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The Home Fax™ Real Estate Blog Recap

1. Big Impact Spring Home Maintenance Tips

Learn how to spot and fix potential grading issues around the landscape of your home and see the impact, importance and simplicity of exceptional downspout drainage systems.

2. National & Local Real Estate Market Cycle Factors

Did you know national real estate factors, such as interest rates, and local factors, such as supply and demand, are of top-notch importance to understand when buying or selling a home?

3. Real Estate Strategies by Market Cycle

Learning to apply the correct strategy, or strategies, during any real estate market cycle can help amateurs and rookies make elite decisions that help you profit, even when others may be experiencing a loss. It's all about the strategy!

4. Identifying Target Real Estate Markets, Cycles & Locations

Can you identify the current state of the real estate market cycle and implement the correct strategy to maximize your investment?

Real Estate Strategies by Market Cycle

Last week we discussed Identifying Target Real Estate Markets, Cycles & Locations and found seven common points within the real estate market cycle. Now that we’ve reviewed the typical strategies applied to each point of the market cycle, let’s explore the identification process and expand upon those strategies to help you identify the current state or your local real estate market.

1) Peak: Sell

Like most experiences in life, there is a time to sow and a time to harvest. In a peak real estate market supply (inventory) is low, and demand (buyers seeking to purchase) is high.

Remember when Beanie Babies and 1980’s sports cards were the hottest toys and collectibles around, with dealers fetching prime dollar for even some of the most common items around? People followed the crowd, some to the point of hoarding their future retirement “investments”, only to find that some years later most of what they had held was pretty much worthless because it was overvalued. Like the dealers who saw prime opportunity to off their inventory for massive prices and profits while everyone was buying, as opposed to holding, smart real estate investors sell, sell, and sell in a peak market. They’re honestly is only one strategy, SELL, and do not buy.  

2) Early Downturn: Sell or Hold

Almost every aspect of the real estate market begins to see the effects of reaching maximum capacity. Cap rates begin to trend upward and purchase prices are starting to fall. The influx of demand slowly starts to dissipate and the market sees a bit more inventory, with homes starting to extend their recent listing period on the market. Any fix-n-flips should be turned over expediently, and hopefully those income properties invested in earlier have already been sold during the peak market or beginning of the early downturn.

Renovations should be held to a minimum, but new home construction, such as the last models within newly developed areas, might be found for a steep discount. Reason being, those companies have made their profits during the peak market and you may get a steal for being late to the party, similar to buying a display Christmas tree for 10% cost of the original purchase price. Sure, it might be January, but there’s a time to sow and a time to harvest, remember?

3) Full Downturn: Hold or Acquire

As the bottom has dropped out of demand, landlords are doing all they can to extend leases and hold current tenants, while foreclosures are increasing and sales volume has decreased drastically. Inventory begins to rise, and prices that do sell are falling steeply. Banks risk less on credit, with higher interest rates, leaving property purchased with cash as the best option. Any development homes still left are on full clearance, investments are being dumped, and renovations a time of the past. If you missed the early downturn and choose to sell now, you may lose deeply. Holding may very well be the best option, and may take a longer period of time to see recovery. Any relocations or necessary moves, for instance, may need to involve a long-term lease at the most affordable property management costs.

4) Bottom: Acquire

Homeowners who purchased their home during a peak market may have their stomachs turned upside down at this point. During this stage, supply is up and demand is down, driving down purchase prices for investors to acquire and hold, or acquire and lease. Typically strategies involve buying income properties for cheap.

You will tend to see an influx of foreclosures (some due to people who don’t want to pay a mortgage for a property that is worth 25-30% less than what they owe –don’t be ‘that guy’), which is a great example of a quality income property. Buying property at this stage, when most people are too scared, or have switched focus to the stock market or other investment areas, is a prime opportunity. As rental prices are lowest at this point, this is about the only time we would recommend exploring renting, as necessary. In addition, homeowners should be holding, and investors acquiring.

If you’re planning on purchasing a home in six months, you may want to consider purchasing now.

5) Early Recovery: Acquire, Develop and Explore Renting

Inventory is available below replacement cost and trading for above replacement cost. Meaning, if you put $5,000 in renovations within your property, you should see a $10,000 return on the purchase price or equivalent increase in monthly rent.

As the rental market may be gaining some steam, and prices leveling, wise real estate investors put as little, or much, as necessary into leased income property as possible. With vacancy rates decreasing, occupancy is still low, but demand is improving. Foreclosures may be lightening up, but affordable property in ideal locations should be acquired and developed, or held until the late stable market. One year leases may be the best option to prohibit a vacancy period, expiring within the late stable to peak point where selling may be explored.

6) Late Stable: Rent, Refinance, Improve, and Prepare for Selling

Credit is affordable, vacancy rates are decreasing, rentals are increasing, and purchase prices are gaining steam. It’s time for the fix-n-flip, leases, and renovations.  

7) Peak: Sell

Repeat step 1 and watch closely to determine the next early downturn. In our opinion, (which is the minority opinion, to be fair) this is where we believe most real estate markets across the nation currently sit as of February 2016. Most people would tell you we’re in Step 6, late stable, preparing to Peak with a good year or so left in high-priced inventory. So with that being said, even professionals will not always agree, and only time will tell.

