Norada Real Estate Investments

Rental Property Insurance: Protect Your Investment Today

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What is a Rental Property Insurance?

Rental property insurance is a type of insurance policy designed to protect property owners who rent out their properties to tenants. It provides coverage for damages or losses to the rental property caused by certain perils, such as fire, theft, vandalism, and natural disasters. Additionally, rental property insurance can provide liability coverage, which protects landlords from legal claims and lawsuits brought by tenants or other third parties who suffer injuries or property damage while on the rental property.

The coverage provided by rental property insurance typically includes the physical structure of the rental property, as well as any personal property that is owned by the landlord and kept on the property for tenant use, such as appliances, furniture, and fixtures. Some rental property insurance policies may also cover lost rental income if the property becomes uninhabitable due to a covered loss.

It's important to note that rental property insurance is different from renters insurance, which is designed to protect the personal property of tenants rather than the property itself. If you own a rental property, it's important to consider purchasing rental property insurance to protect your investment and financial interests.

Understanding Rental Insurance Coverage Options

Rental property insurance is essential for landlords who want to protect their investments from unexpected losses and liabilities. There are several types of coverage available with rental property insurance, each of which is designed to provide protection for different risks that landlords may face.

One of the most important types of coverage is property damage. This coverage helps landlords pay for repairs or replacement of their rental property if it is damaged by a covered event, such as a fire, storm, or vandalism. This coverage is essential for landlords because repairs to rental properties can be expensive, and damage can lead to lost rental income [1].

Another important type of coverage is liability insurance. This coverage helps landlords pay for legal fees and damages if a tenant or visitor is injured on their property. Liability insurance can also cover damages caused by a tenant’s actions, such as if they accidentally start a fire. Without liability insurance, landlords could be personally responsible for these costs, which could be financially devastating [2].

Finally, rental property insurance can also include coverage for lost rental income. This coverage provides landlords with compensation if their rental property is uninhabitable due to a covered event, such as a fire or flood. This coverage can help landlords pay their mortgage and other expenses while repairs are being made [1].

It is important for landlords to understand which types of coverage are included in their rental property insurance policy and which types of coverage may be necessary to add. Depending on the specific risks that a landlord faces, additional coverage may be required to fully protect their investment.

Choosing the right rental property insurance policy can be challenging, especially for first-time landlords. There are many factors to consider, including the size and type of property, location, budget, and specific risks that need to be covered. Here are some tips for choosing the best rental property insurance policy:

  1. Understand the coverage options: As discussed in the previous section, there are several types of coverage available with rental property insurance. It is important to understand what is included in a policy and which types of coverage may be necessary to add based on the specific risks a landlord faces.
  2. Shop around: It is important to compare policies and prices from several different insurance companies before choosing a policy. This can help landlords find the best coverage for their budget and specific needs.
  3. Consider the deductible: The deductible is the amount that a landlord must pay out of pocket before insurance coverage kicks in. A higher deductible will generally result in a lower monthly premium, but it may also mean higher out-of-pocket costs in the event of a claim.
  4. Look for discounts: Some insurance companies offer discounts for landlords who have multiple properties, have installed safety features in their rental properties, or have a good claims history. It is important to ask about discounts when shopping for insurance.
  5. Work with an insurance agent: An experienced insurance agent can help landlords understand their options and choose the best policy for their needs. They can also provide guidance on how to reduce risks and prevent claims.

How to Choose the Right Insurance for Your Rental Property?

The number one goal of your rental business should be to make money, not give it away.  One way to protect you and your investment is to have proper insurance in place. Let me introduce you to four insurances that you should consider.

A Good Lease

The first insurance that I possess is the insurance of a good lease and a thorough move-in inspection. More than once I have referred to the pictures of a move-in inspection to counter a tenant's claim about a pre-existing condition. I remember one time during a preliminary move-out inspection I noted a cracked ceramic floor tile. The tenant claimed that it was like that when they moved in.

I turned on my laptop, pulled up the appropriate picture from the move-in inspection, and proved to the tenant that the crack was not there when they moved in. The next insurance that I possess is the kind purchased from my friendly neighborhood insurance professional. However, take note that there is more to consider than just regular old homeowner's insurance. There are several kinds of insurance that you want to consider as a landlord.

Property Insurance

When it comes to insuring my personal rental properties, I have a landlord policy on each rental unit that I own, whether that unit is paid off or not. Landlord policies have the added benefit of additional liability protection for the landlord. You also need to ensure that each policy carries sufficient coverage to satisfy your mortgage lender.

Depending upon your rental's geographic location, there are some additional property insurance policies you may want to consider. In California, many people have earthquake insurance. In other areas, you may want to investigate flood insurance. Your insurance professional can educate you on the particular hazards you might wish to insure against for your area.

Umbrella Insurance

The third insurance that I have is an umbrella policy, which acts like an umbrella over all of my other existing insurance policies. Examples of when this coverage may come into play include when a guest of your tenant slips and falls in one of your rental properties and is severely injured, or when a storm occurs and a neighbor's property is damaged by a tree falling from your property.

Your landlord insurance policy has a liability limit. The umbrella policy picks up after those limits are exhausted and therefore usually carries a very high deductible, $300,000 or higher. Those deductibles seem high until you are sued for $750,000 and lose. In this example, the first $300,000 would be picked up by your primary insurance; the balance of $450,000 would be yours to pay. An umbrella policy helps pay that off. Otherwise, virtually everything you own would be a fair game against that judgment.

Renter's Insurance

The fourth insurance is renter's insurance. Remind your tenants that their personal property and vehicles, or those of their guests, are not covered by any of your insurance policies against loss or damage due to fire, theft, vandalism, rain, water, criminal or negligent acts of others, or any other cause. Coverage for those items comes only through a renter's insurance policy.

Renters' insurance traditionally covers the tenant's and any guest's possessions, like furniture, clothes, computers, and bikes. Additionally, if a plumbing backup floods your property and renders it uninhabitable, the renter's insurance may cover the cost of a temporary place to live until the tenant can move back into your property. Some renter's insurance policies may also have protection for the tenant against lawsuits.

You should always require renter's insurance when the tenant has a pet in the residence. You do not want the tenant's dog biting a neighboring kid and then have the neighbor sue you. At my office, we will not allow tenants to receive keys without proof of a paid-in-full renter's insurance policy. If the tenant does not have a policy at the time of lease signing, we make the tenant call an insurer and obtain one on the spot.

Insurance is all about risk management; you buy or require insurance to manage some of those risks. Knowing your real estate laws is the best defense. After that, obtaining the insurance discussed in this article is an intelligent way to begin managing your risk. By following these tips, landlords can find the best rental property insurance policy to protect their investment and provide peace of mind.

10 Home Improvements That Are Worth the Cost

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Home improvements can be a fantastic way to add value to your property while enhancing your living space. Whether you're looking to sell in the near future or simply want to make your home more comfortable, certain upgrades can be particularly beneficial. Here are ten home improvements that are worth the investment, along with additional details to consider for each:

These Ten Home Improvements Are Worth the Cost

1. Kitchen Remodel

A modern, functional kitchen can be a major selling point, especially for attracting buyers who love to cook or entertain. Consider these aspects for your kitchen remodel:

  • Appliances: Upgrade to stainless steel appliances with features like convection ovens, built-in microwaves, and dishwashers with multiple wash cycles.
  • Countertops: Choose durable and stylish countertops like granite, quartz, or butcher block. Consider incorporating an island for extra prep space and seating.
  • Cabinets: Repaint or replace cabinets with modern styles and finishes. Opt for features like pull-out drawers, soft-close hinges, and built-in organizers for improved functionality.
  • Flooring: Select easy-to-clean and water-resistant flooring like tile, laminate, or luxury vinyl plank (LVP).

