Archives for October 2018

New Chinese Tariffs to Raise Renovation Costs. Should You Postpone your Reno?

New Chinese Tariffs to Raise Renovation Costs. Should You Postpone your Reno?

We talked last month about the potential impact of new Chinese tariffs on the real estate industry, and now there’s another issue that could slow down an important associated industry. “New Chinese tariffs are about to make your home renovation more expensive,” said CNBC.

Renovation demand has been growing as homeowners tap their home equity to make updates and improvements. “This year, the National Association of Home Builders’ Remodeling Market Index (RMI) revealed that in the fourth quarter of 2017, the RMI reached 60 for the second time since 2001,” said HousingWire. “Although the demand for home renovation has continued to increase in 2018, recently imposed tariffs are expected to reduce affordability for homeowners seeking renovations.”

So, could the higher costs associated with renos be enough to slow their roll? To be clear, the first round of new Chinese tariffs took effect on September 24, hitting “about $10 billion worth of Chinese products exclusive to homebuilding and remodeling, according to the National Association of Home Builders,” said CNBC. The tariff is expected to rise “to 25 percent by the end of the year. That would be equivalent to a $2.5 billion tax increase on the industry.”

That’s putting pressure on an industry that has been thriving even under a labor shortage, and that could bend to uncomfortable levels under higher materials costs. In addition, “Clients and contractors are having to set contracts with escalation clauses for projects that are being scheduled for six months from now, largely because we’re not sure how far prices are going to go north,” Washington, D.C.-based contractor Justin Sullivan told CNBC.

So, if you were getting ready to add a bathroom, redo your kitchen, or create a killer outdoor area, should you proceed? That all depends.

“Trump’s trade tariffs will drive up the cost of some home renovations, so you might need to speed up your plans to finish a remodel before the supply chain impact hits you directly,” said GOBankingRates. “On the other hand, some costs are already up, so it might be worth postponing your renovation until prices stabilize.”

Specifically, they recommend moving forward with new kitchens and bathrooms. “If you’ve got a new kitchen or bathroom in mind, don’t wait. The new tariffs aimed at Chinese imports will raise the prices for tile used in bathrooms and kitchen backsplashes, cabinets, wallboards and floorboards, light fixtures, and heating and cooling equipment.”

Popular countertop materials like quartz are especially tenuous, facing a “double whammy,” with the U.S. “imposing import duties on quartz, which an investigation found was being illegally ‘dumped’ into the U.S. by Chinese exporters, capitalizing on subsidies from the Chinese government. Quartz prices are already rising and will likely continue to do so,” they said.

Nonetheless, updated kitchens and bathrooms are among the most-wanted features in a new home, so if you’re renovating to sell now or even a few years into the future, by all means, don’t change those plans. GOBankingRates also recommends moving quickly if you want to “convert a basement or mudroom into a laundry room.”

As for what projects to skip until costs head back down? Adding a room or garage can wait. “Some of the first tariffs President Trump imposed were on Canadian lumber, charging that Canadian companies were being unfairly subsidized by their government,” they said. “Canadian lumber prices have also risen in response to a supply decline due to tree disease and slower transportation. Wait for lumber prices to stabilize before you build a new home, add a room, add a garage, convert a basement into an in-law unit.”


Source: New Chinese Tariffs to Raise Renovation Costs. Should You Postpone your Reno?

How to Deal with Cranky Toddlers During the Move

How to Deal with Cranky Toddlers During the Move

Moving is an overwhelming experience. It is difficult to say whether you are excited about the new place or melancholic about the one you are leaving behind. You are trying hard to handle all those jumbled up emotions, along with the stress of getting everything done on time. The last thing you need is the background score of a wailing child.


Moving can get messy if you have a toddler in the house. Parents often complain that their kids get extra cranky during the move. While some of them will just cry and whine a lot, others might act out and throw tantrums. With everything lying around in boxes, your precious bundle of joy becomes an irritable bundle of distractions.

It may be difficult to deal with a cranky kid during the move but not impossible. Like a good parent, you need to investigate the cause behind this behavior first.

So, Why Do Kids Hate Moving?