What stage do you think your local real estate market is currently in? Any different nationally?

Next week we will explore different local, state, regional and national factors that contribute to real estate market cycles and strategies. Until then, Nationwide Home Fax™ and Home Fax™ Inspections will help you Know the Home Before You Buy™.

Sellers Inspections: Advantages for Sellers, Agents & Buyers

Although buyers are most commonly known for having a home inspection completed, many sellers and agents are starting to see the enormous benefits from Seller’s Inspections and Pre-Listing Inspections. 

This approach has positive benefits for the seller, buyer, and agent.

  • During a Seller’s Inspection, the inspector works for the seller. 
  • This allows the seller to assist the inspector during the inspection
  • Become aware of any safety issues or defects before a buyer walks away
  • Shop competitive bids to repair any defects (or lighten the effect of a surprise defect)
  • Price the home accordingly (instead of renegotiating the purchase price with inflated demands) &
  • Have corrections made to the report that can be used as a marketing tool for sellers and agents.

Ultimately, buyers may waive their inspection contingency all together, potentially saving sellers tens of thousands of dollars from the purchase price, while increasing the commission amount of the agent and broker.

Check back as next time we’ll discuss how controlling the home inspection process will save you time, money, and hassle.

Winter Problems & Preventative Maintenance

Part 3

Welcome back to the winter maintenance and preventative options that help you save you energy, money and time. In case you missed Part 1 or Part 2, check them out and don’t forget to visit HomeFaxInspect.com and NationwideHomeFax.com when you’re done. 

Downspout Drainage System

To properly direct melting snow and water away from your foundation and structure, add, fix or replace your downspout drainage system to divert water away from your home. Adding 3’ to 5’ downspout extensions are easy, cost effective, and can have a huge impact on your homes long term condition. Not to mention, as the melting water enters the foundation and freezes, your foundation becomes susceptible to the pressure that the water creates as it freezes. On a similar note, fix any screws or missing fixture pieces as additional pressure is placed on them during the winter as well. 

Turn off Exterior Faucets

No one wants to fix bursting water pipes at any point in time. Turning off your exterior water may seem like common sense, but many people experience bursting pipes from ice expansion and encounter additional unplanned expenses as a result of simply forgetting to handle this task.  Disconnect all garden hoses and drain the excess water remaining in the faucets. If you do not have frost-proof faucets, remember to turn the shut-off valve inside your off home as well. 

Drain Lawn-Irrigation Systems

Many homes have lawn irrigation systems, such as automatic sprinklers, that can also freeze, create pressure, and cause leaks if left un-drained prior to winter. Draining sprinkler-system pipes will help avoid freezing and leaks.  This one may require a professional and a $50-$150 charge, but could also save you thousands in the long-run. 

Check back on Wednesday for Part 4 of winter maintenance tips and preventative options brought to you by Home Fax Inspections and Nationwide Home Fax.

Tips & Tricks for Online Real Estate Sales & Auctions

This is a very brief example of how to identify, research, and make an informed decision regarding bargain online real estate investment properties. 

  •  Drive by the home and compare current condition to the provided photos
  •  Contact previous buyers and ask for their feedback regarding working with the seller
  •  Many sellers who do purchase in bulk have not seen the property. Find photos of the inside of the home (or attempt to view the inside when driving by the property). With a quit claim deed, there is no guarantee that the property is in livable condition, let alone a wise investment.
  • Contact the county assessor and deed record office to confirm the liens, current owner, deed holder, and verify the property is actually for sale.
  • Contact people who have been involved with any other previous property transfers with the same company (find pre-existing deed transfer records for other properties in the same area). 
  •  Contact the seller listed on the tax record by phone to speak with them directly.
  • Contact the business owner (if any) and confirm that they are currently selling the property.
  • Speak with neighbors near the potential home and gather their thoughts on neighborhood activity, vacancy rates, and safety (for example).
  • Contact a real estate agent or appraisal office to determine potential value.  
  •  Follow up accordingly based on your findings through supplemental research.
  • Establish an action plan of what you will do with the property. Are you going to fix and flip, straight flip, rent out, or live in the home yourself?
  • Have your cash or payment lined up for yourself after detailed communication with the selling property.  

Hopefully these tips and tricks will help you along the way in your next potential property investment purchase from eBay or any other online auction site.  Remember to always Know the Home Before You Buy with a Home Fax Report from Nationwide Home Fax! Then don’t forget your home inspection from Home Fax Inspections. See how else we can help you in your next purchase, investment, or rental property today. 

Home Fax Inspections is a MI licensed, bonded and insured home inspection company with professional residential and commercial property inspectors servicing the Metro-Detroit, Michigan area with house inspections and home inspections for Buyers, Sellers, Agents, Realtors and more for local and non-local requests by appointment in all Michigan cities within Oakland, Macomb, Wayne, Washtenaw, Livingston, Monroe, Lapeer, Livingston, St. Clair and Genesee County, Michigan