savings depends on how long you plan to own the property. For example, if the closing costs are $3,600 and your monthly saving on the mortgage is $200, the break-even, where you save more than the closing costs, is 18 months later. You should plan to own the property for at least 18 months for this refinance to make financial sense.

Cash Out

Sometimes the benefits of refinancing also include the possibility of taking cash out from the refinancing loan to use for other purposes. If this is the case, consider the savings on the cost of those funds if borrowed elsewhere.

Summary

Those are the things to think about when considering refinancing. Work with a qualified real mortgage broker to get advice if you are not certain about the best thing to do.

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.

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.

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.

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.

How To Finally Become A Real Estate Investor This Year

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How To Finally Become A Real Estate Investor This YearInvesting in real estate remains one of the best ways to accumulate wealth in America. There are six ways to get started in real estate investing. One way does not require any investment capital, just an investment of your time. Ways to get started include investing in a REIT, buying an incoming-producing property, using a buy-and-hold strategy, flipping houses, crowdfunding, and wholesale deals.

Investing In A REIT

A real estate investment trust (REIT) is an investment instrument that offers a proportional ownership interest in a real estate portfolio that follows a particular investment strategy. A private REIT has a minimum investment that could be $1,000 to $25,000. A publicly-traded REIT sells in shares, just like stocks on the stock exchange. The investment minimum is just one share and some REITs have share prices under $100.

Income-Producing Property

Buy a home and rent it out. For this strategy to work, you do have to deal with the tenant headaches, unless you can afford to outsource the landlord’s work to a property management company.

Buy-And-Hold Strategy

Buy raw land for cheap on the outskirts of a growing town and wait the time necessary for the town to overtake your land for the opportunity to subdivide and develop it for a high price.

Flipping Houses

For those who like doing contracting work, or who partner up with a contractor, there may be profit in buying some fixer-upper homes to renovate and sell for more than the acquisition price plus the renovation costs.

Crowdfunding

Crowdfunding is a way to participate as a small investor in real estate deals and also to fund your own deals.

Wholesale Deals

Wholesale deals can be accomplished with no money down. You work for other investors and secure properties at lower than market prices by controlling them with an offer that is accepted and then assigning the deal to the investors for a fee.

Summary

If you have been thinking about becoming a real estate investor, now is the time to do something about it. Even if you start with only $100 by buying shares in a REIT, at least you got started. Once you get your real estate investment strategy going, you will find it to be a very rewarding experience, if you are careful and make wise decisions.

Be sure to associate with an expert REALTOR® in your marketplace area to get sound advice and information.

Turn Your Yard Into An All-Seasons Living Space

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Turn Your Yard Into An All-Seasons Living SpaceThink of backyard space as “in-between” or transitional space that is a bit like being inside while being outside. Sunrooms, screened-in covered patios, outdoor kitchens, spas, fire pits and more, are all becoming very popular ways to make more use of the backyard. Making use of the outside area is not limited to only the times of the year that have nice, warm weather.

Sitting around a fire pit, with a blazing fire in it, is a perfect way to spend a chilly winter evening under the stars. This is a bit like camping out, without having to leave the comfort of your home.

Here are some tips about how to turn your backyard space into a comfortable and functional transitional area.

Landscaping

Install shade trees, cobbled paths that invite exploration, and water features that are mixed in with attractive landscaping to make your backyard more inviting. Add some inexpensive solar-powered lights to line the walkways for a nice nighttime look.

This can be a labor of love that you take your time doing without having to rush the end result. It is healthy for you to do a bit of gardening, to get some fresh air and light exercise.

Outdoor Cooking

There are many ways to enjoy outdoor cooking such as simply taking a hibachi grill out to cook on a patio. You can cook hamburgers, hot dogs, steaks, chicken, shish kebab, and more. You can even grill vegetables, like delicious slices of eggplant or corn on the cob, for your vegetarian friends on a separate grill reserved for that use.

Pizza Oven

If you really want to impress your guests, then put in a wood-burning pizza oven. Pizza made this way tastes delicious. There are dozens of pizza recipes you can try from thin crust to deep dish.

You can also make loaves of bread and other types of oven-baked foods. When you get a wood-burning pizza oven hot enough to cook properly, you will want to cook plenty of things so be sure to invite over lots of friends and neighbors.

Gourmet Kitchen

Taking the outdoor cooking one step further, some people like to install a full gourmet kitchen and spend lots of time cooking outside. There are many stainless steel grills to choose from that go along well with matching stainless steel appliances, which are strong enough for exposure to the elements.

Temperature Control

When desiring to have some control over the temperature outside, it is best to think of creating usable areas. When it is cold outside, you can use patio heaters that burn propane to make warmer areas for sitting. Another popular idea is to put in a fire pit to sit around.

During warmer times, you will want to have shaded areas and patio covers with ceiling fans. In the hot summers, you might enjoy a misting system that sprays a fine mist of cool water vapor in the air.

Summary

Many neglect their backyards, which is a shame because they can be lovely places to hang out. Rather than investing in an expensive room addition, start thinking about how you can make your backyard more enjoyable as a transitional space between the interior living area and the outside.

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.

What Should I Consider Most When Buying A Home In 2020?

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What Should I Consider Most When Buying A Home In 2020There are two times when it is best to buy a home. When you have to buy one and when you can afford to buy one. In general, owning a home is better than renting one because you are building up equity for yourself, instead of throwing your money away by helping the landlord buy the property with your rent money.

Best- And Worst-Case Scenario Planning

Be prepared for owning a home, especially if this will be your first time as a homebuyer. There is a natural tendency to stretch finances to the breaking point when wanting to own a home. Try to be patient and have a contingency plan for what would happen if you lose your job or if your significant other loses his or her job if you are buying a home with the help of another income.

A surprising piece of counter-intuitive advice is NOT to use all of your savings as a down payment, even if you have to pay more for the mortgage. Instead, hold back three to six months of mortgage payments in your savings to use in case there is an unexpected job loss or problem. That will give you enough time to recover from a temporary problem without having to worry about having enough money to make the mortgage payments.

Keep Emotions Under Control

Try not to let your emotions override practical considerations. Most people trade-up from the first home that they buy. A house need not be “perfect”; however, you want it to be in a decent condition to avoid having large expenses right after buying it, unless you are a fixer-upper type and know what you are doing.

Seller’s Or Buyer’s Market

It is useful to know whether the area you want to buy a home is a seller’s or a buyer’s market. In a seller’s market, there may be many buyers for fewer sellers. In that case, you will need to be more competitive in your approach when buying a house.

One easy way to tell if the area is a seller’s market is to ask your REALTOR® to find out the median number of days that homes are on the market for sale and the percentage of the asking price that the average home sells for.

Don’t be surprised to learn in a seller’s market that homes stay listed only for a short time, and they sell for nearly the asking price. Having a pre-approved lending commitment before you go looking for a home in a seller’s market is one way to make your offer(s) stronger.

Summary

Take time when buying a home to do some market research first. Get your loan commitment approved, before shopping for a home. Make looking for a home to buy an adventure. Avoid stretching yourself to a financial breaking point and plan to stay in your home for a few years, at least, before you trade-up.

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