We know just how stressful deciding to purchase a home can be, especially when you're already a homeowner! It can be nerve-wracking to think about purchasing a new home when you have hundreds of thousands of dollars already in your current asset...
BUT, THE FEAR STOPS HERE!
When it comes to buying and selling at the same time, or even purchasing before you sell, it is all about strategy and diving into the details. Sellers are in a very strong position in our market right now, so buyers who also have listings on the market have to come up with a strategy to make their offer stand out.
Join Nicole Rueth and Justin Knoll as you are given options to simplify this coordination.
There is a lot of math in this episode, important math. Listen while Nicole walks you through the cost of waiting to purchase a home, especially if you are currently paying rent. The last 18 months of everyone's lives have been exhausting. But putting off purchasing a home shouldn't be one of the things falling to the wayside. If you've been on the fence, now is the best time to buy. Why? It's not just because interest rates are low, it's because of the two-fold effect of appreciation and principal reduction. No matter how good of a deal you have on rent, you're not getting the best bang for your buck or making the most of the roof over your head. In fact, you'll lose out on quite a lot by waiting. But just how much...?
Learn more about building wealth through real estate on Nicole's YT Playlist:
https://www.youtube.com/playlist?list=PLDnB7ZSa5nonyH6H8F9-RAS6AtdlOMo7Q
Use Real Estate to Pay For College! First-time homebuyer and investment property purchase.
- How can I use equity to pay for college?
- When should I start investing?
Nicole's personal experience. She had three in college at the same time - one graduated, two are still in. At 20, Nicole's two boys were able to purchase their first homes. They bought income property where they could live, and then become the landlords and rent out the other rooms in their homes to not only pay the mortgage but to help with cash flow.
Each home cost $400,000 with a 3% down as first-time homebuyer or could be done using downpayment assistance.
If you put less down, you'd still cover the mortgage with the income, but maybe not as much pocket money.
You can use your own home equity to purchase investment properties do follow this same model and cover room and board, and increase your real estate portfolio. Consider this option instead of a 529 plan. That home you purchase for your child when they are born could appreciate over the next 15-18 years and will pay for college, or a whole lot more using the rental income and principal reduction. It could help pay for their first home and even their wedding, PLUS their education.
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What is debt to income ratio? Which is different than what is my monthly budget. All right? Because I really want to just land there just for a second. Because it's super important that when you're going out looking for a home, you've identified what is that monthly number, that monthly payment that fits with the rest of your lifestyle? Because it's really easy to fall in love with a house that's higher than your budget. I mean, the higher you go, the prettier they get. Right? But that might not work with the fact that you want to start a family. You want to buy a car. You want to go on vacations. Maybe you want to build up investments to secure your financial freedom and retirement. All of those things should be talked about, discussed with your lender. Bringing in all the other things about your life to ensure that you pick the house payment that allows you to have a life, not just live in a home. Lisren to this episode to get the full story and why you need to know its affect on your credit score.
Do you know what goes into a credit score? We're going to be going through a five-part series to share with you what you need to know.
What makes a credit score?
Let's start off with the five factors that can ultimately affect your score: payment history amounts owed, length of history, credit mix, and credit inquiries for new credit. The first three go hand in hand. Your payment history will appear in your credit report for all of your open and active trade lines. Payment history demonstrates how you were able to manage your debt over a period of time. Paying your bills on time consistently yields a higher credit score, and in turn, allows you to borrow more money.
Additionally, the longer your history of consistency exists, the higher your score will be. I mean, this is important, because while you're shopping for a home, do not close any accounts as that cuts your history short. Also, keep your balances low, ideally below 30% of the credit limits and make sure above all else, keep making your payments on time. I mean, if you're looking to purchase a home, now is not the time to miss a payment. Even if it's by accident, a missed payment can drop your score by as much as a hundred points.
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Purchasing your first home is a major accomplishment .. it’s also stressful, daunting, and overwhelming! Knowing exactly where to start the journey to homeownership will allow you to optimize the most of your available time, money, and energy. So first steps first... do you talk to a real estate agent or lender first?
