13 Items to Check When Performing Due Diligence on Multifamily Properties

It is worthwhile to uncover these important due diligence points prior to purchasing a multifamily property. This article will provide a list of items to obtain or further inspect during the due diligence period. Rent Roll A rent roll is an account or schedule of rents, the amount due from each tenant, and the total received. Real Estate Tax Bills Checking property tax data can tell you a lot about a property. You want to make sure there is no free rent for some tenants at the back of lease and no leases that leave you seriously exposed as a landlord. Unit Inspections A physical inspection of each individual unit should be done, along with common areas, utilities, and the exterior. You don’t have to personally do it, and it may not be worth your time if there are a lot of similar units. How might litigation impact the ability to buy and close on the property? While these are the most common items to focus on during due diligence, depending upon the particular deal, you will want to look into other elements outside of what is listed here. Create your own checklist such as this one and make sure it is used every time you evaluate an acquisition.

Where to Buy Single-Family Rentals in 2019

Investors are still finding the single-family rental market a lucrative business. The average annual gross rental yield for a single-family home (that is, the annualized gross rent income divided by the median purchase price) was 8.8 percent in the first quarter of 2019, up from 8.7 percent a year prior, according to ATTOM Data Solutions’ Q1 2019 Single-Family Rental Market report, analyzing 432 counties with populations of at least 100,000. “Buying single-family homes to rent them out is a better deal for investors so far this year than it was at the same time in 2018, as profit margins are rising in a majority of counties across the United States,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Last year, at this time, investors were seeing returns drop in three-quarters of the counties that were analyzed. ATTOM Data Solutions ranked the best U.S. markets for buying single-family rental properties this year. The counties with the highest rental returns in the first quarter were: Baltimore City, Md. : 24.5% Bibb County, Ga. (in the Macon metro): 21.9% Cumberland, N.J. (Vineland-Bridgeton metro): 21.2% Winnebago, Ill. (Rockford metro): 17.1% Wayne County, Mich. (Detroit metro): 17.1% Cuyahoga County, Ohio (Cleveland metro): 12% Allegheny County, Pa.: 10.9% Cook County, Ill. (Chicago metro): 9.7% Philadelphia County, Pa.: 9.4% Rental returns rose compared to a year ago in more than half of the counties ATTOM researchers analyzed. The report also identified the single-family rental markets most poised for growth. The high-growth markets include Wayne County, Mich. (Detroit); Cuyahoga County, Ohio (Cleveland); Allegheny County, Pa. (Pittsburgh); Milwaukee County, Wis.; and Marion County, Ind. (Indianapolis).

Millennials Drive the Housing Market, and More Surprises From New Zillow Research

It was friends and the rising cost of rent that finally turned Matt Fong’s attention toward buying a home. “Then I saw another friend buy a home and rent out rooms to make a profit. Only 66 percent of millennial homeowners are white, compared with 77 percent of all homeowners. Nearly half of millennial homeowners live in the suburbs Another surprise from the new report is that a large number of millennial homeowners — 47 percent — live in the suburbs. Their willingness to live in the suburbs, along with the fact that millennials waited longer to buy their first homes, may be part of the reason new Zillow research also reveals that today’s “starter” homes are almost as large as “move-up” homes and cost just 18 percent less. Renting still looks good Although millennials are jumping into the homeowner pool in greater numbers than previously believed, it is not without second thoughts. Two-thirds of millennial buyers consider renting at the same time they shop for a home — and one in three seriously consider it. It’s become the norm for buyers to make more than one offer before they close on a purchase. Fong, in Seattle, is among the 24 percent of buyers who made three or more offers. Home buyers, by comparison, make $87,500 on average.

5 Tips for Buying an Out-of-Town Rental Property

My family has chosen to live in a small town for quality-of-life reasons, and we’ve never considered buying large multifamily assets here. Since BiggerPockets is all about helping you succeed in real estate investing, we’ve put together a complimentary Rental Application for you to use. Related: “I Live in a High-Priced U.S. City. Find the Right City My firm, Wellings Capital, uses 22 metrics to evaluate a city before looking at any multifamily deals. We like to buy in cities that have a mix of health care, education, and government jobs. Interview several property managers. Check out your submarket and neighboring areas as well. Choose a location where your property manager would be happy to go at night — and that you would send your daughter to live. When we decided to make a serious run at one of the apartment complexes, I told my business partners that it was a great city, I really liked the area, and I didn’t see any problem making an initial offer. Do you have any additional tips for buying out-of-town rentals?

How to Save Thousands of Dollars in Interest on Your Mortgage

Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well. When you make ‘extra’ payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you. If you have a 30-year mortgage on a median-priced home ($250,000) with a 5% interest rate, you’ll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone! Pay an additional 1/12th of your mortgage payment every month Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month’s worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest! Pay an additional $50 per month towards your mortgage Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Make one-time lump sum payments when you can Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense. Bottom Line If you’re wondering what strategies would work best for you to shorten the term of your loan, consult a local real estate professional who can answer your questions or connect you with someone who can. Members: Sign in now to set up your Personalized Posts & start sharing today!