2. Bathroom Upgrades

Like kitchens, bathrooms can significantly impact a home's value. Updating these elements can create a spa-like retreat:

  • Fixtures: Replace outdated faucets, showerheads, and toilets with water-saving models in a modern style. Consider a walk-in shower with multiple showerheads for a luxurious feel.
  • Tiling: Opt for timeless tile designs for walls, floors, and shower surrounds. Consider installing heated floors for an extra touch of comfort.
  • Lighting: Improve the ambiance with a mix of overhead and task lighting. Vanity sconces can add a touch of luxury.

3. Energy-Efficient Windows

Replacing old windows with energy-efficient ones can bring multiple benefits:

  • Cost Savings: Reduce heating and cooling costs significantly, especially in extreme climates.
  • Comfort: Improved insulation keeps your home warmer in winter and cooler in summer.
  • Noise Reduction: New windows can help block out unwanted noise from outside.
  • Environmentally Friendly: Reduce your home's carbon footprint.

4. Landscaping

Curb appeal matters, and a well-landscaped yard can make a great first impression:

  • Increase Value: A well-maintained lawn, colorful flowers, and attractive shrubs can add value to your home.
  • Outdoor Living: Create a designated patio or deck area with comfortable seating and shade for entertaining or relaxing outdoors.
  • Improved Drainage: Proper landscaping can help direct water away from your foundation, preventing moisture problems.

5. Additional Bedrooms

If you have the space, adding bedrooms can significantly increase your home's marketability and price. Consider these factors:

  • Local Market: Research if additional bedrooms are in high demand in your area.
  • Building Codes: Ensure any additions comply with local building codes and obtain necessary permits.
  • Long-Term Needs: If you plan to stay in your home for a while, consider if the additional bedroom will suit your future needs.

6. Home Extensions

Expanding your living space with a home extension can add significant value, especially in markets where there's a premium on square footage:

  • Increased Functionality: Add a sunroom, family room, or home office to create more usable space in your home.
  • Open Floor Plan: Consider knocking down walls to create a more open and modern living space.
  • Professional Help: Consult with an architect and contractor to ensure the extension blends seamlessly with your existing home.

7. Loft Conversions

Utilizing attic space for an extra bedroom or office can be a cost-effective way to add value without increasing the footprint of your home:

  • Headroom Requirements: Ensure the converted loft meets minimum ceiling height requirements.
  • Storage Solutions: Consider built-in storage solutions to maximize space in the converted loft.
  • Accessibility: Think about adding a staircase that is safe and easy to navigate.

8. Solar Panels

With rising energy costs, solar panels are an attractive feature for homebuyers looking to save on bills:

  • Financial Incentives: Many governments offer tax credits or rebates to encourage investment in solar energy.
  • Long-Term Savings: Solar panels can significantly reduce your electricity bills over time.
  • Environmental Impact: Generate clean energy and reduce your reliance on fossil fuels.

9. Smart Home Technology

Installing smart home devices can make your home more functional, secure, and appealing to tech-savvy buyers:

  • Smart Thermostats: Regulate your home's temperature remotely and save on energy costs.
  • Smart Security Systems: Monitor your home remotely, receive alerts when doors or windows open, and deter potential intruders.
  • Smart Lighting: Control lights with your voice or smartphone, create automated lighting schedules, and improve energy efficiency.
  • Smart Appliances: Control appliances remotely, receive notifications when laundry finishes, and monitor energy usage.

10. Hardwood Flooring

Hardwood floors are desirable for their appearance, durability, and ease of maintenance:

  • Increased Value: Hardwood floors can significantly boost the resale value of your home.
  • Timeless Style: Hardwood offers a classic look that complements various décor styles.
  • Easy Cleaning: Hardwood floors are relatively easy to clean and maintain compared to carpet.

Remember, while these improvements can increase your home's value, they should also align with your personal needs and enjoyment of your space. Before embarking on any major renovations, consider consulting with a real estate professional to ensure your investments are wise for your particular market.

All of these improvements return at least as much money as you put into them.

Turnkey Real Estate Investment: A Guide For Beginners

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Definition of Turnkey Real Estate Investment

Turnkey real estate investment refers to a type of real estate investment where the investor purchases a property that is ready for rental use, without any further improvements or renovations needed. The property management, rent collection, and maintenance responsibilities are handled by a third-party property management company, allowing the investor to simply collect the profits without having to manage the property.

This type of investment provides a low-maintenance, hassle-free way for individuals to invest in real estate and generate passive income. The turnkey approach provides a complete solution for those looking to invest in real estate with minimal effort and time commitment. Let us get to know about the “turnkey real estate investments” a little more in this article.

What is a Turnkey Real Estate?

Turnkey Real Estate Investment

So the first question to ask here is – What is turnkey real estate? To answer this let us first start by defining what “Turnkey” means. Turnkey refers to a product or service that is ready to use or ready for generating income/profit. Similarly, a turnkey investment means investing in a property that will give you continuous profits.

For example, if you want to buy a property and put it on rent to gain such kinds of benefits. You can buy a property that is already on rent and being taken care of by someone else. This way you get an already set-up profit-generating business model and continue churning profits from it over the years to come.

In other words, turnkey real estate refers to a property that is ready to be lived in or used immediately after purchase. The term “turnkey” means that the buyer can move in or start using the property without having to make any additional improvements or renovations. The property is fully functional, and all the necessary systems, such as plumbing and electrical, are in place and good working condition.

The goal of a turnkey property is to provide the buyer with a hassle-free investment opportunity that requires minimal time, effort, and money to get up and running. This type of investment is popular among real estate investors who are looking for a quick and easy way to start earning a return on their investment.

Advantages of Turnkey Real Estate Investment

Turnkey Is Passive Real Estate Investing

Passive real estate investing is when you hire or contract a turnkey real estate investment company to help you find and manage your investment properties. You are not actively involved as an investor or landlord, but the income is truly passive. Turnkey real estate investment is a passive investment option for real estate investors. Investing in turnkey real estate is one of the most profitable business opportunities in today's day and age.

The prices of properties are ever-increasing and there are minimal chances of them going down. Hence, buying a real estate property is one of the best choices for investment purposes. However, it is not always possible to live in the area and look after the property to earn a profit. For those investors, a “turnkey real estate investment” is the best option.

Passive Real Estate Investing

Real Estate Profits Even From A Distance

Turnkey Real Estate Investment

Another benefit is that you get the advantage of rental income even from a distance. This means that you do not have to work to maintain the property, all you need to do is sit back home and get the profits in the form of rental income. Turnkey real estate investment is a type of investment where the investor purchases properties that are ready to be occupied or used immediately, without the need for any further renovation or upgrades.

These properties are typically single-family homes located in remote locations. The idea behind this type of investment is to provide the investor with a hassle-free and low-maintenance investment that is ready to generate rental income right away. The properties are typically managed by a professional property management company, which takes care of the day-to-day operations, such as rent collection, maintenance, and tenant placement.

This allows the investor to sit back and collect the returns on their investment without having to worry about the day-to-day operations of the property. Тhіs type of investment аllоws уоu thе frееdоm tо rеmаіn lіvіng whеrе уоu wаnt, whіlе stіll mаіntаіnіng а саsh flоw frоm а lосаtіоn thаt hаs ехсеllеnt rеаl еstаtе vаluеs.

You Get A Fully Managed Turnkey Investment Property

The third advantage is that you get a property that a turnkey property management company already manages. So, you can live wherever you are living in this country and still earn profits from your property which may be located out of your city or even state. This eliminates the hassle of managing the property yourself and also saves you time, money, and resources. With a turnkey real estate investment, you have the peace of mind that your property is in the hands of professionals who have the expertise and experience to manage it effectively.

They handle all the day-to-day responsibilities such as rent collection, maintenance and repairs, property inspections, tenant screening, and much more. This allows you to enjoy the benefits of investing in real estate without getting involved in the operational details. The turnkey property management company will also provide you with regular updates and financial statements, ensuring that you are always up-to-date on the performance of your investment.