If you are a first-time homebuyer, you may not even have those names to fill in the blanks. The best practice is to start with people you trust. Who in your life do you know who is a realtor, a lender, or maybe someone who just purchased a home and had a great experience? These initial contacts might not be where you land, but picking their brain on why they liked working with their team can give you a good direction to start from.
As a lender, I want to say everyone should first dial in their credit availability, payment budget, and optimal purchase price before looking at homes. But sometimes people get excited... I get it. Looking at homes is a lot sexier than talking about financing. But the last thing you want is to find the perfect home $25,000 outside of your budget. You will also want to find a realtor who specializes in the type of home or location desired. Let's take Denver Metro for example. You would think anyone can go anywhere, but looking at horse property with a well and septic, versus condos downtown, versus multiunits in the suburbs can take a different skill and a focused search. Talk to your agent openly about what is important to you to ensure there is a match.
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The table below is taken from Tracey Wilson's presentation at the Agent Ignite session. These are derived from his research. If you have questions, please visit his website. This is the BIG RED button he talks about in this presentation.
Here is the PowerPoint from this presentation.
Here are a few points covered:
1)American Rescue Plan: $1.9 trillion for COVID Stimulus Package
- Passed even though $800 billion of the previously passed $2.2 trillion CARES Act (passed 3/20/20) had not been spent yet
2)American Jobs Plan: $2.3 trillion for infrastructure
- Raise the corporate tax rate to 28%
- Increase the global minimum tax paid to 15%
- Impose a corporate minimum tax on book income
- Eliminate tax benefits for the oil and gas fossil fuels sector
- Increase corporate tax enforcement
3)American Family Plan: $1.8 trillion for universal pre-K, free community college, SLD $50K forgiveness, paid family leave
- Raise individual income taxes
- Raise cap gains tax rate
- Increase estate tax
- Limit step-up in basis
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The July DMAR Market Trends data was released this week, and there are two notable trends. First, when comparing 2021 to pre-covid 2019, our seasonality is falling back into normal ranges. We have a healthy influx of listings which were up 8 percent, 2 percent more homes went under contract, and there were 7.5 percent more closings when compared to 2019, yet we continue to see three times the price growth. If I return to our current month-over-month or year-over-year and stop there, we are bleeding red.
But the real story is in the green. Green month-over-month active listings are eluding to hope that more balance is on its way, yet green double-digit annual closed prices say that balance may not arrive too quickly. The second trend that stuck out is that year-to-date, homes priced over $500,000 are flying off the shelves compared to 2020 and 2019, with more homes at higher prices coming on the market, going under contract, and closing. Year to date 54 percent of all homes sold in the Denver market were over $500,000. In July, that number spiked to 74 percent. Where did all of the under $500,000 priced homes go?
In this episode, Tracey Wilson of IPX1031.com compares the 1031 Exchange from the previous episode and explains the 1031 Reverse Exchange. In the previous episode Tracey Wilson went into details about the 1031 Exchange laws, how they work, details you need to know, including the six rules.
Here is the nutshell of this 8-minute episode. You'll want to listen or call Tracey to get a more comprehensive explanation:
In a Forward Exchange, you would sell the old property. You have 45 days to identify the new, buy new, then 180 days to complete the purchase of the new property.
In a Reverse Exchange, there are two types:
1. replacement property parked first
2. relinquished property parked first.
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Nicole welcomes Tracey Wilson of Investment Property Exchange Services. You can find him at ipx1031.com. Ipx1031 has provided its clients with superior qualified intermediary services for three decades. And each year they assist thousands of clients and their tax and legal advisors by providing proven exchange solutions that best achieve the client's goals of enhancing their business portfolios and preserving equity. But he'll tell you more about that at the beginning of this episode. This is a two-part episode. There is so much to learn. This first one covers the basics you need to know as an agent and as an investor, about a 1031 exchange to avoid capital gains taxes. He will give you guidance, no matter how creative you think you are, he will have solutions and some recommendations to keep you out of hot water with the IRS. Listen to this episode now.
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