As an owner of rental properties, it is crucial to be updated on the latest real estate terms. Being familiar with the major developments occurring in the real estate market can assist you in safeguarding your investments and growing your portfolio. You can better negotiate with potential buyers or renters and make informed decisions if you understand the situation. Understanding these six concepts will give you an edge in today’s competitive market. Let’s take a closer look at each of them.
iBuyers is a real estate company that uses cutting-edge technology to facilitate home-selling solutions in a timely and organized manner. They provide an innovative and reliable way of selling residential properties within days, with minimal participation from the homeowners. By evaluating real estate market data with complex procedures, iBuyers is able to make instant, competitive offers in accordance with present market conditions.
To begin the iBuying procedure, most homeowners simply submit their property details to an iBuyer’s website. After assessing the property, iBuyers makes an instant cash offer within 24 to 48 hours. Within a few days following acceptance of the offer, the homeowner can set a closing date and get paid.
A key benefit offered by iBuyers is an efficient selling procedure that eliminates the necessity for staging, open houses, and negotiations. The stress associated with preparing their homes for showings and the months-long delay in selling their properties can be eased.
Days on Market (DOM)
When you’re on the hunt for a new property, familiarizing yourself with basic real estate terms is a must. One such term is “DOM,” which stands for “days on the market.” This metric displays the number of days a property has been listed for sale.
An extended period on the market without any offers being made could be indicated by a high DOM. However, you should keep in mind that seasonal changes in the real estate market could influence DOM. As an example, the real estate market is typically more active in the spring than in the winter.
By studying the average DOM for a particular area, you can identify whether the real estate market is strong (i.e., with a low average DOM) or weak (i.e., with a high average DOM). In a weak market, buyers have the upper hand since they may have an easier time negotiating a better deal.
Real Estate Owned (REO)
REO property, which stands for “Real Estate Owned,” is a type of property that a lender owns after the previous owner defaulted on the mortgage payments and the property has been foreclosed on. This usually happens when a home fails to sell at a foreclosure auction.
Investors may find REO properties appealing to investment opportunities because of the possibility of purchasing them at below-market value. Despite this, it is essential to remember that these transactions normally involve jeopardies as the property is sold “as-is.” The buyer is responsible for paying for any necessary repairs or renovations and securing financing can be difficult.
FHA 203k rehab loan
The FHA 203k rehab loan is a loan program assisted by the federal government. It enables prospective homebuyers to finance the purchase of a property that requires substantial renovations or repairs.
The loan can fund repairs and renovations, such as structural developments, plumbing and electrical fixes, and the installation of new heating and air conditioning systems. It can also be used to insulate and replace windows and doors in older homes to make energy-efficient upgrades.
The main benefit of the FHA 203k rehab loan is that it allows buyers to finance the cost of the maintenance and makeovers into the mortgage, meaning they don’t have to pay for these expenditures out of pocket. Moreover, the loan can be used to purchase a property needing repair and refinance an existing property.
However, the loan is not intended for “luxury” enhancements like the construction of a swimming pool or other non-essential amenities. The money is supposed to go toward repair and renovations to their homes so they can live safely and comfortably in their properties.
Debt to Income (DTI)
Lenders utilize the DTI, or debt-to-income ratio, as a financial metric to determine the amount of one’s monthly income allocated to paying debts. To calculate DTI, add up your monthly mortgage or rent and other debt payments, dividing the total by your gross monthly income and multiplying by 100. Lenders can utilize this calculation to know the amount of your income currently allocated to paying off debts and how much mortgage you can afford.
It’s important to keep your DTI as low as possible to improve your chances of getting qualified for a loan. Mostly, lenders prefer borrowers to spend no more than 28% of their monthly income on housing payments and 36% or less on monthly debt payments. A lower DTI enhances the likelihood that you will be approved for a loan or a mortgage.
An individual’s DTI ratios may be evaluated slightly differently by lenders depending on the type of loan or mortgage being sought. For illustration, borrowers with exceptional credit scores may be eligible for a higher DTI ratio from some lenders.
In any case, keeping a low DTI ratio is important for maintaining good financial health and making it easier to obtain financing when necessary. Raising one’s income, paying down one’s debt, or seeking the advice of a financial professional are all options for those struggling with a high DTI.
Earnest Money Deposit (EMD)
Earnest Money Deposit (EMD) is a deposit a buyer must make when offering a property. One possible alternative is a “good faith deposit.” This deposit could lure the seller to accept the offer by showing the buyer’s seriousness and sincerity to purchase the property. The amount of EMD provided typically ranges from 1% to 5%, but this can change depending on the market and the conditions. The EMD is held in escrow and, if the transaction is successful, is applied to the purchase price of the home.
It’s important for a rental property owner to acquire knowledge of a wide range of real estate terms. Staying up to date with the latest industry progress can help you make informed judgments when negotiating with buyers or renters and protect your investments. Remember that in a competitive market, knowledge is key to success.
Real Property Management Capital Region is willing to give assistance in establishing financial freedom and making passive income via real estate investments in Saratoga Springs and the neighboring areas. Regarding our property management and real estate investment, our professionals are able to deliver knowledgeable and accessible advice. Contact us online or call us at 518-290-1448.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.