You Can Buy Turnkey Cash Flow Investment Properties In Your Budget

This is one of the most attractive aspects of turnkey real estate investment. The properties available for turnkey investment often come at a range of price points, so you can choose a property that fits within your budget and provides the desired cash flow. This makes turnkey real estate a viable option for a wide range of investors, regardless of their financial situation. Additionally, with the help of a knowledgeable real estate agent or investment company, you can find a property that not only fits your budget but also meets your investment goals and objectives.

If your budget does not let you buy property in your city or state, you can easily find a property in another place that suits your budget. For example, a person living in New York (where real estate is very expensive) can buy a turnkey property in Atlanta or Dallas, or Memphis, and have it managed by a local turnkey property management company. They do not need to restrict themselves to their own city/state. In this way, they can buy affordable properties in high-growth markets and get a passive income in the form of rent. Some percentage of the rental income will be deducted to pay the property management company.

These Are The 4 Best Markets For Turnkey Real Estate Investments

Houston Real Estate Market

The Houston real estate market has been attracting the attention of turnkey real estate investors for several reasons. As the fourth-largest city in the United States, Houston offers a diverse economy with strong sectors such as energy, healthcare, and technology. This economic diversity provides stability and growth potential for real estate investments.

Houston is known for its affordable housing market, making it an attractive destination for investors seeking turnkey properties at reasonable prices. The city has a wide range of housing options, from single-family homes to multi-unit properties, catering to different investment strategies and budgets.

One of the key factors driving the demand for turnkey properties in Houston is the robust rental market. The city has a growing population and a strong job market, which contributes to the demand for rental properties. Investors can benefit from consistent rental income and the potential for long-term appreciation.

Additionally, Houston has favorable landlord-tenant laws and a relatively landlord-friendly legal environment. This provides investors with a sense of security and protection for their investments.

Atlanta Real Estate Market

The Atlanta real estate market has been a hotspot for turnkey real estate investments due to its strong economic growth, population growth, and affordable housing options. Atlanta is a major business and transportation hub, attracting a diverse range of industries, including technology, finance, and logistics. The city's vibrant economy creates opportunities for rental properties and ensures a steady demand for housing.

Atlanta offers a favorable investment climate with affordable property prices and a relatively low cost of living compared to other major cities. This affordability factor makes it attractive to investors looking for turnkey properties with favorable cash flow potential.

The city also benefits from a strong rental market, driven by factors such as job growth, a robust student population, and a steady influx of young professionals. Turnkey investors can tap into this demand and generate consistent rental income.

Furthermore, Atlanta has a pro-business environment and a landlord-friendly legal system, providing investors with a level of confidence and security. The city's real estate market has shown resilience and stability over the years, making it an appealing choice for turnkey real estate investments.

Dallas Real Estate Market

The Dallas real estate market has emerged as a top destination for turnkey real estate investments, attracting investors from around the world. Dallas is a major economic powerhouse in Texas, with a thriving business sector, strong job growth, and a diverse economy that includes finance, technology, healthcare, and manufacturing.

The city offers a favorable investment environment with affordable property prices, a low cost of living, and a steady appreciation rate. Turnkey investors can find a range of property options, including single-family homes, townhouses, and multi-unit buildings, allowing for diversification and flexibility in their investment portfolios.

Dallas benefits from a robust rental market, driven by factors such as population growth, a strong job market, and a growing millennial population. This creates a steady demand for rental properties, providing investors with the potential for consistent cash flow and long-term appreciation.

In addition, Dallas has investor-friendly policies, including landlord-friendly regulations and favorable tax conditions. The city's pro-business environment and strong economic fundamentals make it an attractive choice for turnkey real estate investments.

Birmingham Real Estate Market

The Birmingham real estate market in Alabama has gained traction among turnkey real estate investors due to its affordable properties, strong rental demand, and potential for high cash flow. Birmingham is the largest city in Alabama and has a diverse economy that includes sectors such as healthcare, education, manufacturing, and finance.

One of the key advantages of investing in Birmingham is the affordable housing market. Property prices in Birmingham are significantly lower compared to many other major cities, allowing investors to acquire turnkey properties at attractive prices and achieve favorable cash flow.

Birmingham also benefits from a strong rental market, driven by factors such as job growth a steady influx of students from various universities and colleges in the area, and a growing population. The demand for rental properties in Birmingham remains consistent, providing turnkey investors with the opportunity to generate reliable rental income.

Another advantage of the Birmingham real estate market is the potential for high cash flow. The affordable property prices, combined with strong rental demand, create favorable conditions for investors to achieve attractive returns on their investments. The relatively low cost of living in Birmingham further enhances the cash flow potential for turnkey properties.

Birmingham's economy is diverse and has seen significant growth in sectors such as healthcare, education, manufacturing, and finance. This economic diversity contributes to the stability of the real estate market and provides opportunities for investors to explore different investment strategies.

Additionally, Birmingham offers a favorable regulatory environment for real estate investors. The landlord-tenant laws are generally considered to be landlord-friendly, providing investors with a sense of security and protection for their properties.

Yоu Dоn't Hаvе Tо Bе а Turnkey Rеаl Estаtе Investment Eхреrt

Whеn уоu dеаl wіth а rерutаblе turnkеу rеаl еstаtе investment соmраnу, thаt рrоvіdеr knоws thе rеаl еstаtе mаrkеts wіth muсh mоrе рrесіsіоn thаn аn оutsіdеr wоuld. Ѕurе, уоu соuld dо sоmе bаsіс rеsеаrсh оn аn аrеа, сhесkіng оut thе lосаl sсhооl rаtіngs, сrіmе rероrts, аnd рrісе rаngеs, but а turnkеу рrоvіdеr wіll knоw аll оf thаt аnd mоrе; thеу'll knоw thе hеаrt оf аn аrеа, suсh аs whу реорlе рrеfеr оnе nеіghbоrhооd оvеr аnоthеr.

Additionally, a turnkey provider will have a network of contractors, inspectors, and other professionals to help you find and maintain your property. They also often have a team of property managers who will handle all aspects of the property management, from collecting rent and handling tenant requests to maintaining the property and addressing any issues that arise.

This hands-off approach can be especially attractive to investors who are looking for a passive income stream or those who live far from the property they are investing in. Ultimately, a reputable turnkey provider can make the real estate investment process smoother, more efficient, and more profitable.

What is a Turnkey Real Estate Investment Company?

Turnkey Real Estate Investment Company

A turnkey real estate investment company is a company that acts as the mediator between the buyer and the seller. This is the company that is responsible for hiring the maintenance staff for the property. They are also responsible for providing you with the details about the properties that are available to buy. When you buy a property from the Turnkey real estate company, you get a fully renovated property that is already rented, maintained, and taken care of. It is like buying a profitable turnkey business.

Additionally, the turnkey real estate investment company will handle all the legal documentation and paperwork, making the process of buying a property much smoother and stress-free. They will also provide you with regular updates on the status of the property, including rental income and any necessary repairs.

With a turnkey real estate investment company, you can enjoy passive income and hands-off investment, freeing up your time and allowing you to focus on other things. Overall, working with a turnkey real estate investment company can be an excellent way to invest in real estate and experience the benefits of owning rental properties without the hassles of property management.

Risks Involved In Turnkey Real Estate Investments

Like every coin has two sides, investing in a Turnkey real estate company also comes with some risks. These are the risks involved in turnkey real estate investments. Fіrst аnd fоrеmоst, уоu wіll соmе асrоss turnkеу real estate companies thаt trу tо mахіmіzе thеіr оwn rеturns аt thе ехреnsе оf сuttіng соrnеrs, but bеуоnd thаt thеrе аrе оthеr drаwbасks.