According to various studies, moving can have a psychological impact on kids of all ages. While school going kids are sad about leaving their friends behind, toddlers can feel the lack of attention. When parents are too busy with packing and moving-related hassles, it becomes impossible to give kids the same amount of attention as before. Cranky behavior may be a sign that your child can tell the difference. In a way, it is your child’s call for attention.

Another reason toddlers become so difficult during a move is that this is the age when kids recognize change around them, and they are usually not thrilled about it. When you are moving things around and packing them in boxes, a toddler cannot tell what is going on but they can sense that something is definitely happening. Their minds are not ready to deal with the confusion and it stressed them out. Yes, toddlers’ stress is real and kids act out in response to that stress.
Now that you know that your child’s behavior is but a natural response to the change happening around, let’s see how you can deal with it in the most effective manner.

Stick to a Checklist

We will not mislead you into thinking that you can eliminate the possibility of your toddler creating a fuss. In fact, it is a possibility you will have to stay prepared for. Make sure you have a proper new apartment checklist to keep things organized. This way no matter how much fuss your toddler creates during the move, you can make sure that every box is checked at the end of the day. No amount of distraction will keep you from getting things done.

Seek Help

There is nothing wrong in asking for help from friends and family. You can always ask your kid’s favorite aunt or uncle to pay a visit or even stay a day to keep your child distracted from whatever is going on around them. If that is not possible, hire the nanny or babysitter who looks after your child when you are absent, If you take turns with whoever is looking after the toddler, they won’t feel deprived of the much needed parental attention. Avoiding help during this critical period will help neither you nor your child.

Manage Your Emotions

There is a high chance that your kid is unhappy because you don’t seem too happy either. Toddler’s age is one of learning and observation. They can feel the emotional energy around them. They can tell a frown from a smile. They can read the sign of stress on your face. More importantly, they look at how you deal with stress. As a parent, you can try to conceal signs of stress and frustration on your face or in your attitude. See if you are agitated. Try to display a positive behavior and attitude and your kid will walk to walk.

Don’t Disrupt the Routine

Moving doesn’t happen in a day. It is days and weeks of preparation and packaging. It can throw your entire routine upside down. While you may be big enough to deal with the disruption, your kid might not like it. Kids become difficult to deal with when things aren’t the way they are used to. Toddlers need sleep and meals as per their regular schedule. They also get used to things like family game time or TV time. Try to keep things as normal for them as possible. Naptime, especially, should remain undisturbed because a sleep-deprived toddler can wreak havoc around the house.

Give them Control

Toddler loves control. They love it when you let them be a part of what you are doing. You can use this fact to your advantage. Think of smaller tasks that your toddler can perform. You can start with their own stuff, like toys. Give them a box and tell them to safely put their toys in that box. You can make things even more interesting for them by letting them draw on the boxes. That will keep them busy and distracted, and they will take part in the process. However, for the sake of maintaining the routine, make sure your baby’s room is the last one you pack.

The Final Piece of Advice

While we talk about keeping the child distracted and routine undisturbed, it doesn’t imply that your child should be kept in darkness about the move. It is important to prepare them for the change, and more importantly, get them excited about it. A sudden change is not at all healthy for your toddler. It might disturb their sleeping and eating patterns and result in bad behavior. Try to ease them into the idea by paying a few visits to the new place before moving. Also, let them say goodbye to their old room so that they are more aware of the situation. Remember, your child is not being unreasonable. The crankiness is just a natural response to the change and lack of attention. Tend to them wisely and they will be as calm as a clam.


 JennyHarrisonJenny Harrison is a passionate home and lifestyle blogger. She loves to engage with readers who are seeking home and lifestyle-related information on the internet. She is a featured blogger at various high authority blogs and magazines in which she shared her research and experience with the vast online community. Currently associated with NYC moving company ‘All Around Moving Services Company Inc.’ Specializes in arranging and assembling services of professional and skilled local movers locally in New York City as well as areas in New Jersey, Connecticut and the Miami Dale area in South Florida for their blog operations. Follow her on twitter @MJennyHarrison for more updates.


