Sunrise Homes & Renovations, Inc.

New FHA Financing Available For Condo Buyers That Has A Low Down Payment

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New FHA Financing Available For Condo Buyers That Has A Low Down PaymentCondominium owners and buyers have previously been at a disadvantage when trying to use the Federal Housing Authority (FHA) support to get a home mortgage. Single-family homes could get better FHA mortgage deals than condominiums. In October 2019, this changes.

New FHA Condominium Financing

As of October 15, 2019, FHA loan availability is extended to condominium buyers. This is important news for first-time buyers who frequently purchase a condominium. First-time buyers appreciate FHA loans because they only require a very modest 3.5% down payment.

FHA loans were strongly curtailed after the real estate market collapse in 2008. Since 2009, most condos did not qualify for FHA loans. The problem was that FHA loans require mortgage insurance and this insurance was only available for about 6.5% of all condos.

In America, there are about 160,000 condominium projects (complexes and buildings). The new FHA program makes mortgage insurance possible for about 20,000 to 60,000 more condominium projects nationally. Not all condos will qualify for the new FHA program; however about half of them will.

Both first-time buyers and people who are down-sizing by selling a larger home appreciate condos. The median price for a condo nationally is around $260,000. This is about $29,000 less than the median price for a home that is about $289,000. Maintenance costs and upkeep for a condo are typically less than caring for a larger home.

Refinance Opportunities

For condo buyers, who could not get FHA loans in the past, they may now qualify for the mortgage insurance needed if they could not get it before. Then, they can refinance a loan to get a better deal with FHA financing if they want to do this.

Easier Condominium Sales

For those who are putting their condos on the market for sale, this new FHA loan program is worthwhile to investigate to see if the condominium building or complex qualifies. If the condo is in a facility that qualifies, this new FHA financing option will potentially attract more buyers

Summary

Real estate agents should become aware of the new FHA program and inform their clients if a condo buyer can use an FHA loan to finance the purchase. This is a very impactful change for the condominium market dynamics. This new FHA loan program is the first of its kind to occur since around 2009, a decade ago, which is great news for condo buyers.

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

The Most Popular Cities For Relocating To Get A Better Deal On A Home

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Many people are looking to buy homes, not across the street, not somewhere else in town, but in other parts of the country. The motivator for this is that there are significant differences in the median prices for home sales in different parts of America. This is not a result of the places being undesirable.

Many of the places with excellent values in home prices are very desirable. In these nice cities, the lower prices are more about the local economy, the cost of living, and the availability of homes for sale.

Popular Cities For Relocation

The Most Popular Cities For Relocating To Get A Better Deal On A HomeA study done by REALTOR® identified the most popular cities that people search for when looking for a new home in another area that is different from where they currently live.

The median home price in America is $226,800.

Areavibes ranks American cities based on a livability score that considers many factors, which include the cost of living, crime, school, employment, and amenities. The livability score is a scale that goes up to 100.

Here are the top choices in the order of their popularity for searches and median home prices along with their livability score:

  1. Charleston, South Carolina – Median home price is $269,400. Livability score is 77.
  2. Boise, Idaho – Median home price is $191,000. Livability score is 80.
  3. Honolulu, Hawaii – Median home price is $601,500. Livability score is 73.
  4. Columbia, South Carolina – Median home price is $164,200. Livability score is 63.
  5. Fort Myers, Florida – Median home price is $160,800. Livability score is 70.
  6. Portland, Maine – Median home price is $248,000. Livability score is 66.
  7. Sarasota, Florida – Median home price is $109,500. Livability score is 74.
  8. Greenville, South Carolina – Median home price is $237,800. Livability score is 73.
  9. Tucson, Arizona – Median home price is $135,200. Livability score is 65.
  10. Las Vegas, Nevada – Median home price is $184,900. Livability score is 71.

Cost Of Living

The cost of living is a big factor that impacts the quality of life for the average person. The cost of living includes the cost of housing, groceries, transportation, health care, utilities, and other goods and services. The national standard for America’s cost of living is set at 100.

The cost of living index in each city is a number that is higher or lower than 100. Higher figures than 100 represent a percentage higher than the national average. Lower numbers than 100 are cities that cost less than other cities in America.

Here is the cost of living index for these popular cities:

  • Charleston, South Carolina – 115
  • Boise, Idaho – 96
  • Honolulu, Hawaii – 182
  • Columbia, South Carolina – 101
  • Fort Myers, Florida – 94
  • Portland, Maine – 114
  • Sarasota, Florida – 108
  • Greenville, South Carolina – 106
  • Tucson, Arizona – 92
  • Las Vegas, Nevada – 100

Conclusion

The lowest median price for a home is found in Sarasota, Florida. The city with the highest livability score is Boise, Idaho. The lowest cost of living is in Tucson, Arizona. These are all great cities to live in. For those who have the option to relocate, to get a better price when buying a home, they should all be considered as decent choices.