Cheating And Frauds

The first risk is that the property you buy is not in your city or maybe the country. There is a possibility that turnkey real estate investment companies might sell a bad property to you at higher rates, which means your investment is ruined and you tend to lose all your money. Тhеrе аrе “shаdу” turnkеу соmраnіеs оut thеrе. Тhеsе соmраnіеs wіll еnсоurаgе аn оut-оf-stаtе іnvеstоr tо buу а bаd рrореrtу іn а bаd lосаtіоn, mеаnіng mоrе mоnеу lеаkіng оut оf thе іnvеstоr's росkеts thаn соmіng іn.

Your Money Is Distributed | Fewer Profits

Тhе turnkеу real estate соmpany nееds tо mаkе mоnеу. Тhіs mеаns buуіng рrореrtу аt а dіsсоunt аnd thеn sеllіng іt tо уоu аt а hіghеr аmоunt, or “flірріng” thе рrореrtу, оftеn fоr а hеftу рrоfіt mаrgіn. Some part of your rental income from the property will also go into the pockets of a turnkey property management company. For hassle-free and passive management of your property, you need to hire such companies. Managing properties and tenants can be a daunting task for you, especially if you own multiple turnkey properties in different locations.

However, it's important to note that while a turnkey real estate company may take a portion of your profits, they also help you to maximize your returns. They have a wealth of experience and resources at their disposal, including local market knowledge, relationships with contractors, and a proven system for attracting and retaining high-quality tenants.

By outsourcing the management of your property to a turnkey real estate company, you can focus on growing your investment portfolio, without having to worry about the day-to-day headaches of property management. This can free up your time and energy to focus on other areas of your life or investment strategy, and ultimately lead to a higher return on your investment in the long run.

Click on the link to know How To Buy Rental Properties With No Money Down.

Bad Turnkey Real Estate Management

Bad Turnkey Property Management

A bad property management company will not take good care of your property as you would. Since you do not know the person who has been appointed to take care of the company, you cannot be sure that they will provide you with the kind of care that the house requires.

For more details, you may read this blog – Risks In Turnkey Real Estate Investing

To conclude, it can be said that investing in turnkey real estate is a good idea if you have some money that you want to disburse to acquire profitable turnkey investment properties in different locations. However, it is also essential to stay away from the frauds and cheats of the real estate world. Тhеrе аrе sеrіоus bеnеfіts of turnkеу rеаl еstаtе іnvеstmеnt, аnd іt саn dеfіnіtеlу bе аn аttrасtіvе саsh flоw strаtеgу. Yоu wіll nееd tо іnvеstіgаtе thе turnkеу real estate рrоvіdеr аnd mаkе surе thеу аrе bоth rерutаblе аnd рrоfіtаblе, аnd еnsurе thаt thе саsh flоw орроrtunіtу thеу аrе оffеrіng уоu іs асtuаllу fеаsіblе аnd rеаlіstіс.

You also read our in-depth article on – What Is Turnkey Rental Property Investing?

The One Percent Rule: Quick Math For Positive Cash Flow Rental Properties

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The one percent rule is an analysis tool used by real estate investors to quickly screen potential rental properties. In this article I’ll go into more depth about what it is, when to use it (and when not to!), and why it can be helpful.  I’ll also address the one percent rule in high-priced markets. There are times when it makes sense to break the rule, but there are also risks to doing that.

More than anything, the one percent rule is about using income discipline when buying investment properties.  The mindset of disciplining yourself to only buy real estate investments that meet certain income criteria will help you make more money and avoid common investing pitfalls.

Let’s get started.

What is the One Percent Rule?

The basic benefit of investment real estate is its ability to produce rental income. So, the one percent rule quickly and easily measures how well a rental property does that.

The one percent rule is simply a rule of thumb that says a rental property should meet the following criteria;

Monthly Rental Income ≥ One Percent of Purchase Price

So according to the rule, a property with a total investment (price + upfront repairs) of $200,000 should rent for $2,000/month or more in order to be a good investment.  If the rent is only $1,500/month, the $200,000 price would not meet the rule. Or if you had to pay $250,000 for a property that rents for $2,000, it would not meet the rule either.

You can also use the reverse of the rule:

100 x Monthly Rent = Maximum Purchase Price

Let’s say you know a property rents for $1,500/month.  You could quickly calculate that you can not pay any more than $150,000 (100 x $1,500). So, if you saw a property listed for $160,000, you would know you’re getting closer to a good investment. Or if it was listed for $250,000, you wouldn’t have to waste your time on it.

But the one percent rule is not the final word on a property. It’s just the beginning of the story. And it does not apply to all properties or all situations. So, let’s look at when to use the one percent rule and when not to.

When to Use the One Percent Rule

The one percent rule is best used as a pre-screening tool.  It’s a way to save time and remain disciplined as an investor. This means you’ll be using it early in the process while looking for good investment purchases.

For example, you could use it to quickly filter 20 listed properties that your real estate agent sends you. First, you’d scroll down the list of asking prices in order to estimate 1% of each list price. A trick to do this in your head is just move the decimal place over 2 times to the left. For example, $100,000 = $1,000.00.

Then after you have the 1% number, you’d compare that to the market rent for the property. If the rent is close to 1% of the asking price, it’s probably worth researching more. But if the real rent is far below 1%, you can just eliminate that option.

My blogging friend and fellow investor Lucas Hall wrote a good article explaining how to estimate the rent.  As a new investor, it may take more time to make a good estimate because you’ll have to scan several sources like zillow.com (rent Zestimates are a good starting point but not always 100% accurate), Craigslist, or RentOMeter.com.  But eventually, as you study and become an expert in your area, rent prices should become more intuitive without doing a lot of research.

That’s the ideal situation to use the one percent rule. But now let’s look at when not to use it.

When Not to Use the One Percent Rule

After narrowing your list of properties, I recommend moving beyond the one percent rule and using more in-depth analysis tools.  For example, if you are going to make an offer and eventually close on a purchase, you’ll need much more information than the one percent rule provides.

The one percent rule just uses the gross income of a property (i.e. what you collect from a tenant).  But the bottom line of rental investing is the net income, or what’s left over after all expenses. To really understand a property’s cash flow, you must also deduct expenses like management, vacancy, taxes, insurance, maintenance, capital expenses, and mortgage payments.

I personally like to evaluate and set goals for a property’s cap rate and net income after financing. Sometimes a property that meets the one percent rule will also meet these goals. Other times it won’t. A lot depends on the specifics of the particular property’s expenses or the mortgage financing I can acquire.

I also only use the one percent rule for certain types of properties. In my case, it primarily makes sense for small residential rentals (i.e. houses, duplexes, triplexes, and quadplexes) in A or B neighborhoods. If I’m buying in lower-priced C neighborhoods or if I’m buying mobile home parks, large multi-unit buildings, or commercial property, the income will need to be even better than the one percent rule can provide.

Another challenge to the one percent rule (and one of the most common objections I hear) is that it can’t or shouldn’t be used in high-priced markets. Let’s take a look at that situation in more detail.

Is the One Percent Rule Even Possible in Some Markets?

As you probably know, real estate investing is very local. The trends and numbers vary greatly from one region to another. And in some regions and big cities, it’s nearly impossible to find properties that meet the one percent rule.

For example, I used Zillow Local Market Reports to evaluate several high-priced or hot real estate markets as of February 2018. Here are the results:

In the case of Denver and Washington D.C., you’d have to buy an average home at almost half of its value to meet the one percent rule. And in San Francisco, you’d have to buy a home at almost one-third of its value to meet the one percent rule!

Needless to say, buying at that big of a discount will almost never happen in any of these areas. So, your options are to:

  1. Buy in other areas (either outside of those markets or lower priced locations within the market)
  2. Lower your criteria (i.e. have a “.5% rule” or some other criteria)

Many investors choose option #1 and simply buy properties long distance in other markets. A friend of mine Rich Carey at richonmoney.com has done this for years. He initially lived in Washington D.C. and later abroad in Korea, and he now owns a portfolio of free-and-clear rental properties in Alabama.