Source: How to Deal with Cranky Toddlers During the Move

Eye on Nashville: Why Music City is Now a Top Five Real Estate Spot

Eye on Nashville: Why Music City is Now a Top Five Real Estate Spot

A new study of the hottest real estate markets in the country from PricewaterhouseCoopers and the Urban Land Institute is out, and it’s topped by Dallas Fort Worth, a region that has experienced extreme growth over the last several years. However, another city on the list caught our eye, and not just because we’re big music fans: Nashville.

“Nashville’s real-estate market bounded ahead of Seattle, Los Angeles, and other major markets as the nation’s fifth-surest investment bet for 2019, according to one of the industry’s most comprehensive and influential reports,” said The Tennessean. “In the study, Nashville rose from 9th to 5th place this year.”

Nashville’s reputation as a top music city may be largely responsible for its growth over the last few years, but, that’s only the beginning of the draw today. “It’s really a story about affordability, employment growth, population growth and employment stability,” Mitch Roschelle, a PwC partner, said in The Tennessean. “One thing that’s really important now is no state income taxes. That’s becoming a bigger and bigger factor when people start making choices about where they want to live.”

If you’re considering a move to Nashville, or simply looking for a place to put down roots, this top five real estate market may be for you.

The music

Whether you’re an aspiring musician or simply love the idea of being in a musical city, Nashville could be for you. The Bluebird Cafe is “where greats such as Garth Brooks and Taylor Swift played before making it big,” said Bellhops. “You should also check out South Broadway Avenue, the veritable heart of country music. While Tootsie’s Orchid Lounge is the most famous venue on this strip, you can walk into any honky-tonk at any time of day and hear live music. The Ryman Auditorium was originally a church built in the late 19th century. Now it is well-known as an historic, beautiful, and popular music venue that hosts shows of all genres.”

The affordability

Nashville’s home prices seem like a dream for those coming from pricier markets, although the reality is a little murkier for those coming from lower-cost areas, and, especially, long-time residents who have watched home prices rise steadily. “Nashville’s housing costs have jumped more than 70 percent in the past six years, as new residents flooded the city at a rate of about 100 people per day,” said the Tennessean. “The surging prices have shocked residents and rapidly displaced lower-income people outside the city center, creating an affordable-housing crisis. But the $250,000 median cost of a single-family home in the greater metropolitan area is still just below that of the overall U.S. market.”

To put that in perspective, SpareFoot notes that a 2017 study released by GoBankingRates “revealed that Nashville has seen the greatest year-over-year cost of living increase in the nation. But, a salary of $70,150 will allow you to live comfortably in Nashville—more than some other popular cities, but far less than other hot markets in the Top 20.

A bright spot for buyers: the new-home market, which led to Nashville’s No. 1 ranking for home-building markets in the ULI report.

Vibrant neighborhoods

Downtown Nashville is a dynamic spot within walking distance of Bridgestone Arena, Nissan Stadium, and Broadway Ave. (the main strip in Nashville), while Bellhops calls The Gulch “the fastest-growing neighborhood in Nashville. Located just a few blocks from downtown, this area boasts easy access to the interstate and some of the best new restaurants and bars in town. A word of caution: the cost of living continues to rise as The Gulch becomes more popular. For reference, though, it remains somewhat cheaper than downtown at the moment.”

Music Row is ultra-convenient to numerous recording studios, if that’s your thing, but is also heavy on the rentals and college students. East Nashville “includes popular neighborhoods such as McFerrin Park, Greenwood, Lockeland Springs, Maxwell, and Eastwood. Through neighborhood revitalization, the focus of East Nashville has become more community-centered. Musicians, artists, and creatives have flocked to this neighborhood, which is now a haven for arts and culture.” Brentwood is 15–20 minutes from downtown, meaning it’s still convenient for those who work in the city center but offers a more suburban-type environment with larger, single-family homes with yards—popular with young families and professionals.

The economy

According to the the Bureau of Labor Statistics, Nashville “had the lowest unemployment rate—2.7%—of any metropolitan area in the US with over one million people as of February 2018. Nashville even beats out the metropolitan area of San Francisco, the US mecca of economic vitality,” said Quartz.

Bridgestone Tires and Vanguard Industries both have their headquarters in Nashville, and startups and tech companies like Emma and Cicayda are also abundant.

