All Forum Posts by: Walter Key

National Association of Realtors Chief Economist Lawrence Yun recently wrote an article stating that we're in a "Bizarre Market" in which he stated "With a strong economy and the lowest unemployment rate since 2000, more Americans are in the market to buy a home yet sales are stagnant. Existing home sales are down about 1 percent year over year." He went on to discuss how the average days on the market are only about 26 which is well under historical norms. I have personally seen SUB 1-week in both the Central VA and Omaha markets on some properties in the last several weeks.

His solution is new home construction in a variety of housing types to address the inventory shortage. While I think that certainly has merit, I was just wondering what everyone else was thinking of the current market, bizarre or otherwise, and what you feel is a good move to solve the problem. Is it a "problem" or is it a "new normal" for a while? What are your thoughts?

-Walt

@Account Closed I live in Charlottesville, VA and have rentals in Omaha, NE and Southern VA. When being that far away (1200 miles to the Omaha rentals) a good property manager or a team of local contractors that you can trust is key. Knowledge of the local area (I used to live in Omaha) is a must in order to understand the market you're getting into and how to be successful there.

^^^ This...exactly.

@Reese C.

Something you need to ask yourself is, WHO do you know and HOW will you operate in the area you want to invest in. Nothing wrong with long distance investing. For example, Chinese investors for spent $31.7 BILLION on US Real Estate last year. Its certainly doable with the right due diligence. Don't just ask yourself WHERE, but HOW and WITH WHOM will you invest. Investing in rehabs out of state means you need some trusted business partners that can do the work on time and on budget. So, think about areas where you may have some friends, family or associations that might be able to expand your network in your target market and find you some quality partners.

On another note, the Omaha, NE rental market is awesome. You may want to add that to you list to consider. But again, it's more about the WHO and HOW than it is about the WHERE.

Best of luck!

@Caleb Heimsoth hit the high points already. Credit Score, Minimum income based on the rent, past rental history (and references) are big helps. Make sure you establish your screening parameters early and stick to them. Do go off of "I liked that person" or "That felt right". Stick to the plan.

Excellent advice right there! It's all about the relationship.

Those DTI ratios BOTH have to be met. So, if you have ZERO debt, they will approve you for whichever ratio is less. Example, if you have a $5,000 income, 29% house max is $1450/MO. Now, 41% TOTAL DTI would be $2050/MO. They'll approve you for a mortgage with a payment of no more than $1450/MO.

Let's say you had a car payment, credit cards, etc that equaled $1,500/MO. Your $1450/MO housing DTI PLUS the $1,500/MO in consumer debt would put your Total DTI well over 41% ($1,450+$1,500=$2,950 or 59% total DTI), so they would reduce the amount of mortgage approved to keep you under that 41% total DTI. Make sense?

Very well done man! Just chalk up the extra time and money to learning the ropes. Your next project will be that much smoother for having gone through those hiccups. Excellent!

I have to echo what most have already said. 1% is a pretty good deal these days, all things considered. I'm at between 1%-1.25% on mine (in VA and NE).

@Account Closed. I think what Thomas is driving at is that you're only getting about a .67% return on your investment ($2K/MO on $300K investment). If you were to sell, bank that $315K-ish after selling expenses, and then look for some quality rental properties to invest in using the cash for a 20-25% down payment, you'll find some much better investments and be able to scale quickly by using the cash from the sell to leverage multiple properties with a far better ROI.