Investing in real estate property can be a career, or it can be a valuable sideline. Either way, it is not at all the same as buying a home for your family to live in. It’s a business. If you don’t treat it that way, you won’t make money. You could easily lose your investment, and more.
Research has shown that cash is still king in real estate home buying. Millions of people who are buying homes and commercial business properties across the globe are increasingly opting to pay using cash as opposed to other means of financing.
Cash deals on homes account for more than half of the sales in major markets.
One thing that you need to understand is that cash buyers are better positioned to get better deals in the marketplace.
Sellers are FAR more comfortable dealing with a buyer who pays in cash. Rather than someone who opts to pay using other financing sources.
What about first-time buyers, is a cash purchase a good ideas?
Many experts out there argue that cash deals are negatively affecting first-time home buyers. This is not always the case. Many first time buyers love to depend on home loans and mortgages when purchasing a home for their families. Though, there are still those first time home buyers with cash on hand.
The good thing with paying by cash is that you typically get the opportunity to negotiate with the seller. Too, you can agree on terms on a more personal basis. This might be an ideal choice for first time buyers who want to get the most value (lowest price) of an all cash home purchase.
Cash buyers are on the rise
Research shows that in 17 of the largest cities in the United States, 32% of home buyers currently prefer to pay for their initial purchase with the use of cash. What’s more, statistics show cash purchases in the United States have been on the rise since the year 2011.
In fact, the rise in these all cash home purchases started in the year 2007 when the housing bubble burst. It was during this time that cash purchases accounted for close to a third of all purchases by the year 2011.
Another element that has triggered this is the tightening of mortgage lending standards, fewer home sales, and investor purchases. Since it is quite hard to qualify for a mortgage from most lenders today, cash is a much better option.
When you take a look at the housing market in the United States and other parts of the globe, you’ll find that the largest percentage of homes bought without a mortgage are on the low and high ends of any market. As prices get to the upper level, everything seems to change. All cash purchases start to become more likely and a preferred option among most high end buyers.
What does the future hold for real estate purchases?
A considerably large percentage of wealthy home buyers in the United States are starting to come from overseas buyers. Apparently, a large number of them prefer to pay for their purchases in cash. This further proves that cash is still king in the real estate home-buying sector.
As for the future, things look brighter for both buyers and sellers. People are willing to pay for purchases using cash instead of mortgage financing and sellers typically find the cash option to be most desirable.
Finding a lake home for a bargain can take time, a reasonable budget, and the ability to go outside of your original expectations in both location and layout.
Though you might not think that getting a lake house at a fairly low price is attainable, people do it all the time. Taking a deeper look at each of these factors can help you in your journey to finding a lake home for a great bargain.
Shopping for a Bargain May Take a Lot of Time
Being able to wait until the perfect opportunity comes along is probably the most important aspect of getting a lake home for a bargain. In places where there is a “seller’s market” this can be especially true.
When the right house does come up, time again plays a factor as you need to be able to get on it right away.
There may be times when there are hardly any homes on the market. Other times, there may be lots of them.
If you have the discipline to wait until the right home comes along at the right price, you can get a second home at a very large bargain.
Understand Your Lake Home Budget
Your budget is going to have a lot of influence on how good of a bargain you can get for a lake house. For smaller houses that more people can afford, you are less likely to be looking at a bargain. You will be more likely be looking at the seller getting pretty close to fair market value for their house.
Where budget does come into play is when there are very large or relatively expensive houses on the market compared to other homes nearby.
When there isn’t a very large pool of buyers for a home because of the price, you can sometimes score a good deal. This is because the sellers know that someone else may not come along for a very long time.
In these cases, you are getting a relative bargain not because you got it for such a low price compared to all the other houses in the area, but because you got it for far less than it’s fair market price.