Others may choose option #2 and lower their criteria for how much income a rental property needs to produce. This could still work if you make money in other ways, like price appreciation. But before you go that route, let me explain why the one percent rule and income discipline matter.

Why the One Percent Rule and Income Discipline Matter

Real estate is just a tool to accomplish your financial goals. You invest your savings, time, and energy, and hopefully the property pays you back much more money over time. You can then use this money to achieve financial independence and do what matters.

So, how exactly does this tool of real estate help you? Primarily in two ways:

  1. Rental Income – Net, spendable income that can be saved for rental debt snowballs, buying more properties, or paying for your lifestyle.
  2. Price Appreciation – The growth of your equity (i.e. wealth) from either a discount in price upfront or an increase in price after the purchase. This equity can then be harvested when a property is sold or refinanced.

As a smart investor, you should take advantage of both of these profit centers to achieve a better overall result. But of the two, rental income is the most straightforward.

I love buying properties at a discount or adding value, but these processes are inherently more speculative and risky. At best, they both take more time and energy to capitalize on than collecting rent.  And at worst, the “profits” on paper can disappear before you can take advantage of them.

This is why I set goals for a minimum cap rate and net income when purchasing a property. Like gauges on the dashboard of a car, these formulas tell me how well a property produces income.  The one percent rule is just a proxy or quick approximation for these more detailed calculations.

If you choose to lower your expectations for rental income (i.e. not meet the one percent rule), you must make up for this shortfall somewhere else. And that could sometimes be a difficult task.

Housing Market Saw a Big Surge in Inventory in October 2024

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October 2024 is showing a big change in the housing market. There are a lot more houses for sale than last year – way more! This is happening because of things like interest rates on mortgages and the economy. If you're buying or selling a house right now, it's really important to know what's going on so you can make smart choices.

Housing Market Trends: October 2024 Insights

Key Takeaways

  • 29.2% increase in homes actively for sale compared to last year (Realtor.com).
  • 4.9% rise in newly listed homes, despite a sharp decline from the previous month.
  • Median home price remains static at $424,950; however, the median price per square foot has increased by 2.1%.
  • Homes are averaging 58 days on the market, the slowest October in five years.
  • Prices in swing states reflect a closer relationship to red than blue states, indicating market nuance.

Overview of Current Housing Market Trends

As of October 2024, the housing market continues to experience a striking surge in inventory, with a 29.2% increase in homes actively for sale compared to October 2023. This marks the twelfth consecutive month of growth in inventory levels, which are now at their highest since December 2019. The total count of unsold homes, which includes those under contract but not yet closed, has escalated to 22.5% higher than last year (Realtor.com).

Moreover, there has been a clear upward trend in seller listing activity during October, with a recorded 4.9% increase in newly listed homes compared to the same period last year. This comes despite a notable dip from September's impressive growth of 11.6%. The recent rise in mortgage rates to a two-month high likely hampered further increases in new listings, as many potential sellers may hold off on listing their homes when borrowing costs are uncertain.

Interestingly, September's growth in new listings has a strong correlation with the rise in pending home sales seen across major markets in October. Metropolises such as Seattle, Boston, and San Diego are telling examples where a spike in new listings in September has led to a notable uptick in pending sales, indicating that sellers are genuinely in the market to buy replacements for their homes.

Days on Market and Price Trends

A critical metric to assess housing market health is the average number of days homes spend on the market. In October, the typical home spent 58 days on the market, which is an increase of eight days compared to last year. This represents the slowest pace for homes in October for five years, underscoring the current environment's unique characteristics.

The extended time on the market implies that buyers are taking more time to weigh their options, likely influenced by today's economic conditions and market uncertainties. It is important to note, however, that the average time spent on the market remains shorter than during the pre-pandemic years.

Regarding pricing, the median home price has remained relatively flat, standing at $424,950—a mere $50 lower than last month. This stability signals that while inventory has increased, it has not yet forced price reductions in a significant way. Yet, when we consider the median price per square foot, there’s been a 2.1% increase, indicating a growth in the demand for smaller, more affordable homes. Interestingly, the overall share of homes seeing price cuts holds steady at 18.6%, mirroring levels from last year, which hints at a more stable adjustment in pricing strategies among sellers.

Regional Insights on Active Listings and Trends

When analyzing the regional housing market trends, a consistent pattern emerges where all four main U.S. regions reported increases in active inventory when compared to last year. The South led the charge with an impressive 34.0% growth, while the West saw a solid 33.6% increase. Midwestern regions experienced a rise of 19.8%, and the Northeast trailed with a 14.3% uptick.

Additionally, within the largest 50 metropolitan areas, every single one recorded growth in listings. The markets with the most substantial increases included San Diego, which saw a staggering 63.5% growth, followed closely by Seattle at 60.5% and Denver at 59.5%. While these numbers can be promising, it is critical to compare them against pre-pandemic levels—many metros still fall short of the inventory levels seen between 2017 and 2019, with only 13 markets displaying higher levels than the pre-pandemic norm.

Impact of Mortgage Rates on Seller Activity

The landscape of the housing market is heavily influenced by fluctuations in mortgage rates. After a period of declining rates earlier in the summer, seller activity saw an uptick as many homeowners were encouraged to list their homes, having benefited from lower monthly payments. However, recent increases in mortgage rates during October likely tempered the momentum observed in September, holding back new inventory levels.

Empirical data shows that as the number of new listings increases, so too does the number of buyers entering the market. This correlation is especially present in markets that experienced significant listings in September, such as Seattle, where pending listings surged by 50.5% following the spike in new listings. The interplay between new listings and pending sales creates an environment where heightened availability can stimulate buyer interest, solidifying the housing market's ongoing recovery.

Analyzing Market Dynamics in Swing States Versus Red and Blue States

One of the more intriguing patterns emerging from this month’s housing market trends is the pricing dynamics across different political regions. Notably, homes in swing states have demonstrated a pricing structure more akin to red states rather than blue states. On average, homes in swing states are about 30-40% lower in cost per square foot than their blue state counterparts, yet 10-20% higher than prices in traditional red states.

This observation has real implications for buyers and sellers alike, as pricing strategies in swing states may offer unique opportunities for both investment and relocation. It has become increasingly clear that political factors can impact real estate values, thereby influencing buyer sentiment and market strategies in different regions.

Conclusion:

The October 2024 housing market presents a tapestry of trends that are critical to understanding the current state of real estate. The sustained rise in inventory reflects a market that is becoming more balanced, moving away from the intense competition seen in previous years. With homes spending more time on the market and pricing remaining relatively stable, both buyers and sellers are adjusting to a more predictable market environment.

The repercussions of rising mortgage rates and shifting political landscapes will likely continue to influence buyer and seller decisions in the approaching months. While October exhibited solid trends across inventory and pricing, close attention to these evolving dynamics is essential for all stakeholders involved in the housing market.

Will Housing Be Cheaper if the Market Crashes in 2025?

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The question of whether housing will become more affordable if the market crashes in 2025 is a complex one, with various factors influencing the potential outcome. A market crash can indeed lead to a decrease in housing prices, as seen historically, but the extent and duration of such a decrease depend on the underlying economic conditions, the reasons for the market downturn, and the response from policymakers.

Here’s a detailed analysis based on current trends and expert predictions.

Economic Context and Predictions

Current Housing Market Trends

  • Housing prices have been elevated due to limited supply and high demand, exacerbated by rising mortgage rates over the past few years. However, recent trends indicate that mortgage rates are beginning to decline, which may improve affordability for potential buyers.
  • Predictions for 2025 suggest that while home prices may continue to rise, the rate of increase is expected to slow down significantly. For instance, estimates indicate growth rates could be around 2% to 3.9% year over year by the end of 2025.

