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Renting? You’re Still Paying a Mortgage…Just Not Your Own

For those who invest in real estate, cash flow is king. Investors considering buying a rental property take into account how much rent can be charged compared to ownership costs. Those costs can include a mortgage, property taxes, insurance and maintenance. If the expected rental is more than that, the property will cash flow. Otherwise, it’s an expense and the investor is likely to move on to another property. There are also some tax incentives for real estate investors.

For renters, they need to consider how much they can comfortably afford each month for housing and utilities. Lenders typically view about one-third of gross monthly income should be used as a general rule of affordability. As rent is paid each month, the investor takes that cash and pays the mortgage with it. In essence, you are paying a mortgage, just a mortgage that belongs to someone else.

For first time buyers, getting financing can be a bewildering process for some. There’s lots of documents that need to be signed and reviewed. Lenders need to make sure you have enough funds on hand for a down payment, closing costs and leftover cash reserves. Credit is reviewed as is employment and income. But it doesn’t need to be an intimidating process. That’s also where a good loan officer comes into play, to walk with you side-by-side from initial prequalification to the settlement table.

Most renters will ultimately end up owning at some point in the future. In the long run, owning compared to renting makes sense in a lot of ways. In today’s interest rate market where rates are low compared to areas where rents are steadily increasing, it’s ultimately cheaper to own compared to renting.

Renters may have a goal of owning but not sure how to get there and when. They realize renting is not a long term solution, but their current situation makes it better to rent than own. Someone that is short term for example is probably a better renting candidate compared to someone with the intent to keep the property for the long haul.

It’s usually at this stage where renters first begin to get the urge to explore buying. They can do their own research online to get an idea on where rates are and even run a few mortgage calculators to see what monthly payments might be. Yet it’s important at this point to stop flying solo and contact an experienced loan officer. If you don’t know of anyone in the mortgage business, your real estate agent can point you in the right direction as well as friends, family and co-workers.

Your loan officer will provide you with an approximate qualifying loan amount for starters. This prequalification takes into account your gross monthly income and expenses and at some point, your credit report will be pulled along with credit scores. Your loan officer will give you an estimated amount for a down payment and associated closing costs. It’s a lot easier to be an owner than you might think. Maybe if you’re asking these questions, it’s time to get your own mortgage and stop paying for someone else’s.

Position Realty
(480) 213-5251

What to Know About Tax Lien Investing

Tax lien investing is a way to expand your portfolio and add a unique element to your investments. When property owners don’t pay their property taxes, you may be able to invest in subsequent tax lien certificates. Investing in tax liens is an indirect way to get into real estate investing.

You’re buying tax lien certificates instead of properties, and the hope is that you’ll eventually get a return.

Below, we dive into some of what you should know about this alternative approach to investing in real estate.

What Is a Tax Lien?

A tax lien is created when a local government puts a lien on the property because of unpaid property taxes. Twenty-eight states currently allow the sale of tax lien certificates. There are tens of billions of dollars in delinquent property taxes every year, so opportunities are there for savvy investors.

A tax lien isn’t the same as a mortgage lien. If a property has a mortgage lien, the lender has a claim to the property in question until the borrower pays the loan back. With a tax lien, the government or owner of the tax lien certificate has a claim to the property.

A tax lien is usually something that comes before harsher penalties, like a tax levy. When there’s a tax levy, the IRS or a local government can seize property.

When a local government or municipality issues a tax lien, they create a tax lien certificate. That certificate indicates how much is owed in taxes and any penalties and interest.

Then, the municipality may be able to sell that certificate to private investors. Private investors cover the tax bill, and for that, they get the right to collect that money plus interest when the property owners pay the balance.

Investors Bid In An Auction

An investor in tax liens will have to bid for the certificates in an auction process, and the specifics of how that works depends on the municipality. There is an organization, the National Tax Lien Association, that provides information on what you should know.

They recommend that if you’re interested in investing in liens, you get familiar with the local area. You can contact tax officials in your area to determine how they collect delinquent property taxes.

Bids may be based on a cash amount that someone is willing to pay for a certificate. Bids can also be based on an interest rate they’ll accept. If it’s a cash offer, a certificate goes to the highest bidder. If it’s an interest rate, it goes to the lowest bidder.

The lower the interest rate you bid, the lower your profit.

What If You’re the Winning Bidder?

If you’re the winning bidder, you then take ownership of the lien certificate. You don’t own the property at this point, but you do have the right of ownership through a foreclosure, or you have the right to be paid back if the homeowner covers their tax bill.

You are immediately responsible for paying the tax bill if you win in an auction. You have to pay any owed interest or fees as well. Then, a homeowner has a period of time before what’s called the redemption deadline. They have to pay the investor, or they’re at risk of foreclosure.

Those are the two outcomes—essentially, the homeowner pays their property taxes, or they don’t.

If they do, you get your initial investment back and the interest rate you bid during the auction. If the homeowner doesn’t pay the property taxes, you can start the process of foreclosure.

Most homeowners do end up paying their property tax before it gets to that point.

What Are the Downsides?

There are certainly upsides to investing in tax liens. Namely, you can see significantly better returns than you would on other investments, and it can be a passive investment at least initially.

There are downsides to weigh, too, though.

This is a very risky investment, and you should work with a professional before taking it on.

It can be time-consuming once you purchase a tax lien certificate because there are a lot of deadlines and expiration dates.

Tax lien investing can be lucrative but not something for a person with no experience to dive into without preparing.

Position Realty
Office: 480-213-5251

What is the Hardest Part of Buying a House?