So much other stuff to do

“If there’s one thing that Nashville, Tennessee is known for, it’s probably the country music. But you’d be (pleasantly) surprised to learn how much music city has to offer even if you don’t have a single country bone in your body,” said Bellhops. Have a picnic (or watch a concert) in Centennial Park, or stroll along the Cumberland River walkway, working up an appetite for the famous hot chicken. The city’s abundant restaurants and breweries cater to just about anything you have a craving for. “Nashville cements its ‘It City’ status with eclectic and fine dining establishments, such as City House and the Catbird Seat,” said Livability in its look at “8 Reasons to move to Tennessee.”

The sports

Whether or not a city has its own professional sports teams can and does drive migration to the area. So many of those who are moving to Nashville love the fact that they can support the local NFL team, the Tennessee Titans, and the NHL’s 2017 Stanley Cup finalists, the Nashville Predators.


Source: Eye on Nashville: Why Music City is Now a Top Five Real Estate Spot

Is There Anything Left to Flip?

Is There Anything Left to Flip?

So you want to flip a home. Yeah, well, you and everybody else.

“Just more than 207,000 homes were flipped in 2017, according to a new report from Attom Data Solutions, which defines a flip as a property bought and sold in the same 12-month period,” said CNBC. “That is the highest number of flips in a decade. The number of people or companies flipping homes, 138,410, also jumped to a decade high.”

And therein lies the problem. With so many homes flipping and home flippers competing for the same properties, how does one even go about finding a place to buy these days?

We have some ideas.

Work with a savvy real estate agent

This is key because your exposure to distressed properties will be limited. Also, a savvy real estate agent may have connections—the kind of connections that could find you a flip before it hits the market.

Keep your eye on really distressed properties

Pass by an eyesore on your way to work every day? Is there a house down the street with an unkempt lawn and noticeable deferred maintenance? You never know what’s going on inside, but your Realtor may be able to find out. You could be in the right place at the right time to get a great deal and even help out someone who needs a hand by getting them out from under the home before it’s taken by the bank.

Go where the projected growth is

It may already be too late to score in a place that’s on one of those fastest-growing cities lists. Prices may have appreciated past the point of potential profit on a flip, and inventory is likely low. Instead, pay attention to cities that are projected to be on the rise so you can get in before everyone else does.

Look for estate sales

“What they could do to make it easier is combine the two. You know, Mr. Kline died yesterday, leaving behind a wife, two children, and a spacious three-bedroom apartment with a wood-burning fireplace.” — Billy Crystal’s Harry on the difficulty of finding a place in NYC in When Harry Met Sally

Turns out Harry was on to something. If you’re looking for a house to flip, you have to get creative. Poring through the MLS for a house may yield a winner here and there, but the competition from other would-be flippers is gonna be fierce. That probably means that if you do find something flip-worthy, you may end up paying more because you’re bidding against other people, and that will reduce your potential profit. Does that mean checking the obits? Probably not. But estate sales…now that’s another story.

Check in with landlords

Are there any rentals in your neighborhood? Maybe one of the owners would be willing to unload an underperforming home. Maybe that same individual doesn’t want the hassle of getting it ready for sale.

Don’t be afraid of the city

Dingy downtown areas in many cities across the country have turned many a would-be real estate investor into a flipping pro. In many cases, these buyers took a chance on an area that many would have described as “iffy.” Investors often call these “transitioning areas” and some pros, like Christina El Moussa from Flip or Flop, go right ahead and call them bad neighborhoods. These areas can provide great bang for the buck if you choose right.

“It seems like one year a particular neighborhood will be really ‘bad’ with a lot of vacancies and a high crime rate,” said El Moussa on Real Estate Elevated. “The next year the crime rate will be a little lower, and there’ll be fewer vacancies. The year after that, it’ll be an affordable neighborhood, and before you know it, people are paying a lot of money to get houses in the area.”
Don’t be afraid of the suburbs
Have you heard? The ‘burbs are hot, even with millennials, who many thought would always embrace the city lifestyle. One thing millennials want, however, is an updated, move-in ready property (unless they’re flipping, too!). You can grab their attention with a well-done property in a nice family neighborhood.

