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Home Inspections: Tips and Common Findings

In 2020 alone, more than 6.5 million homes were sold across the United States of America. Before every single one of these properties was sold, both buyer and seller were likely to undergo a home inspection. Home inspections are pivotal to the real estate market because they ensure both parties are protected from potential issues that may manifest following a sale.

Let’s take a closer look at home inspections, what to expect, and why they are so important.

What To Expect From a Home Inspection

Home inspections are thorough assessments of a property’s overall physical condition. Inspections are performed by licensed professionals who have been trained to visually assess and identify issues. Inspectors will traverse every inch of a property, from foundation to attic, to find issues that may manifest into costly or dangerous scenarios.

Common Findings During a Home Inspection

Home inspections are vital to the real estate industry as they give both parties a chance to assess issues before going through with a deal. For a buyer, this means potentially saving themselves from buying a property with hidden damage. For the seller, home inspections provide the opportunity to upgrade and maximize the value of a home.

The most common results of a home inspection will yield the following information.

  1. Roofing Damage – Nearly 20% of home inspections will yield at least one issue with the roof of a property. Roofing issues can vary in terms of how problematic they are. Leaks, material degradation, and ventilation issues are the most common inspector-detected roofing problems.
  2. Electrical Wiring – Nearly 52,000 electrical fires are started every single year within residential buildings due to improper wiring practices. Make sure that your property is up to code before buying or selling it. Frayed insulation, mismatched wiring, and rodent-related damage can all be identified during an inspection.
  3. Plumbing Issues – Plumbing issues may range from severe to barely noticeable. A leaky faucet won’t cause an inspection to fail, but outdated pipes and mismatched DIY solutions can cause serious headaches.
  4. Termite/Pest Damage – Don’t buy a home with a shaky foundation and don’t purchase a home that is infested with termites, two concepts every property owner should live by. Termite damage can cause structural issues that go unnoticed for years, often long after there is any time to prevent the issue. A skilled inspector can suss out any potential infestation during an inspection.

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Should Your Project Be a Rental or a Fix and Flip?

When you’re looking at a potential investment property, one of the most important questions you’ll need to answer is whether the property is better suited as a rental or a fix-and-flip project. This is one decision that even some of the most experienced investors struggle with.

If you’re considering a real estate investment and aren’t sure which route will be best, there are some considerations you should keep in mind to help you make the right choice.

The Property’s Current Condition

The current and overall condition of the property, as well as its age, should play a major role in your decision to either buy the property as a rental or flip it. Generally, older properties will require more long-term maintenance and upkeep, which tends to make these homes better candidates for fix-and-flip investments.

Meanwhile, a newer property that needs some up-front work but is otherwise in decent condition may be more suitable as a rental. The exception to this may be a property that is located far away, which can create additional headaches for you as a property manager/landlord. If you’re investing in a property from afar, your best bet is typically to treat it as a fix-and-flip (unless you’re comfortable shelling out monthly fees for a property management company’s services).

Local Real Estate Trends

You’ll also want to consider local real estate market trends when deciding whether to buy a property as a rental or a fix-and-flip. While there are currently more renters in the residential real estate market than ever before, this won’t necessarily be the case in the exact area where you’re looking to invest. Taking some time to truly get to know your local real estate market and whether people are looking to rent or buy can make your decision a much easier one.

Your Budget and Preferences

If you’re looking for a property that can start generating income for you sooner rather than later, then a rental may make more sense. On the other hand, flipping a property rather than renting it out can prevent your money from being tied up in any single real estate investment for too long.

Of course, part of your decision to rent or flip will ultimately come down to personal preference. Some investors simply don’t like the hassle of playing “landlord” and would thus refer to flip and property, sell it, and be done with it. Likewise, other investors may enjoy the long-term income string that a rental property can provide.

Need a Hard Money Loan?

Regardless of whether you end up flipping or renting out an investment property, you’ll need to secure the right funding to get started. If you’re searching for a hard money loan for a real estate investment property, IMC Money is here for you. We offer a wide range of hard money loans and other financing options to suit your needs. Contact us today to find out more about our services!

Tips For Flipping A House For The First Time

Flipping a house for the first time can seem a little intimidating. However, if you follow these tips, it should be smooth sailing.

Know and Analyze the Local Estate Market

It’s important to know the neighborhoods you want to invest in like the back of your hand. You need to familiarize yourself with the sales prices for different types of homes, schools, neighborhoods and demographics. Real estate sites like Trulia and Zillow can give you some data on current home selling prices. And you get the rest of the information from other local realtors. Once you get this information together, go ahead and analyze it. By analyzing the data, you’ll know how much local buyers are willing to pay and you’ll know the types of properties that buyers are interested in buying. Knowing this information will allow you to avoid winding up with a home that sits on the market for a while versus one that flips quickly.