Home Location Impacts Price
Where a home is located plays a sizable role in getting a bargain. If it is in a neighborhood that is highly sought after, there probably won’t be too many opportunities to get a home at a bargain. What you need to do is start looking away from the beaten path.
Homes in areas that aren’t as popular can often have excellent deals available. This is due to houses tending to languish on the market and a seller may be more willing to come down a lot more on the price.
The region of the country the house is in can determine what kind of price point it will be offered at. Too, whether or not you are going to be able to score a good deal on it. Places that are seeing an influx of buyers will have far fewer good deals than places where there seems to be a lot of inventory on the market.
Knowing the general market in your region of the country can help you make a decision on whether to look earnestly for a lake house now, or to wait it out until prices, or the number of buyers, come down.
You May Have to Compromise in Home Layout
Understanding what is popular with buyers in your area in terms of the number of bedrooms, bathrooms, and square footage, can help you find hidden bargains that you might not have otherwise known about. A place that is popular with families will result in prices close to fair market value for houses with lots of bedrooms.
On the other hand, that same area will see sellers with smaller homes have a much harder time trying to sell their house for close to their asking price.
Upgrades on the inside and house layout can play a part in whether or not you can get a deal on a lake house.
Most people go for open floor plans these days, while some older houses have much more compartmentalized layouts. If you don’t mind a few extra walls, you can get a good house for a very good price.
The great thing about looking for a lake house as either a second home or an investment property is that you are going to be able to negotiate from a position of strength.
Any house that has been on the market for more than a couple of weeks means that you likely won’t have much competition bidding for the house, and if the current owners need to get out quickly, you can have it for an even lower price.
Since the market collapse in 2008, home ownership may have seemed like a pipe dream for many Americans in today’s economic climate.
However, the signs indicate that the real estate industry is starting to bounce back following 6 years of depreciation and inability for many to obtain a mortgage. As such, the market is beginning to move from a seller dominated environment towards a more buyer dominated industry.
Buying a first home, or a vacation home, should not be treated lightly. Capital investment aside, it is a trying time viewing different properties and competing against other buyers. This is where choosing a fully qualified, experienced real estate agent can help.
With a wealth of knowledge in helping buyers find the house of their dreams, they are invaluable asset in the hunt for new properties. Note however, that not all real estate agents are equal. Some have their merits in different areas from others.
In order to separate the great from the good, below are a list of questions to consider when choosing a real estate agent:
1) What is Your Experience in the Neighborhood? First and foremost, you want to establish your realtor’s experience within your neighborhood. This is key in order to establish your realtor’s knowledge of fair asking prices and the exclusivity of certain areas. If your agent is not experienced in your area, find out what regions they are experienced in and see how this compares with your own.
2) Full Time or Part Time?
This is an important point to establish. Ideally, you want to choose a real estate agent who has worked in the industry for a significant amount of time. This way you know they have a wealth of experience in buying new properties. There are many part-time realtors who juggle their full-time career with managing real estate. Not to discount there merits; there are like some very qualified part-time real estate agents out there.
However, you want to be sure that your property manager is committing themselves 100%. The last thing you want, whilst going through the stress that buying a property entails, is to call your agent and find out that they are unavailable due to other commitments.
3) Is Your Realtor’s License in Good Standing?
This is critical when hiring not only a real estate agent, but any outside contractor. An agent’s real estate license is the bread and butter of their job. Without it, they cannot present themselves as a fully qualified, professional realtor.
When faced with this question, a good real estate agent will jump at the chance to show you their certifications. If they act slightly skeptically, then you should be concerned.
4) How Many Buyers Do You Currently Represent?
Finding out how many buyers your potential realtor currently represents is a good gauge of their standing in the local area. As a rule of thumb, bigger client bases correlates with a better real estate agent. Word of mouth is a realtor’s best friend, and this is how most buyers discover their agent.
If an agent has a sizable client base then, this is likely through referrals. With this, you can be fairly confident that their promises are delivered.
