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Posts Tagged: Real Estate Investor Loans

Cost of renting leads millennials to consider buying

In recent years, new job opportunities, falling crime rates and a desire to live in an urban environment have given millennials plenty of reasons to move to U.S. cities. But this population shift has come at a cost — literally.

Rising demand for urban apartments has outstripped supply and is causing rents to rise at a rapid clip. Nationally, the typical worker between the ages of 22-34 paid 30 percent of his or her income for rent in the first quarter of 2015, which is generally considered to be the maximum that anyone should spend on rent. This is significantly higher than it was in 1979, when typical young renters paid 23 percent of their income.

Tax Breaks Possible For Property Owners And Investors

First and foremost, prospective property owners and investors must consider the costs of a home they are considering buying. While homes and interest rates are more affordable now than they have been in decades, potential owners could find additional cost savings through the tax code.

The most common tax deductions that property owners are familiar with are related to home mortgage interest and property taxes, each of which can generally be written off. In addition to these savings, investors could be uniquely equipped to receive additional breaks through the tax code. They have the option of claiming that a property they own has depreciated and is in need of upgrading.

Buyers Should Strike When Lenders Remove Properties From Shadows

For every home that comes off the market, more properties approach foreclosure and lurk on the sidelines of the housing market waiting to be sold, thus slowing any significant recovery efforts.

Homes that make up the shadow inventory are those that owners intend to sell, but have not yet placed on the market. In many cases, these homes are either underwater, facing foreclosure or distressed in general. Lenders simply have too many properties on the market to handle selling any more. In addition, the foreclosure process, which is both lengthy and costly, could be preventing many lenders from acting.

Organizations Buying Up Investment Properties To Eventually Rent Out

Even though Fannie Mae is offering up only 2 percent of its total stock of foreclosed property, this could amount to some 2,500 properties becoming available to buyers with real estate investor loans. Some large investment firms are now jumping into this market, as they scoop up properties in droves.

Investors were initially reluctant to purchase properties in bulk and rent them out because returns would not be sufficient. But, now that rent prices have begun to spike across the nation, annual returns are commonly in the 6 to 8 percent region. While these investments will help the firms themselves, they could also take pressure off of the foreclosure inventory.

Foreclosure Backlog Continues To Find Relief

In recent months, many foreclosures have stalled midway through the process due to bureaucratic barriers and the sheer volume of affected properties. Many experts anticipate a rise in foreclosures in the coming months, which could harm individual homeowners while providing relief to the overall housing market.

RealtyTrac published a report this week that found 21 states increased their foreclosure activity in February over figures at the same point last year. In total, foreclosure filings occurred on 206,900 properties last month, which represents 2 percent decrease from January.

How Can An Expanding Rental Market Stimulate Home Sales?

It may seem counter-intuitive that surging rental prices could contribute to the recovery of the housing market, but new numbers from Zillow suggest this could be the case.

Earlier this week, the real estate information tracker released its January market report, which found that rents rose 3 percent year-over-year as home prices fell 4.6 percent during that same time period. Zillow also released its first Rent Index, which determined that home values had increased in 7 percent of all metro areas from January 2011 to January 2012, compared with rent prices that increased in 69 percent of these markets during that period.

Home Improvement Projects A Boon For Owners And Investors

Although homeowners often make improvements to their homes to fulfill their own needs, most projects will also make a property more attractive to buyers when the time comes to put a home on the market.

Of course, with home prices as low as they currently are, many homeowners who would otherwise move are unwilling to part with their properties for pennies on the dollar. Many have needed to remain in homes that they have, for example, either outgrown or are in locations that are not convenient for job considerations.

How Serious Is The Trend Away From Homeownership Among Millennials?

A home purchase is perhaps the most significant long-term purchase of a person's life. At the time of a purchase, buyers may commit to 30-year fixed-rate loans, meaning they expect to exhibit considerable financial health for most of their adult lives. For Millennials though, when also confronted with high gas prices and student loan debt, a home purchase may not be as significant a priority as it was to their parents.

In a Forbes Magazine piece written last December, Peter Reilly describes the results of a survey he conducted of Millennials that found most respondents preferred freedom, advanced degrees and sociable living communities instead of homeownership or suburban living. In all, less than one-third of respondents said they were interested in owning a home.

NAR Prefers Increased Mortgage Availability Over REO-To-Rental Program

A program to convert real estate owned (REO) properties into properties funded by rental property loans may not have the support of the National Association of Realtors (NAR).

Last month, this blog reported that the Federal Housing Finance Agency (FHFA) announced the creation of a pilot program that would allow investors to use rental property mortgages to fund properties owned by Freddie Mac, Fannie Mac and the Federal Housing Administration (FHA).

Florida Law Would Expedite Foreclosure Process

The Florida House of Representatives overwhelmingly voted in favor of a bill that would accelerate the foreclosure process in the state, which is in dire need of relief for its foreclosure inventory.

Although the state senate has yet to approve the measure, its bipartisan support on the House side bodes well for final passage. The bill would shorten the foreclosure process by compelling homeowners to respond sooner to foreclosure filings and reduces the time lenders can lodge complaints against homeowners.