Impact of a Market Crash

  • Historically, a stock market crash can lead to decreased consumer confidence and spending, which can indirectly affect the housing market. A significant drop in the stock market (e.g., a 20% decline) often results in higher unemployment rates, which can reduce the number of potential homebuyers.
  • However, it’s important to note that a stock market crash does not automatically equate to a housing market crash. In some cases, investors may turn to real estate as a safer investment during stock market downturns, potentially keeping demand stable or even increasing it.

Key Factors Influencing Housing Prices in 2025

  • Mortgage Rates: As the Federal Reserve continues to cut interest rates, mortgage rates are expected to fall further. This could stimulate demand for housing, even if prices are predicted to rise at a slower pace[4].
  • Supply and Demand Dynamics: The availability of homes for sale plays a critical role in determining prices. If more homeowners decide to sell due to falling mortgage rates, this could increase supply and potentially stabilize or lower prices. Conversely, if demand outstrips supply due to lower rates attracting more buyers, prices could continue to rise[3][4].
  • Economic Sentiment: The overall economic climate will influence buyer behavior. If a crash leads to widespread job losses and economic uncertainty, consumer confidence may plummet, leading to reduced demand for homes and potentially lower prices[1][2].

Factors That Could Influence Housing Affordability if the Market Crashes

Government Intervention

One of the key elements to consider is the role of government intervention. In past economic crises, government programs have been instrumental in stabilizing the housing market. For example, during the 2008 financial crisis, the federal government introduced measures such as the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP), which helped many homeowners avoid foreclosure and stay in their homes. If a market crash were to occur in 2024, the government's response would likely play a significant role in determining the extent to which housing prices are affected.

Demographic Trends

Another factor to consider is the demographic trends driving housing demand. The Millennial generation, which has been entering the housing market in large numbers, is expected to continue to drive demand for the next several years. This sustained demand could help cushion the impact of a market crash on housing prices.

Shift in Work and Lifestyle Patterns

Additionally, the shift towards remote work, accelerated by the COVID-19 pandemic, has led to changes in housing preferences and demand patterns. Many people are seeking larger homes with dedicated office spaces, often in suburban or rural areas rather than urban centers. This trend could influence the housing market's resilience in the face of a downturn, as the demand for certain types of properties may remain strong.

Investor Activity

Investor activity is another variable that could affect housing prices during a market crash. Investors who purchase properties to rent out or flip have been a significant force in the housing market. Their actions in response to a crash—whether they decide to sell off properties or buy up more in anticipation of a recovery—could have a significant impact on housing prices.

Economic Environment

Finally, the state of the broader economy and the job market will be crucial in determining housing affordability. High levels of employment and income growth can support housing demand and prices, even during economic downturns. Conversely, if a market crash leads to widespread job losses and reduced consumer confidence, the demand for housing could decrease, leading to lower prices.

Summary: While a market crash could theoretically make housing cheaper, current trends and expert analyses suggest that a significant crash is not expected in 2025. Experts predict a cooling down rather than a dramatic crash. Instead, the market may experience a rebalancing, with slower price growth or minor adjustments. Therefore, you should keep a close eye on economic indicators and market forecasts, as these can offer valuable insights into future trends and potential shifts in affordability.

Wisconsin Housing Market: Trends and Forecast 2025-2026

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Thinking about buying or selling a home in Wisconsin in 2024? Let's dive into the current Wisconsin housing market trends and what they might mean for you. In short, the Wisconsin housing market in September 2024 showed a 6.2% year-over-year increase in home prices, but also a 7.2% decrease in the number of homes sold, indicating a potential shift in market dynamics. Let's explore this further.

Wisconsin Housing Market Trends in 2024: A Detailed Look

Home Sales in Wisconsin

According to Redfin data, the number of homes sold in Wisconsin in September 2024 was down 7.2% compared to the same period last year. This decrease is significant and points to a cooling market. While this might initially seem discouraging, it's crucial to understand the context. The previous years saw exceptionally high sales volumes, fueled by low interest rates and a surge in demand.

This year's dip is more of a return to a more sustainable pace, though it could represent changes in the market. I've personally seen a shift in buyer behavior; people are more cautious, taking their time, and negotiating more fiercely than a year ago. This is a good thing, as it signals more balance in the market.

Home Prices in Wisconsin: A Closer Look

Despite fewer homes being sold, home prices in Wisconsin saw a 6.2% increase year-over-year in September 2024, reaching a median sale price of $316,200. This rise is interesting, as it shows that while the volume of sales is decreasing, prices are still climbing. What's driving this? The simple answer is still limited supply. While there's a slight increase in available homes, it hasn't kept up with the demand. Certain areas within Wisconsin have seen significantly higher increases than this.

Here's a glimpse of some of the top 10 fastest-growing sales prices in Wisconsin metros:

City Growth (% YoY)
Beloit, WI 31.4%
Manitowoc, WI 24.4%
Middleton, WI 21.4%
Mount Pleasant, WI 19.9%
Kenosha, WI 15.0%
Oshkosh, WI 14.5%
Stevens Point, WI 13.5%
Milwaukee, WI 12.5%
Eau Claire, WI 11.6%
West Allis, WI 10.2%

This data highlights the variability across the state. Some areas are experiencing much faster price appreciation than others. This underscores the importance of doing localized research before buying or selling.

Housing Supply in Wisconsin: The Inventory Picture

The number of homes for sale in Wisconsin in September 2024 increased by 5.3% year-over-year, reaching 22,052 listings. This represents a small increase in inventory, but it is still far from an over-saturated market. This increase offers a slightly better selection for buyers, but it's essential to remember that this is relative. The market is still considered tight, especially in highly desirable areas. We are far from the days of buyers' markets, where homes sat unsold for months.

The number of newly listed homes also saw a small uptick, only 0.4% year-over-year, indicating that new properties are still entering the market at a relatively slow pace. This further contributes to the limited inventory. This is a factor contributing to the steady increase in home prices despite reduced sales.

Real Estate Market Trends in Wisconsin: A More Balanced Market?

The current Wisconsin housing market trends show a picture of transition. We're moving away from the frenzied market of the past few years. The decrease in sales and the slight increase in housing supply indicate a shift toward a more balanced market.

  • Homes Sold Above List Price: 39.5% of homes sold above asking price in September 2024, down 8.4 percentage points year-over-year. This demonstrates a reduction in bidding wars, although it's still quite common for homes to sell for over the asking price.
  • Homes with Price Drops: 23.6% of homes experienced price reductions, up 3.2 percentage points year-over-year. This increased rate of price drops is a clear indication of a less aggressive seller's market.
  • Sale-to-List Price Ratio: The sale-to-list price ratio was 99.8%, down 1.1 percentage points year-over-year. This decrease indicates a slight softening of the market's competitiveness, but it's still quite close to the 100% mark, indicating continued price strength.

Wisconsin Housing Market Predictions 2024-2025

Predicting the future is always tricky, but based on the current trends, I expect the Wisconsin housing market to remain relatively stable, though there will likely be some regional variations. While the rapid price increases of previous years are likely over, I believe the market will continue to show modest growth rather than any major decline in home prices.

The inventory increase will help buyers, offering them more options and better negotiating power. However, I don’t anticipate a significant increase in homes for sale, and inventory will likely remain tighter than in previous decades.

Regional Breakdown: A Closer Look at Key Areas

Wisconsin Housing Market Forecast Summary

Overall Outlook: Relatively Stable, with Regional Variations

Regions Poised for Growth:

  • Green Bay
  • Appleton
  • Janesville
  • Sheboygan
  • Manitowoc
  • Shawano

Regions Poised for Decline/Slow Growth:

  • Wausau
  • Wisconsin Rapids
  • Stevens Point
  • Baraboo
  • Menomonie

Disclaimer: This forecast is based on current trends and projections and is not financial advice. Consult a real estate professional for personalized guidance.