This is a double-edged sword however. A sizable client base can significantly reduce the one-to-one time you will have with your agent. New agents managing smaller portfolios will be able to offer far more interaction. If transparency is something you rate highly, then it may be worth considering a new client with a smaller pool of buyers.
5) Do You Offer a Guarantee?
You’ll understandably be wary about signing documents for your real estate agent without knowing the details of their guarantee. Do they offer an opt out period? If so, how do you go about it? Find out if there has been past clients who have chosen this option, and what the process entails.
6) What Is Your Main Selling Point Compared to Other Agents?
Any reputable realtor will jump at the chance to answer this. Typically, they will have a stock answer ready to list the main points which set them apart – and this is not a bad thing! You should be looking for an agent who is honest, has time for their clients and is a great negotiator. Be careful though, a shrewd negotiator may save you some money on the asking price however, they’re unlikely to budge on agent’s fees!
7) Can You Give Me a List of Referrals?
The best real estate agents will have an extensive list of past clients who are ready to vouch for their services. A good degree of transparency shows that their claims are always backed up and their services have been recommended by others. Ask for a list of clients in order to assess the agent’s suitability from a verified third party.
Selling a lake home can present certain challenges and opportunities that you may not find with a house away from the water. Staging can help tremendously to secure the highest price for your home and also help to sell it more quickly.
Staging your lake home provides a unique opportunity to tie in elements of your home with the lake or, at a minimum, put the lake on the forefront of a potential buyer’s mind relative to other properties in the area.
Outdoor Staging
The exterior or a home should showcase the fact that along with the house, the buyer will be purchasing the chance to take full advantage of the lake nearby. One of the best ways you can do this is to put some kind of boat either by your dock, or on your beach, depending on how you gain access to the lake.
While any kind of boat will do, from a kayak to a pleasure boat, it is important to take into account what the rest of the neighborhood is like. If everyone else has nice looking boats moored to their docks, you probably want something similar, even if you don’t own one, you may want to think about renting one for the period of time that the house will be shown.
Family/Living Room
here is a good chance that one of the main living areas in your home will have a very nice view of the water. Position your furniture to make that view the focal point of the room.
If you have more than one room with large windows and an excellent view, you don’t necessarily need to do the same thing with each of them. Potential buyers know that they need to be able to put a TV somewhere, and they’ll also want some level of privacy at night as well.
While it may be tempting to go with a nautical theme in a lake house, you might consider alternative design motifs that are less overstated. There is certainly nothing wrong with a few nautical-themed pieces throughout the house, unless you know for certain that your potential buyers are very water sports-minded, sticking with a theme that showcases the lake is a safer strategy.
Kitchen
If your kitchen has windows that face the lake, be sure to completely open up the curtains or blinds, letting buyers know that they have a great view waiting for them every time they use the kitchen.
For a kitchen that opens up into a dining or living area, display a few fresh fruit items or a small bouquet of flowers on the table. You won’t need anything elaborate, just a small bowl of fruit or a small bouquet of freshly picked flowers is all you need.
The important thing is to help convey the feeling of freshness to someone looking at the home, you want to try and convey the feeling that the home is vibrant and welcoming.
Bedrooms
Staging a bedroom in a lake house is a lot like staging one in any other house – you really want to maximize the appearance of space. This means a bed, a couple of pieces of furniture, and not much else on the floor.
People want to know that they are going to have plenty of space in their bedroom and what you are giving them is the maximum amount of space possible.
When the buyer moves in, they know that their items are going to take up more space than what you have in the bedroom, which is its so important to convey the appearance of space within the home, even in small areas.
Bathrooms
As opposed to the rest of the house, a bathroom may be a great place to put up a few nautical motifs. Toothbrush holders, hand towels, soap dishes, boat pictures or anything that can provide a pop of color and give a bathroom a little bit of character.