Watch for moving trucks

There’s a scene in the Sex and the City movie where Miranda, in searching of a new apartment in New York, runs into a building to inquire about a vacant apartment because she saw men loading up a moving truck out front (Apparently, all of our best ideas for finding a flip should come from movies filmed in New York!). While no one is recommending you go running into a home as someone is moving out, the moving truck is something to look out for in target neighborhoods. Someone who’s moving out under curious circumstances—no one in the neighborhood knew the home was for sale, it’s late at night, etc.—is someone you may want to pay attention to. It could be a foreclosure situation or some other opportunity you want to take advantage of before someone else does.

Look at auctions and foreclosure listings

“The first step in successful fix-and-flipping is finding the profitable property in the first place. You can call it investor’s common sense to look for properties in the best areas selling at low prices,” said Do Hard Money. “However, many new real estate investors come up empty-handed month after month until they finally give up in frustration. This is because they’re all doing the same thing: they’re looking in the same place. Most of the new flippers look on the MLS for potential properties. Dare to do differently. Look for properties by lesser-known means, such as foreclosure listings, estate sales, short sales and real estate auctions.”

Check the schools

Don’t have kids? Doesn’t matter. Your buyer may, and that means the schools are important. And, in truth, even buyers who don’t now or may never have kids still seek out good schools because of their positive impact on home values. “If you’ve found an affordable home in a neighborhood that’s on its way up, your next step is to research the local schools,” said Money Crashers. “Homes in good school systems sell faster, and command higher prices, than homes in mediocre or poor school systems. Use websites like GreatSchools, SchoolDigger, and Niche to see rankings and reviews of local schools.”


Source: Is There Anything Left to Flip?

Halloween Decorating and Marketing Tips For Selling Your House

Halloween Decorating and Marketing Tips For Selling Your House

Planning to deck your house out with ghosts and skeletons and every last one of the pumpkins and gourds in your supermarket’s produce department? If you’re also planning to sell your home, you might want to rethink that strategy.

There are mixed opinions on how much to decorate for Halloween—or if you should at all—when selling your home. Can it actually help you sell a home if you turn the holiday into a marketing opportunity? Possibly. We took the temperate of the industry for some guidance.

When should you put up your decorations?

You may want to keep an eye on your neighbors for this one. If you’re the first house on the block to decorate, your home may stand out for the wrong reasons. If you’re still worried that your Halloween décor may distract from the home, follow Mass Realty’s advice. “Overall, you won’t want to put up spooky Halloween decorations until the night of Halloween and make sure to take them down the next morning,” they said. “Instead, it’s alright to put up seasonal decorations, such as pumpkins, bright leaves, or colorful corn cobs. That way, no one gets offended and you can keep them up for weeks to feel the spirit of the season.”

Should you continue your annual spooky theme?

You may be known for your elaborate displays that have a different theme (Friday the 13th, Carrie) each year, but perhaps it’s best to forgo that when trying to sell your home. “If Halloween is your holiday, it is best to take a break this year,” said Shorewest Realtors. “Over decorating will hide your home and turn off potential buyers. Instead think of how you will decorate your new home!”

If you do want to add some Halloween-specific decorations, use common sense. “Experts say keep Halloween decorations neutral,” said Lyst House. “So what Halloween decorations should you avoid? Well for starters…clowns, dead children, blood and gore, and rotten pumpkins.”

Time your listing photos right

Be careful with your listing photos if you do decorate for Halloween. If your home is still for sale come Thanksgiving and Christmas and New Year’s and even Valentine’s Day, your photos will look extremely dated. This will likely turn off buyers, who may wonder what’s wrong with you home because it’s been on the market a while. A good tip is to use spring photos, if possible, said Fortune Builders. “If you can, try to take property photos when the sun is shining and you can take advantage of all the great natural light that spring has to offer. It will help your property stand out in a cold (and gloomy) market.”

Don’t miss a marketing opportunity

“If you must decorate for the holiday, hold a Halloween open house to attract buyers with children or those young at heart,” said Mass Realty. “Set the date for the weekend before the spooky holiday to bring in more potential buyers. Offer homemade cookies and a $10 gift certificate to an ice cream shop for the adult with the best costume who registers at the door. Take photos to compare costumes after the open house. Have your real estate agent contact the winner to pick up the prize, giving the agent time to discuss the home with all who registered.”

