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A Tip for Homeowners Over Age 62

We’ve got a great tip for senior homeowners today. Have you ever heard of a reverse mortgage?

As promised, I want to discuss a few tips for any senior homeowners in the market to buy or sell a property in the near future. They will help you compete in this crazy market.

Last time, we discussed the increased number of sales from 2016. A big portion of those sales is coming from seniors who are looking to downsize. There is a lot of demand for homes like this, especially from first-time homebuyers. First-time homebuyers are a great demographic to attract because they often have no contingencies.

Even if you have had a previous bankruptcy or bad credit, you can still qualify for a reverse mortgage.

If you’re a senior that’s looking to sell your home and move to something a little smaller, you should consider a reverse mortgage. You can use a reverse mortgage to buy a new home before your current home is sold, then use the proceeds from the eventual sale to pay back the lender.  Even if you have had a previous bankruptcy or bad credit, you can still qualify for a reverse mortgage, which will eliminate the need to make a monthly mortgage payment. However, you do have to be age 62 or older.

Remember that if you’re thinking about selling, you become a buyer just as soon as you become a seller. If you’re thinking of buying a home in the near future or have any other questions for me, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

A Look at Our Market From Last Year to Now

What is going on in our local Southern California real estate market? Let’s go over the numbers and how things compare to what we saw last year.

Today I’ve got a market update from the first half of 2017 regarding some of our local areas. 

To give you an idea of what’s been going on, I’ll be comparing what we’ve seen this year with what things looked like in 2016. The first piece of good news is that more homes have sold this year than last year and 2015 both. 

We’ve also seen a healthy increase in home values, as well as a decrease in the number of days homes are typically spending on the market. 

But, let’s take a look at some more specific numbers so that we can get a better idea of how things have changed. In 2015, the average sales price was roughly $413,000. That number increased in 2016 to $442,000, and this year, prices have risen again. As of June of 2017, the average sales price was $472,000. This is a roughly $30,000 increase each year.

Appreciation between 2015 and 2016 was approximately 7%, and from 2016 to 2017 it was 6.75%. So how does this affect your investment? Most people using a conventional loan will put down approximately 20%, and those going the route of an FHA loan will put down about 3.5%. In today’s market, that down payment can relate to a lot of leverage in relation to appreciation. If we consider a down payment of 3.5% in relation to a 7% increase in terms of appreciation, the result is a 210% increase on your investment. 

For an investor who usually puts 25% down payment, it is a 1 to 4 leverage. Because of inflation and appreciation rates, an ideal investment will see as much as a 33% return. 

So, what numbers are important to know for specific markets in our area? Starting to the east, the city of Rancho Cucamonga has experienced a hefty appreciation of 8.4% compared to last year. Another notable statistic is that the average number of days on market has decreased from 54 in 2016 to 29 this year. The number of homes sold, though, has increased. In 2016, 1,271 homes sold compared to the 1,331 this year. 

It’s a good time to purchase and a great time to sell.

In Chino Hills, home appreciation is at 6.4% average between this year and last. Days on market have dropped in that area, as well. This is a pattern we’re largely seeing across the board. Chino Hills homes have gone from spending an average of 58 days on market in 2016 to an average of 43 days in 2017. The number of homes sold has increased, as well. 671 homes sold between January and June of 2016, whereas 750 homes sold in 2017 between those same months. 

When we look at the more mature city of Alhambra, this pattern continues. Like other nearby areas, this city is seeing an increase in value. There, the appreciation between 2016 and 2017 has been 6.4%. As is the case elsewhere, the number of homes sold also increased in the last year—going from 316 to 331 homes. Also, again, days on market have gone down. Last year, the average was 48 days. This year, that number is 44 days. 

So, what do all of these numbers mean for you? If you are looking to sell, you have a great opportunity now to do so. If you price it correctly, your home should move fairly quickly off the market. Buyers, too, can take advantage of the market. However, buyers will need to act quickly and be ready to make decisions. Additionally, mortgage rates are still at all-time lows. 

It’s a good time to purchase and a great time to sell.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Finding the Funds to Invest in Real Estate

You can find the funds to invest in real estate by using your retirement fund and putting it into a self-directed IRA.

In one of my previous videos, I discussed the seven reasons you should buy an investment property to forge a path of financial independence and perhaps even become a millionaire. 

Since then, I’ve received a lot of great feedback on this topic. One question I keep getting is from people who are interested in investing in real estate but don’t think they have the money to do so. 

Everybody’s circumstances are different, but there are ways you can invest in real estate even if you think you don’t have the means. 

Odds are you have a 401(k), a 403(b) if you’re a teacher, a deferred compensation plan, or an IRA. As I’ve mentioned before, our market has averaged a 6% appreciation every year for the past 30 years, and with a leverage of 20% to 25% and a 6% cash flow based on your rental, you should be able to produce a 30% return per year. 

If you have a child that’s about to attend college, I have a way for you to invest in real estate that I personally use. I recently purchased a home near where my son attends college at UC Riverside using my retirement fund. He shares the rooms with friends and classmates, which produces more than a 6% return annually. 

Using a self-directed IRA gives you total checkbook control.

Find the funds to invest in real estate by using your retirement fund and putting it into a self-directed IRA. This way, you have total checkbook control, you’re not dependent on a company you’re not familiar with, and you have total control over the property. You can also benefit from the tax write-offs that come with owning an investment property. 

If you want to know more about how to set up a self-directed IRA to invest in real estate or you have any other questions, please don’t hesitate to give me a call or send me an email. I’d be happy to speak with you.