When someone walks through a house, the last thing they want to see is a bathroom that lacks cleanliness or character. If it’s messy or uninteresting, that thought could start to creep into their mind about the rest of the house. That’s not the lasting impression that you want to leave a potential buyer.
Waterfront homes are unlike any other type of property. They carry a unique beauty and versatility since you’re getting land and water at the same time. However, they can also be more complicated to buy than land-locked real estate.
Here are the top 10 tips for how you can make your waterfront home buying experience more successful:
1. Inspect carefully and comprehensively.
Water might be easy on the eyes, but it’s hard on a building. Whether you have water intruding into the basement from the high water table, corrosion on your exterior because of salt air, or mildew and mold issues from higher moisture levels in the air, an expert inspection can help you understand what you might be up against. Surveys, elevation certificates, water quality tests, and other land and water-based inspections that you might not have done on a regular home can be very important with waterfront homes.
2. Choose the right water.
Waterfront homes aren’t all the same. If you want the smell of salt air, there’s no substitute for a beachfront home, but if you want to hear crashing surf, a home on a bay might not be the right place for you. Property on a large lake gives you the ability to sport about in a powerboat, but if you want peace and quiet, you might be better served by being on a smaller body of water that’s devoid of noisy powerboats and peering eyes.
3. Walk the property carefully.
Spending some time on the water helps you see if the property is as good as you think. For instance, you could have a beautiful view, but not have good access to the water. On the other hand, the lake that looks fantastic from the window could actually be choked with weeds and debris. When a home has an unattractive backyard, you can change the landscaping. With a waterfront home, you’re also buying the water, so getting it right is crucial.
4. Check insurance requirements.
Waterfront homes frequently have an increased risk of flood damage and some beachfront homes are also at risk of a hurricane or even earthquake damage. If insurance is available, it could be cost-prohibitive, so it’s best to know before you sign a contract.
5. Look for hidden costs.
Waterfront homes can sometimes carry additional expenses that buyers might not be aware of. For starters, water and sewer rates can be more expensive than inland rates. Boat dock and lift fees, as well as septic tank and well upkeep, are additional potentially hidden expenses to inquire about as well.
6. Research the shoreline’s history (and future).
Water and dirt mix in interesting ways and, sometimes, the shore moves. If the water level goes up, you could end up losing your property. If the water line moves away, your waterfront home could end up being a quarter-mile walk from any water.
7. Look for a deal.
For many people, owning a waterfront home is a dream come true. For others, not so much, which can create some extremely motivated sellers. If you can find a motivated seller and move quickly, you just might get a great deal in helping that owner get rid of his problem.
8. Consider supply & demand.
On the other hand, if there are too many homes on the market at prices that seem like they’re good deals, it could be a sign of a weak market. Either way, consider what’s most important to you in your buying decision before moving forward.
9. Devise a strategy for the property.
If you’re going to live full-time in the property, searching for a lakefront primary home is one strategic buying approach that you can take. On the other hand, if your waterfront property is going to be a vacation home, you might want to look into whether or not you can rent it out when you aren’t using it. Doing this can help to lower your cost of ownership while also keeping the house from sitting empty for too long.
10. Work with an expert agent.
Waterfront homes aren’t simple. Between the title issues, the structural issues and the unique way that the market looks at the property, many real estate agents can’t effectively help you through the purchasing process. A real estate agent that specializes in waterfront homes and land will know which questions to ask, who to involve in the transaction, and how to help you achieve your dream of homeownership on the water.
For more tips on buying or selling a waterfront property, read here.
If you’ve decided you’d like to buy an investment property and are focusing on vacation homes, take careful consideration before you make the final commitment. Buying a home, no matter what the circumstances might be, is a significant investment and enormous responsibility.
While real estate has undoubtedly been a safe investment medium in the past, buying a vacation home as an investment is not necessarily a sound option for everyone.
However, if your heart is set on making a vacation home investment, these tips can help you avoid some of the downsides associated with second home ownership.