How Millennials Are Influencing Co-Op Boards

In 2017, Habitat reported Millennials were struggling to buy co-ops. Only 10 years ago, the choice was to rent or to buy a co-op, with just a few exceptions, notes agent Lisa Larson of Manhattan’s Warburg Realty. “I’ve found that my Millennial buyers, facing the huge hoops they see as a barrier to co-op entry, are turning to condos as an alternative,” he says. “The co-op boards that have accepted this new reality and recognize the value of their buildings depends upon adapting to it are slowly beginning to change decades-old rules . I’m finding that board members with Millennial-aged children are more open to changing. Second look at subletting Some co-ops are attempting to relax their rules around subletting and approvals, so their home values are more condo-like, said real estate broker Brian K. Lewis of Compass in New York City. I’ve never encountered a condo that wants to act more like a restrictive co-op. Restrictions are audience limiting [because] the smaller the audience, the less money a building tends to attract. Buildings that act more condo-like attract a broader audience – and usually more money.” According to Martin Eiden, another Compass real estate broker, the Millennials with whom he’s worked seek diversity above all else. As Millennials age and have children, they may want to be around other young families for play dates or mommy-relax-and-unwind-with-wine sessions, meaning that they’ll start considering co-ops again.” One by one One Compass real estate broker, Tali Berzak, believes the issue really must be examined on a case-by-case basis.

What Is a Privacy Fence? A Way to Hide a Home From Nosy Neighbors

Do you have to call your neighbors before you start the home improvement project? What is a privacy fence? Privacy fencing can also keep kids safe in the yard and pets contained in one space. "The wood pickets should have about an eighth-of-an-inch gap in between each picket. How much does a privacy fence cost? "Installing fences on hills is more expensive than installing on a flat yard." "You’ll just want to determine your property lines, and discuss your plans with your neighbors, along your proposed fence line," Michaels says. Although it's not typically required, it's common courtesy to let neighbors know in case the installation crew needs to access their property for any reason. You also need to contact your local building inspector to get a building permit. Privacy fence installation Installing a privacy fence is typically done in three or four phases: Post installation: This involves digging post holes (about 2 feet into the ground) and using cement to anchor the posts.

Closing the gap on the real estate closing process

Research from the National Association of Realtors shows that nearly 40% of home buyers rank understanding the closing process and the related paperwork as the top challenge. Painful, Intense, Taxing and Inefficient As a long-time closing attorney in Massachusetts, we suffered the same pains as many in the industry. We used real estate software to draft the title commitment, then used the title company’s system to obtain a required Closing Protection Letter (“CPL”). To obtain seller documents and schedule the closing, we emailed the seller’s attorney or paralegal and attachments were sent to us by email. Additionally, we emailed realtors to obtain their commissions, receive transactional forms (e.g., condominium documents and financials) and schedule closings. Each vendor and fee had to be entered into our real estate software or in the lender’s software platform to generate a Settlement Statement. Electronic recordings were done by separate software. Evicting Inefficiency Today, we coordinate our closings on a single platform. With Qualia, the closing is a much more coordinated process. We have a shared calendar to schedule and memorialize closings with all parties right in Qualia.

4 Stark Differences Between Being Frugal and Cheap

However, given the small-town USA community I come from, I was the closest thing to Jewish many of the kids in my town had ever seen. While this is a subject for another time, I think that is an antiquated way of looking at things. The Difference Between Cheap and Frugal Being frugal is saving money. Being cheap is saving money at the expense of others. A frugal person happily spends money on things of value. At this point in my life, compared with the money I save, I don’t value the food at restaurants when the food I cook at home is almost as good. A frugal person values time, a cheap person values money. Because some people got drinks and more expensive meals, there is always that one person who tries to spend 15 minutes trying to allocate each item on the bill to the appropriate person. This person is being cheap. I like to think that most people like their friends for who they are, not what kind of car they drive.

7 Promising Signs the Home You’re Buying Will Have Good Resale Value

That's why resale value should be an important consideration when house hunting. But if you do your best to predict how the house you're buying—and the neighborhood it's in—will appeal to future buyers, then future-you will be a whole lot happier. But one caveat: Good resale value is never a promise. The neighborhood's hopping... Pay attention to your surroundings when house hunting. "If you buy in an area that is not well-developed and doesn't have good infrastructure—like shopping close by—you will not have a high rate of return on the home," says Realtor® Patricia Vosburgh. "We advise against buying on a busy street or purchasing a home surrounded by commercial properties nearby," Vosburgh says. You have to factor in how much you'll spend on the home while living there—even if the market becomes red-hot. But a word to the wise: If you think you might someday sell your home, you'll want to factor in the school district before you buy. With good light, "there is always a good feeling—a feeling of embracing and belonging," she continues. "Look for a home with a floor plan that will appeal to families," says broker Kris Lindahl.

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How a Stock Market Shakeup Affects Mortgages

Will the stock market shakeup affect mortgage rates and home sales? The Stock Market Shakeup and Home Sales Since then the market has continued to be turbulent. Then, President Trump's tariffs announcement made it drop 420 points on March 1. So how does the recent shakeup affect you if you’re thinking about buying or selling a home? When the yield on these notes increases, mortgage rates increase. On a $250,000 mortgage that’s $70 per month ($840 per year). But as interest rates rise, you could find yourself facing a monthly payment similar to what you would have with higher home prices and lower interest rates. It might be a good time to buy a home before rates increase any further, but only if you’re otherwise ready and only if you find a home you will be happy living in for years. Mortgage rates are still relatively low, making it a good time to take out a home loan. Short-term stock market shakeups should not be a factor in home buying or selling decisions.