According to Zillow data, the average Wisconsin home value hovers around $306,557, according to recent data. This represents a 4.7% increase over the past year. While that seems positive, the market isn't uniform across the state. Some areas are booming, while others are experiencing slower growth or even slight declines.

The time it takes for a home to go from listed to pending varies greatly depending on location, pricing, and the specific features of the property. It's also important to note that national economic conditions will impact the market over the long term, adding to the complexity of any forecast.

To truly grasp the Wisconsin housing market forecast, we need to look at specific regions. The following data offers a glimpse into the projected price movements for various Metropolitan Statistical Areas (MSAs) in Wisconsin:

Region Name Projected Price Change (%) Notes
Milwaukee, WI October 2024: 0.1%; December 2024: -0.3%; September 2025: 0.2% Slight initial increase, followed by a modest dip, then a recovery.
Madison, WI October 2024: 0%; December 2024: -0.5%; September 2025: 0.2% Expect a more significant dip in the coming months before modest growth.
Green Bay, WI October 2024: 0.2%; December 2024: 0.1%; September 2025: 1.9% Steady growth anticipated, with strong increase by the end of next year.
Appleton, WI October 2024: 0.2%; December 2024: 0%; September 2025: 1.2% Moderate growth is projected.
Racine, WI October 2024: 0.2%; December 2024: 0%; September 2025: 0.7% Relatively stable market expected.
Oshkosh, WI October 2024: 0.2%; December 2024: -0.2%; September 2025: 0.6% A little less stable than Racine, with a slight dip in December.
Eau Claire, WI October 2024: -0.1%; December 2024: -0.6%; September 2025: 0.5% Noticeable dip expected before a slight recovery.
Wausau, WI October 2024: -0.1%; December 2024: -0.5%; September 2025: -0.3% Slight price decreases projected throughout this period.
Janesville, WI October 2024: 0.2%; December 2024: 0%; September 2025: 1.4% Solid growth anticipated.
La Crosse, WI October 2024: 0.2%; December 2024: -0.1%; September 2025: 0.5% Stable with a slight dip mid-year.
Sheboygan, WI October 2024: 0.2%; December 2024: 0%; September 2025: 1.5% Steady growth, similar to Appleton and Janesville.
Whitewater, WI October 2024: -0.1%; December 2024: -0.6%; September 2025: 0.4% Dip before a slight recovery.
Fond du Lac, WI October 2024: 0%; December 2024: -0.4%; September 2025: 1% A dip followed by good growth.
Beaver Dam, WI October 2024: 0.1%; December 2024: -0.1%; September 2025: 0.9% Slight dip, but overall positive growth.
Watertown, WI October 2024: 0.1%; December 2024: -0.2%; September 2025: 0.3% Slow, steady growth expected.
Manitowoc, WI October 2024: 0.2%; December 2024: 0.3%; September 2025: 2.5% Strong growth projected throughout the period.
Wisconsin Rapids, WI October 2024: -0.2%; December 2024: -0.8%; September 2025: -0.6% Expect a decrease in home prices in this region.
Stevens Point, WI October 2024: 0.1%; December 2024: -0.3%; September 2025: -0.6% Slight initial increase followed by a decline.
Baraboo, WI October 2024: -0.1%; December 2024: -0.5%; September 2025: -0.2% Expect small decreases in the region.
Marinette, WI October 2024: 0.2%; December 2024: -0.3%; September 2025: 1.6% A dip in the middle of the period but an overall increase.
Platteville, WI October 2024: 0.2%; December 2024: 0.1%; September 2025: -0.1% Initial growth, followed by a slight decrease.
Menomonie, WI October 2024: -0.3%; December 2024: -1%; September 2025: -0.2% Significant decreases expected throughout this period.
Shawano, WI October 2024: 0.2%; December 2024: 0%; September 2025: 1.5% Steady growth projected.

Key Takeaways from the Regional Data:

  • Growth Areas: Green Bay, Appleton, Janesville, Sheboygan, and Manitowoc show the most promising growth potential over the next year. These areas often attract buyers due to job growth, affordability (relative to other areas), or unique lifestyle factors.
  • Stagnant or Declining Markets: Wausau, Stevens Point, Baraboo, Menomonie, and Wisconsin Rapids are projected to see either little to no growth or even price declines. This could be due to various local factors, including economic changes or a surplus of available properties.
  • Market Volatility: Note that these are projections, and the actual results may vary due to unforeseen economic shifts or local market dynamics.

Will Home Prices Drop in Wisconsin? Will There Be a Crash?

The question of a market crash is always on everyone's mind. While a dramatic price crash seems unlikely in Wisconsin at this time, I would not rule out the possibility of a correction in certain areas. The current market is showing signs of moderation. The rapid price increases of the past few years are slowing down. This moderation doesn't necessarily signal a crash, but it does point to a more stable and potentially less exciting market.

2026 and Beyond: A Tentative Forecast

Predicting the market beyond a year is extremely challenging. However, based on current trends, I believe that Wisconsin's housing market will likely continue to experience relatively slow and steady growth in 2026. The level of growth, however, is heavily dependent on the broader economic environment—interest rates, inflation, and national economic conditions. Areas that are experiencing slower growth now may see a pick-up in activity if economic indicators improve.

Factors Influencing the Wisconsin Housing Market

Several factors influence the Wisconsin housing market forecast:

  • Interest Rates: Higher interest rates make mortgages more expensive, cooling buyer demand. Lower rates have the opposite effect.
  • Inflation: High inflation erodes purchasing power, impacting housing affordability.
  • Job Market: Strong job growth generally fuels demand and boosts home prices.
  • Inventory Levels: A shortage of homes for sale tends to push prices upward. An oversupply can lead to price decreases.
  • Population Growth: Areas experiencing population growth tend to see increased housing demand.

My Opinion on the Forecast

I believe that caution is warranted. While some regions offer exciting potential, it's crucial to conduct thorough research and carefully consider your financial situation before making major real estate decisions. Don't get caught up in hype or fear-mongering. Focus on the specifics of the area you're considering and consult with a trusted professional.

West Virginia Housing Market: Trends and Forecast 2025-2026

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Looking to buy or sell a home in West Virginia in 2024? The West Virginia housing market is showing interesting shifts. According to Redfin data from September 2024, home prices were up 9.4% year-over-year, reaching a median sale price of $256,800. However, the number of homes sold dipped slightly by 1.5%, and the number of homes for sale actually increased by a significant 15.5%. Let's dive deeper into these trends and what they mean for you.

West Virginia Housing Market Trends in 2024

The data paints a picture of a market experiencing some cooling after a period of rapid growth. While prices continue to climb, suggesting healthy demand, the decrease in sales and increase in inventory point to a potentially less competitive market. This means that buyers may have slightly more negotiating power than they did in recent years.

Here's a quick summary of the key indicators from September 2024 data:

Metric Value Year-over-Year Change
Median Sale Price $256,800 +9.4%
Number of Homes Sold 964 -1.5%
Median Days on Market 48 -8
Number of Homes for Sale 4,402 +15.5%
Homes Sold Above List Price 23.8% +3.8 percentage points
Homes with Price Drops 25.7% +18.6 percentage points

What Does This Mean for Buyers and Sellers in West Virginia?

  • For Buyers: The increase in inventory is good news. You might have a better chance of finding a home that fits your needs without getting into a fierce bidding war. Remember, even though prices are up, the cooling market offers more leverage for negotiation. Don’t be afraid to make an offer below the asking price, especially if the home has been on the market for a while.
  • For Sellers: While prices are still rising, the reduced number of sales and increased inventory signal that the market is less frantic. It's vital to price your property competitively. Consider using a real estate agent with experience in the area to obtain a thorough market analysis that factors in the current trends. Overpricing a home can lead to it sitting on the market for an extended period, potentially reducing its eventual sale price.