1. Run the numbers early. Use an online mortgage calculator to learn how much you can qualify for before you get too deep into the search for your vacation home.
Most home sellers are more willing to negotiate with a pre-qualified buyer than a buyer without proof of ability to pay.
Knowing how much money is in your investment property budget will also help narrow your home options, saving everyone time.
2. Use a local Realtor. A local real estate agent who lives, works, and plays in a particular market will know much more about the location than you’ll be able to learn. Even if you spend weeks studying the area.
They may also know about plans for road improvement, new developments, and zoning changes. These could impact the home you’re considering.
3. Don’t view the home as strictly an investment. The last few years have demonstrated that investing in residential real estate doesn’t necessarily provide a guaranteed payoff. Especially if you plan to sell the home after a few years.
Even though most vacation homes are in attractive locations, keep in mind that some vacation hot spots have two distinct populations.
The second home buying market has deeper pockets than many of the full-time residents who work in service or support capacities, limiting potential home buyers.
4. Inflate the cost of ownership. Develop a budget for the home and include all your conceivable expenses. When creating this budget, keep in mind that climate and geography impact the cost of ownership. Homes near the ocean tend to experience more corrosion on metal and wood from the salty air. Unlike mountains, which have higher incidences of roof and deck damage from heavy snow loads or severe thunderstorms. Also consider the likelihood of rising property taxes, utility costs and appliance replacement.
Lastly, don’t forget to account for your travel expenses going to and from the property. Include one or two unscheduled trips in the event of emergencies that can’t be handled remotely.
5. Joint investments. Buying a home with a group of people will split the cost of ownership. Often, this makes the investment property more affordable. Be certain that you hire legal counsel to make sure that each owner’s rights to the property, and the equity in the property, are amenable to everyone and the agreement is documented legally.
6. Use caution with foreign investments. If you want to purchase a home in a foreign country, have a lawyer help you through the process. As a foreigner, you may not enjoy the same property protections that citizens do.
7. Research the weather year-round. If you want to use the vacation home throughout the year, choose one that’s in a climate you can handle. Blistering heat, high humidity, or frigid temperatures may limit your enjoyment to just a few seasons a year.
8. Assess the year-round habitability of the home. What starts out as a vacation home could become a rental down the road.
If the home you’re considering lacks some of the amenities that many consider necessities, like a dishwasher or washer and dryer, you may run into objections from likely renters wanting these, and other, features that make full-time living more enjoyable.
9. Consider properties with homeowners’ associations carefully. While the homeowners association could offer the services you want and need, like landscaping or building maintenance, realize that over time, the HOA fees for doing so are much more likely to rise than fall.
Some associations have strict rules about what you do with the outside of your home and visible window treatments from the street. Make sure that the association’s rules fall in line with what you can live with and expect. If they’re too restrictive or not restrictive enough, you may want to reconsider the vacation home.
10. Avoid land purchases in locations prone to strict zoning and building requirements. Instead of building the home of your dreams, you may end up starting construction on a home that never gets built. Strict zoning and building requirements can result in delays and high architectural and engineering costs if the local planning department’s demands are excessive.
Where a home is located plays a sizable role in getting a bargain. If it is in a neighborhood that is highly sought after, there probably won’t be too many opportunities to get a home at a bargain. What you need to do is start looking away from the beaten path.
First and foremost, you want to establish your realtor’s experience within your neighborhood. This is key in order to establish your realtor’s knowledge of fair asking prices and the exclusivity of certain areas. If your agent is not experienced in your area, find out what regions they are experienced in and see how this compares with your own.
here is a good chance that one of the main living areas in your home will have a very nice view of the water. Position your furniture to make that view the focal point of the room.
Staging a bedroom in a lake house is a lot like staging one in any other house – you really want to maximize the appearance of space. This means a bed, a couple of pieces of furniture, and not much else on the floor.