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

Expanding Opportunities For Home-Buying In ‘Opportunity Zones’

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Expanding Opportunities For Home-Buying In 'Opportunity Zones'Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act to encourage investors with capital gains on other investments to invest that money in low-income and undercapitalized communities. They get a reward of deferring capital gains tax. They avoid a portion of it altogether if they keep the investment for five years or longer. 

What started with a trickle of a few Opportunity Zones scattered around the country is now a deluge with over 3,000 approved Opportunity Zones approved in just about every part of America. 4,700 more areas may also qualify.

Opportunity Zones Expanded Dramatically

The very generous definition of Opportunity Zones not only includes poorer areas but it also includes wealthy areas within larger poor areas. Some are wealthier areas adjacent to poor areas. For example, there are Opportunity Zones in Manhattan, which is an area not typically thought of as low-income or undercapitalized.

Opportunities In Opportunity Zones

The tax incentives along with the current easy financing from real estate lenders are stimulating development projects in Opportunity Zones. Investors may increase returns on real-estate investments by up to 50% for projects in these areas. 

The highest returns, based on the tax savings, are for those that invest before the end of 2019 and hold the investment for seven years until 2026. They get a capital gains step-up of 15%. After that, the tax benefits go down to a capital gains step-up of 10%.

Homes In Opportunity Zones

Another attractive characteristic is that the price of single-family homes in many Opportunity Zones is a bargain. The median price of homes in almost half of the Opportunity Zones is less than $150,000. This compares favorably to the national median home price of $266,000. 

Moreover, homes in many Opportunity Zones are less than half the price of an adjacent area. The median rents in the Opportunity Zones are not as depressed as the home prices.

For real estate investors looking for cash-flow positive rental properties to acquire for a portfolio, these homes may rent for enough to pay the carrying costs.

For home buyers, these bargain prices may mean it pays to buy a home on the edge of an Opportunity Zone. If the home is adjacent to a nicer neighborhood, the upside potential for appreciation in home value may be enhanced.

Opportunities for low-cost homes exist in the Midwest, which has 73% of its Opportunity Zones with homes that cost below $150,000. The portion in the South is 57% and in the North East, it is 53%. Florida has over 300 Opportunity Zones. Pennsylvania has over 150. Tennessee has about 140. Those are states worth considering.

Summary

Looking for home-buying opportunities in newly-designated Opportunity Zones is attractive for real estate investors building up a portfolio of rental properties and for homebuyers who are looking for a bargained-price home.

If you are in the market for a new home or investment opportunity, be sure to consult with your trusted real estate professional.

How To Crowdfund A Renovation Project

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How To Crowdfund A Renovation ProjectCrowdfunding came into prominence with the Jumpstart Our Business Startups (JOBS) Act that President Obama signed into law during 2012 and subsequent enhancements. The JOBS Act made it easier for startups to raise money and for the first time allowed the legal ability to advertise the investments and accept small investors.

Innovate And Renovate

Crowdfunding is useful for many projects. The method raises money to create new products, make documentary films, and for many kinds of fashion items. Crowdfunding successfully raises money for real estate transactions. 

Smaller investors participate in real estate projects that they would otherwise not have enough investment money to create on their own. They may invest a few hundred or a few thousand dollars. When their smaller investment money combines with all the others, the project raises enough money.

One thing that makes crowdfunding projects work is their popularity. Affinity groups who have a special interest in certain things invest money in projects related to something that they like.

One application of this motivational factor is to raise money using crowdfunding to renovate buildings with a historical value or that otherwise attract the interest of the public. The process does not have to start with money. It can start with crowd sourcing ideas.

The CLUE® Mansion

A fun example is the Hasbro Company teamed up with Houzz to get innovative ideas from interior designers about how to renovate the CLUE® Mansion. The mansion is a backdrop for the popular board game.

This promotion celebrates the game’s 70th anniversary. The mansion’s style in the game stayed the same since the game debuted in 1949. The winning room designs, selected by fans, will be part of a new version of the game.

There is no reason to stop there. A real mansion can be renovated to match the game. This could be a CLUE® museum and could offer escape rooms as a money-making enterprise. This is just an idea at this moment. Perhaps, someone will take this up and run with it.

Crowdfunding Renovations

The point is, historic buildings that are of interest may need renovation funds that can be raised using crowdfunding. Those who have an interest in the building from the local community and elsewhere can support the project by investing in the renovation with a small comfortable amount.

Summary

Renovation projects are not easy to finance using traditional lenders. However, if a thousand people invest $100 each that is $100,000 for a renovation project in your community. Paying back the loan can come from a portion of the entrance fees.