Everyone experiences things differently, and that includes buying a house. You may think one element or purchasing a home is hard, while someone else could find another more challenging.

With that being said, in general, the following are some of the things many people say are most difficult when they’re buying a home.

Home Price

Home prices have been soaring since the pandemic. Homeowners say even after they’re able to purchase a property, when they look back on the experience, the prices were the most challenging part of everything.

In certain markets currently, major bidding wars are going on, especially for starter homes but often for properties across all budget ranges. There’s a limited inventory of homes, people are afraid to sell because they don’t know if they’ll find something else, and mortgage rates remain at record lows. All of these factors can make it feel impossible to buy a home.

The Paperwork

When you decide to buy a home, you may find the paperwork most challenging, although how hard this is depends on the type of loan you’re applying for and your job and financial situation.

For example, if you’re self-employed, the paperwork and loan process itself can be more difficult. You’ll have to show several years of tax returns and bank statements, just to start.

As you’re waiting to finalize the loan, you may find that it creates a lot of anxiety. Your loan often isn’t finalized until just a few days before you close. You have to wait in limbo until the last moment, and you may not have a clear idea of what’s happening with it during this time of uncertainty.

The Emotions

You may not realize it until you actually start the process but buying a home can be highly emotional in different ways. You might find yourself falling in love with a house that’s way out of your budget for example, and overspending. When you work with a great realtor, they can help you stay objective so you don’t put yourself in a precarious financial situation because of your emotions.

It’s easy to start to feel overwhelmed and discouraged when you lose out on a house as well.

You overall have to learn how to manage your expectations when you go into the home-buying process. You have to prioritize the most important things and be ready to walk away if something like a bad inspection happens.

Saving for a Down Payment

The down payment is related to the cost of the home you plan to buy, and it’s one of the biggest hurdles to buying a home. It can be incredibly challenging to save for a substantial down payment when you’re already paying rent.

Agreeing

If you’re buying a home with your partner, agreeing might end up being the hardest part for you.

You may have an ideal home in your mind that’s completely different from what they have in mind. You could fall in love with something that your partner says absolutely no to. It can be challenging, but you can void some of these pitfalls by having in-depth discussions about what you both want early on.

Many of the other hardest things about buying a home can be navigated by an experienced real estate agent—that’s what they’re there for—to make things easier on you and bring their expertise to an otherwise stressful situation.

Position Realty
Office: 480-213-5251

Cleaning Your Home Before Selling? 5 Surfaces to Leave to a Professional

When cleaning your home, it’s easy to begin feeling burdened by all the areas that you’ll have to tackle. This is especially true for those surfaces that just won’t seem to clean up no matter how hard you scrub and wipe. To save yourself some effort, leave this type of work to a professional. With their higher strength cleaning solutions and tools, they’ll be able to make different parts of your home look like new again. The surfaces that are best for professional cleaning, in particular, can be found below.

1. Upholstery

Cleaning your upholstery can help get rid of stains, dirt, and even bad smells. However, many cleaning solutions on the market can damage fabrics and leave them discolored or ruined. When you hire a professional to clean instead, they’ll use gentle yet effective cleaning solutions that will refresh your upholstery beautifully. This can be done on your ottomans, couches, chairs, and even pillows. More importantly, most cleaning companies guarantee their work so you are protected from damage. This is one of the best solutions if you have antique furniture or fabrics that you just need to have deep cleaned.

2. Stone

If the stone in your home, such as the granite or marble on your countertops, is beginning to look worn, then hiring a professional is a great way to go. They will use time-tested cleaning solutions and techniques to carefully clean and seal your surfaces so they are restored to their natural beauty once again. This can even help get rid of scratches, stains, and other signs of wear and tear, making it especially beneficial to the value of your home.

The equipment that professionals have is expensive and difficult to find, so you’ll be saving money by hiring someone instead of taking on the job yourself. What’s even better is the fact that the professionals will do all the work so you can avoid the physical distress that can come with a large stone cleaning job.

3. Tile

Professional tile and grout cleaning can get rid of deep down stains and even make your grout look like new again. While you could try to do this on your own, it would take hours of back-breaking work and it’s very unlikely you’d end up with results that would mimic those of a professional. By hiring an expert, you save time and enjoy the look of new tiles without having to do any renovations in your home.

If you don’t think your tile and grout needs to be cleaned because you sweep and mop often, get down on the ground to take a closer look. Chances are, you’re going to see many areas that are discolored and some that are completely stained. While this can be disheartening if you clean often, professional service can resolve these issues.

4. Windows

Cleaning your home’s exterior windows can be difficult and even dangerous if you have more than one story. When you hire a professional instead, they use special equipment and cleaning solutions to wipe these clean in the safest manner possible. Most companies even include interior window washing in their price, which can make your windows shine like new again.

5. Wood Floors

Regular mopping and sweeping will help keep your wood floors in good condition for years to come. However, even with weekly cleaning, they can begin to fade and look scratched due to daily use. If you want to restore the appearance and overall condition of your hardwood floors, then hiring a professional is crucial. They have the experience that ensures your floors will be deeply cleaned and restored with zero mistakes. In just a short amount of time, their professional techniques will transform your floors with no effort on your part.

Give Yourself a Break

Some surfaces in your home are just better left to professional cleaners. Not only do they know how to carefully treat all types of materials but they also have higher quality machinery and solutions. Their help can make your home shine and save you from unnecessary cleaning throughout the year.

Position Realty
(480) 213-5251

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