Turn it into a party

We love this idea from Opendoor, who threw Halloween Open Houses in three Arizona cities on Halloween night last year. “We greeted trick-or-treaters at three Opendoor houses in Glendale, Gilbert, and in North Central Phoenix,” they said. “We gave out more than 1,000 candy bars…as well as other tasty treats. We had games and activities for the whole family, including a fun real estate trivia game. The big hit, though, was the haunted GIF photo booth to capture the fabulous costumes of our visitors—we had lines at every house! The event was a huge success. We saw more than 1,200 guests across all three homes and, more importantly, we brought our neighbors across the valley together on Halloween night.”


Source: Halloween Decorating and Marketing Tips For Selling Your House

Buy Real Estate Now

Buy Real Estate Now

Don’t have the resources to purchase real estate on your own? Do what I did, buy real estate with partners.

I will have an entire series on this subject soon if there is an interest. We call it “Syndication” and it may be your key to financial freedom and a successful real estate business.

Considerations When Purchasing Property With Others

Whenever you consider owning property jointly, there are long-term considerations to bear in mind. We have highlighted a few important points to clarify before going to contract:

1. Look at the relationship of all the buyers. As college roommates, the longevity of the relationship may be limited to a few years. Project what will happen if one party wants to be bought out at a later date. Can one of the buyers handle the mortgage payment and buy out alone? Often times it will take both incomes to support the payments. If one party opts for a change, where will that leave the other owner? Will you be forced to sell? It may be prudent to build in a “notice” clause in your agreement to allow for time for one party to sell their interest. Do you, as the remaining buyer have a right of “first refusal?” What if the other buyer sells to someone you are not comfortable with? These are questions that may dampen the initial enthusiasm of home ownership but are critical to harmony later on when the relationship may shift for any number of reasons.

2. Provisions on an agreement might need to address additional persons one or the other of the owners may want to bring into the jointly owned property. If buyer #1 brings in another person to live with, that makes buyer #2 crazy, then it is better to have some kind of provision for settlement prearranged for possible problems or complications.

3. Decide how the title will be held prior to purchase. As joint tenants, if one party dies, the other party enjoys the right of survivorship. However, if the title is held in a tenancy in common, one party can dispose of their share to whomever they choose, leaving the other divisional owner at a possible disadvantage depending on the circumstances.

4. Outline a set of guidelines for repairs in advance. If one party wants to put on a new roof, and the other party doesn’t want to invest the money, what happens? Delineating specific points of repair or replacement can make improvements an easier subject to deal with. Keeping track of which owner has contributed the investment/improvement dollars can make reimbursement at the time of sale easier and clearer.

These are just a handful of the questions you may want to ask yourself before investing with others in the homeownership/real estate investment game.


Source: Buy Real Estate Now

Scary New Trend: Lying About Income on a Mortgage Application

Scary New Trend: Lying About Income on a Mortgage Application

Would you lie about your income to qualify for a mortgage? According to CoreLogic, lots of people are. “Mortgage fraud risk jumped more than 12 percent year over year at the end of the second quarter, said CNBC of the CoreLogic findings. “One in every 109 mortgage applications is estimated to have indications of fraud.”

With high home prices and rents, rising mortgage rates, and heavy competition for available properties, potential buyers are feeling more pressure to own a place than ever. “As a result, an increasing number of buyers are lying and cheating,” they said. CoreLogic’s six fraud indicators include: “identity, income, occupancy, property, transaction and undisclosed real estate debt,” and they noted the highest percentage of mortgage fraud risk in New York, New Jersey, Florida, Washington, D.C., and New Mexico.

The property data and analysis company found that fraud related to income reporting was up 22 percent in an attempt by borrowers to circumvent strict debt-to-income limits for mortgage lending. “Ominously, most of it is not traceable to criminals trying to bilk lenders out of tens or hundreds of thousands of dollars through traditional loan swindles,” said the Washington Post. “Rather, it’s increasingly what researchers call ‘bona fide’ borrowers who don’t have the income to qualify but are determined to get a home mortgage, even if they have to mislead the lender.”