Hopefully, this will spark continued interest in preserving and restoring historic homes, which are a terrific part of the American heritage.

If you are interested in purchasing a new home or listing your current property, be sure to consult with your trusted real estate professional.

Case-Shiller: July Home Price Growth Hits Lowest Pace in 12 Years

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Case-Shiller July Home Price Growth Hits Lowest Pace in 12 YearsCase-Shiller’s National Home Price Index reported U.S. home prices grew by 3.20 percent year-over-year in July; as compared to year-over-year home price growth 0f 3.00 percent posted in June. Cities with the highest rates of year-over-year home price growth were Phoenix, Arizona with 5.80 percent year-over-year home price growth. Las Vegas, Nevada had 4.70 percent year-over-year home price appreciation and Charlotte, North Caroline bumped Tampa, Florida from the top three cities with home price appreciation of 4.60 percent. Tampa, Florida posted 4.50 percent year-over-year home price growth in July.

Home Price Growth Stalls In West

14 cities had higher home price gains than in June and Seattle, Washington was the only city in the 20-City Index to post lower home prices. Analysts said that after years of rapid and unsustainable growth in home prices on the West Coast coupled with economic expansion and job growth in areas with lower home prices. July readings for home-price growth in western cities that posted double-digit price growth percentages in recent years were far lower. Home prices in Portland, Oregon rose 2.50 percent year-over-year; Los Angeles, California home prices rose 1.10 percent and San Francisco, California posted year-over-year home price growth of 0.20 percent.

High Home Prices Ease Demand Caused By Low Supply Of Homes For Sale

As home prices in many markets skyrocketed, would-be buyers were sidelined by affordability cash buyers and strict mortgage loan requirements. With home prices stabilizing and mortgage rates at near-record lows, more buyers will likely enter the market. This would increase demand on already slim supplies of homes for sale and cause home prices to rise at a faster pace than they have in 2019. Current rates of home price growth remain higher than current inflation and wage growth, but are low enough to encourage home buyers who were previously unable to keep up with rapidly rising home prices.

Seven cities posted higher rates of home price growth year-over-year in July as compared to readings for year-over-year home price growth from June 2018 to June 2019. The National Association of Realtors® said that sales of pre-owned homes were higher in July for the first time in months. The supply of available homes tightened in June; this trend is expected to boost home prices as demand for homes increases.

 

How To Create A Home-Buying Partnership

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How To Create A Home-Buying PartnershipMany want to have a home, yet find it difficult to afford one by themselves. Some people are forming home-buying partnerships to buy a home and live in it together. Here are some considerations for those interested in forming a home-buying partnership.

A home-buying partnership is a legal and personal relationship that is similar to having a permanent roommate. It has the feeling of being married to the other person in a legal way, not in a romantic way. Like any business partnership, there are advantages and disadvantages.

Advantages Of A Home-Buying Partnership

Buying a home is easier when sharing the responsibility with another person. In an equal partnership, the money needed is half and the expenses are also half of when compared to buying a home alone.

Wasting money on rent stops and the equity value may build up by owning a home over time if real estate prices increase.

Combining credit strength as co-signers may make it easier to buy a home if both parties have a decent credit history. Qualifying for a bigger home loan amount may be possible, which allows buying a larger home.

A strategy to consider is buying a duplex building, which is two homes combined into one building structure.

Disadvantages Of A Home-Buying Partnership

Getting along well with your home-buying partner is essential. Not only will you share a business relationship, but you will also see each other constantly. Having compatible lifestyles is critical to avoid personality clashes.

People who have been roommates for years and get along extremely well make great candidates for home-buying partners. This is a far better choice than doing something this serious with a person you just met.

Legal Structure

The best way to own the property is by forming a single-purpose limited liability company (LLC). The company will do nothing but own the home. An LLC is like a general partnership with the exception that it limits the liability exposure of its owners to the investment value they have in the LLC.

Ownership in an LLC is in units of the LLC. Owning half the authorized units is half the LLC. If one partner has one unit more than the other one has, that partner has decision-making control over the property.

For tax purposes, an LLC is a pass-through entity. The tax obligations and benefits pass to the owners of the LLC according to the portion of the LLC that they own.

Sudden Death, Buy-Sell Provision

This provision allows for one of the partners to buy out the other one’s ownership before it sells to a third party. This can happen automatically if one of the partners dies or becomes incapacitated. It may happen if there is a disagreement.

The idea is to use this provision so that one partner is not forced to sell the home and has the option to buy the other half of the home before it sells to another party.

Summary

These are just the basic issues about a home-buying partnership. This arrangement can be an effective way to own a home, just be very careful about how you select a partner. Use a competent real estate attorney to form the LLC properly. 

And as always, consult with your trusted professional real estate agent to help you navigate through the purchase process.