Get a Team

Building yourself with a skilled team is critical for a successful flip. You’ll need a team of general contractors, realtors, lenders, accountants and real estate attorneys. You get a team together through referrals and networking. Start to go to meetings of local real estate investment organizations, join some business networking groups and become a member of the chamber of commerce. Realtors can give you access to properties that are currently on the Multiple Listing Service. You should speak to as many realtors as you can. This includes both selling and buying agents. Having a team is essential for a profitable flip.

Find a Flippable Property

Once you’ve identified what types of homes sell best, focus on those ones. For example, if four-bedroom houses are selling well, rehabbing one of these is likely your best bet. In addition, you need to know who your likely buyers are. It may be empty nesters, seniors or singles. Know what their needs are. A family with young kids may need a four-bedroom home with two bathrooms.

Keep an open mind, too. Your leads may wind up coming from a variety of sources, such as friends, banks, realtors, family members or trustee sales. Another good source for flappable properties is foreclosures. Just keep in mind that you’ll probably need a cashier’s check or cash to pick up a foreclosure. You also may not be able to view the foreclose. So, you may have to deal with squatters or hidden liens on the title.

Structuring the Deal

Once you’ve established the value of the property, you then need to calculate the after repair value. This will tell you if it’s a good deal for you. When you inspect the property, work with a good general contractor and review the budget repair sheet. You need to know all the repair costs in order to determine the after repair value. Follow the 70 percent rule. Only take on projects when the after repair value is less than 70 percent of the final selling price. Once you make the sale, use an experienced real estate lawyer to write up the contract.

Manage the Rehab Process

Keep yourself in the loop and work closely with a general contractor. This will keep you on track with the renovations and within budget. Obtain estimates from contractors and keep track of their progress on your project. Make a written timeline and make sure everything goes according to plan in a timely manner. This will help avoid carrying costs.

Real Estate Trends in 2019

The real estate market has certainly seen its ups and downs over the past decade or so. Every year, new trends arise to the surface that can have a dramatic impact on how residents buy and sell their properties. As we approach the middle of the year, it’s important to take a good look at what the newest 2019 real estate trends are and how they can have an impact, whether you’re looking to sell your home in the near future or you’re on the hunt to find your ideal home, whether it’s your first or you’re looking for an upgrade or to downsize.

Home Prices on the Rise

After the housing market crashed and brought many homeowners underwater on their mortgages, many wondered how long it was going to take for the real estate market to recover. While some areas of the country aren’t quite there yet, the good news is home prices are on the rise. This is better news for those who are looking to sell their homes and not as great for buyers. However, it’s a clear sign the housing market is in good shape overall. With the largest jump last year at about 10 percent on average, home prices are still on the rise this year, although this has slowed down somewhat. Unfortunately, with the increase in prices, those who are looking to sell their homes are also seeing a decrease in the number of offers they receive. Rest assured, even if you don’t end up getting as many offers as you did before, there is still likely a buyer out there willing to pay the right price for your home. As long as sellers pay attention to the other homes on the market around them and price accordingly, as well as make their houses stand out, they should be able to find a buyer willing to pay the right price to still make a good profit. Buyers should also take their time when making a purchase and make sure they have enough money down (at least 10 percent) and don’t step outside their set budget for home buying.

Interest Rates Are Up

Although still nowhere near the peak it once was, mortgage interest rates are on the rise, which means buyers need to be careful about getting good rates on their loans. At the present, mortgage interest rates are predicted to rise to about five percent for 30-year mortgages and 4.4 percent for 15-year mortgages. This is the highest interest rates have been in seven years. While this may seem like bad news, it actually indicates the economy is doing well. The federal reserve raised their interest rates and the banking industry is only now following suit. Because of this, it’s best for buyers to opt for a 15-year mortgage if possible to help keep interest payments low. For sellers, high interest rates may seem as though they are irrelevant, but they can have an impact on how quickly you sell your home. This is because some buyers may be hesitant to buy with a higher interest rate or may hold out for a cheaper home in order to keep their payments within budget. The good news is your home is still likely to sell; it may take longer than it may have in years past, but you are still likely to find a buyer willing to pay what you ask or close to it.

Millennials Make Up a Large Portion of Buyers

Millennials have reached a time in their lives when they are most likely working stable jobs and at least thinking about starting their families, which means they’re among the biggest group of individuals to be looking for homes on the market to buy. In fact, they currently make up about 45 percent of the overall market. This is excellent news for the baby boomers and other older generations that are starting to think about retirement and downsizing their homes. In general, millennials are looking for homes that are affordable without sacrificing on the quality of the construction, have low maintenance needs and are located in areas with easily accessible larger cities for their convenience. With easy online shopping, it’s easier than ever to reach this generation of home buyers.