They’re accomplishing this through Internet sites that help borrowers fudge their income and even provide a confirmation service on cross-check. “A casual search will result in any number of online services that will not only generate fake pay stubs, but will also answer phone calls and ‘confirm’ income verbally, all for a fee,” said CNBC. Another scam involves borrowers who claim to have received an interest-free down payment gift from a relative and who are able to disguise these borrowed funds with a faux gift letter they found online.

The Washington Post also noted that, “Fannie Mae recently warned lenders via several alerts about a loan-fraud technique in which applicants claim to work for specific companies and provide income and employment information that appears to be bulletproof but turns out to be totally bogus. Applicants frequently claim to have been students immediately before their current employment. This makes it difficult or impossible for lenders to pull tax transcripts from the Internal Revenue Service for the year spent as a ‘student.’”

The risk is high all around

Borrowers may think of padding their income as a harmless white lie that has little downside if they’re able to meet their goal of buying a home, however mortgage fraud carries with it some serious risks. “What are the possible consequences? Getting turned down for the mortgage is the least of them,” said Credit.com. “If your falsehood is discovered after you get the loan, your lender could boost your interest rate or even demand immediate repayment in full. Tax-related falsehoods could get you in trouble with the IRS. In addition, penalties for mortgage fraud—which is what lying on a mortgage application is—range as high as 30 years in prison and a $1 million fine. You likely won’t face a penalty like that for a small exaggeration or omission, but you could still end up with a fine and a conviction.”

And then there’s the risk to the housing industry if this current fraud trend is at all responsible for causing another crash; CoreLogic found a “far higher risk for fraud in loans coming from wholesale lenders or brokers—which don’t fund the loans but instead gather a borrower’s information and shop it to lenders,” said CNBC. “That implies brokers are also committing fraud. This was common during the last housing boom, when mortgage fraud helped bring about one of the worst financial crises in U.S. history.”


Source: Scary New Trend: Lying About Income on a Mortgage Application

Buying a Rental Property? Here’s What You Can Expect

Buying a Rental Property? Here’s What You Can Expect

If you run across someone who owns multiple rental properties, it’s very possible that individual never intended to own so many. In addition, those who own a rental property might also be “accidental” landlords after having inherited a property or renting out their current home while buying another.

Real estate investors can often find themselves quitting their current job and buying and renting real estate full time. Real estate is an asset that can both appreciate in value while at the same time providing a monthly cash flow. You’d be hard pressed to think of any other physical asset that can do that. So why is not uncommon to meet someone who owns several rentals? It might very well be due to qualifying for a mortgage to buy and finance an investment property.

Conventional financing will ask for a down payment of at least 20 percent of the sales price and with a 25 percent down payment the terms get a little better. Interest rates for rentals are slightly higher compared to an owner occupied property. Investors have the choice of both fixed and adjustable rate mortgages ranging in terms from 10 to 30 years. But with the first rental being purchased, the buyers don’t benefit from the income derived from the rental when qualifying. Instead, the buyers must qualify based upon the new mortgage payment, including property taxes and insurance, without adding rental income into the mix. This is in addition to any current mortgage payment. But all that changes with the next property.

Subsequent purchases of investment real estate do in fact use the income from the rental to help qualify. Investors want to cash flow on their investments each month and if the rents received from a potential investment aren’t enough to cover the new mortgage payment, the investor will likely pass. This means the next rental property is no longer an expense but instead generates monthly income. Who wouldn’t want that type of investment? Yes, property values rise and fall but in time values do rise, contributing to the owner’s equity position. One caveat, you’ll need to own the first rental for at least two years showing you can both manage the property and the unit provided regular income.

Speaking of managing the property, when you become a landlord, you’ll have the occasional tenant issue. Remember when you first rented and the sink disposal went out? Did you go to the appliance store and buy a new one? No. You called the landlord. You can expect the same when you buy your first rental. But when you buy your next one and the next one you might want to think about hiring a property manager to take care of these issues for you.

You can think of your first rental as a learning experience. But once you’ve owned that first rental for a couple of years, don’t be surprised if you start shopping for your second.


Source: Buying a Rental Property? Here’s What You Can Expect