Regional Variations: Not All of West Virginia is the Same

It's crucial to remember that “West Virginia” encompasses a wide range of geographic areas, each with its unique housing market dynamics. The statewide averages shown above don't necessarily reflect the situation in individual cities or counties. For example, Redfin’s data shows significant variation in price growth across different areas. Charles Town saw a remarkable 23.6% year-over-year increase in sales prices, while Charleston experienced a 30.0% decrease, highlighting the importance of local market research.

West Virginia Housing Market Forecast 2024-2025

Predictions for the Remainder of 2024 and Beyond

Predicting the future is never an exact science, but based on the current trends, we can make some educated guesses. The slight cooling we are seeing suggests a transition to a more balanced market, where buyers have more leverage. While a significant price drop is unlikely in the short term, the rate of increase is likely to moderate. The increased inventory should provide buyers more choices, and sellers may need to be more realistic in their pricing. We anticipate a continuation of these trends.

However, it is important to pay close attention to regional differences. Some areas may continue to experience strong price growth while others may see a slight decline or plateau. The overall health of the national and state economies, together with interest rates and employment, remain crucial for a clearer outlook on the future.

Let's dive deeper into the specifics to paint a clearer picture for you.

The average home value sits around $167,571, a figure that's seen a 5.4% increase year-over-year. But averages can be deceptive. The time a home spends on the market before going pending (approximately 15 days) suggests a relatively brisk pace of sales, yet the overall picture is far more nuanced.

The state is far from monolithic. Different regions experience vastly different economic conditions, influencing the housing market significantly. Think about Charleston, a major city with various industries, compared to a smaller town like Elkins. Their economies, and thus their housing markets, operate differently. This is a crucial point to grasp when analyzing the West Virginia housing market forecast.

Regional Breakdown: A Deeper Dive into West Virginia's MSA Forecasts

Using data from sources like Zillow and local real estate agencies (please note that all data used is from publicly available sources and should be verified independently before making any decisions), we can create a more detailed forecast for different regions within West Virginia.

We’ll look at several key Metropolitan Statistical Areas (MSAs) and their projected home price changes. Remember, these are forecasts, not guarantees. Economic conditions, interest rates, and other unforeseen factors can dramatically impact these predictions.

Instead of raw data, I'll break down the anticipated home price fluctuations for these key MSAs over the next year, until September 2025:

Region Name Projected Price Change (Oct 2024) Projected Price Change (Dec 2024) Projected Price Change (Sep 2025) Outlook
Charleston, WV -0.1% -0.7% -0.7% Potentially Slowing Market
Morgantown, WV -0.1% -0.6% -1.9% Potential for Price Decline
Beckley, WV 0% -0.3% 2.2% Mixed Outlook, Potential for Growth
Clarksburg, WV 0.1% -0.3% -1.6% Potential for Price Decline
Parkersburg, WV -0.1% -0.5% -0.8% Potentially Slowing Market
Fairmont, WV 0.2% -0.1% -1% Potential for Price Decline
Elkins, WV 0% -0.3% -0.2% Potentially Slowing Market

Interpreting the Data: What the Numbers Mean

As you can see, the West Virginia housing market forecast isn't uniform. While some areas (like Beckley) show potential for positive growth, others indicate a possible decline or stagnation in home prices.

  • Charleston, Morgantown, Clarksburg, Parkersburg, and Fairmont: These areas project either slight declines or stagnation in home prices. This doesn't necessarily mean a housing market crash, but rather a slowing of the rapid growth seen in previous years. Several factors contribute to this, including interest rate hikes, economic uncertainty, and local market dynamics.
  • Beckley: This area bucks the trend with a projected price increase by September 2025. This could be attributed to local economic factors or unique demographic shifts, showing how localized conditions play a significant role.
  • Elkins: Shows minimal change, indicating a more stable but potentially sluggish market.

Factors Influencing the West Virginia Housing Market Forecast

Several factors are shaping the future of the West Virginia housing market. It’s crucial to consider them when interpreting the forecast:

  • Interest Rates: Rising interest rates significantly impact affordability, reducing purchasing power and potentially slowing home price growth.
  • Economic Conditions: The overall state of the economy in West Virginia and the nation influences consumer confidence, impacting buying and selling decisions. Local job markets and industries are critical here.
  • Inventory Levels: The number of homes available for sale directly affects supply and demand. A low inventory generally leads to higher prices, while a high inventory can lead to price decreases.
  • Population Shifts: Migration patterns both into and out of West Virginia impact demand in specific regions.
  • Local Economic Development: Investments and economic activity within a specific MSA can influence the local housing market. A booming local industry could drive home prices up.

Will Home Prices Drop in West Virginia? Will There Be a Crash?

Based on the current forecast, a complete housing market crash in West Virginia is unlikely. However, it's more probable to see a period of slower price growth or even slight declines in certain areas. This slowdown might not be a “crash” but rather a correction after a period of rapid appreciation.

Forecast for 2026 and Beyond: A Tentative Glimpse

Predicting the housing market more than a year out is highly speculative. However, considering the factors mentioned above, a cautious approach for 2026 seems reasonable. If interest rates stabilize and the economy strengthens, a gradual recovery in home price growth is possible. However, if economic challenges persist, slower growth or even slight declines could continue. Therefore, any 2026 forecast should be approached with considerable caution.

Conclusion:

The West Virginia housing market forecast is complex, with various trends affecting different regions. While the state's average home value has seen recent growth, the coming year is projected to show some variations. Some areas may witness moderate price declines or stagnation, while others could experience growth.

Keeping a close eye on interest rates, the overall economy, and specific local market conditions is critical for anyone considering buying, selling, or investing in West Virginia real estate. Remember, this is just a forecast; it is not financial advice. Always seek professional advice tailored to your individual circumstances.

Seattle’s Housing Market: $178K Income Needed for a Starter Home

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If you're considering buying a typical starter home in Seattle, prepare to earn a substantial income—it requires a whopping $178,332 annually. This reflects increased challenges for buyers as the housing market in Seattle becomes more competitive and prices continue to rise.

The latest data reveals that, despite a recent dip in mortgage rates, affordability remains a significant hurdle for many prospective homeowners. In this blog post, we'll dive deeper into the current housing situation in Seattle, analyzing home prices, mortgage rates, and what this all means for first-time buyers.

Seattle's Housing Market: $178K Income Needed for a Starter Home

Key Takeaways

  • High Income Requirement: A minimum annual income of $178,332 is needed to afford a starter home.
  • Rising Home Prices: The typical starter home price has surged to $564,450, up 4.5% from last year.
  • Mortgage Rates: Despite a drop in mortgage rates from 7.07% to 6.08%, affordability challenges persist.
  • Income vs. Home Price: Buyers will spend 42.4% of their income, exceeding the recommended 30% threshold for housing costs.
  • Market Trends: Nationally, the income required for a starter home has slightly decreased, but Seattle's market remains challenging.

The Current Housing Market in Seattle

The Seattle housing market has always been known for its high prices and competitive nature. A recent report from Redfin highlights that the income needed to buy a starter home in Seattle is pegged at $178,332 per year. This figure showcases just how tough it is for new buyers to find affordable housing in the area. Even as mortgage rates fall to their lowest this year, the typical starter home price has risen, making it a daunting task for many.

The report reveals that the average price of a typical starter home in Seattle is now $564,450, which is up by 4.5% from the previous year. Contrast this with the fact that many buyers are only seeing limited income growth, and it's clear why many individuals and families feel locked out of the market. As home prices have increased considerably—up 51.1% since 2019—the earnings required to comfortably afford these homes have followed suit.

A household earning $178,332 would, alarmingly, need to allocate 42.4% of their income solely towards housing, significantly above the advisable 30% of gross income. This situation is not simply a local issue; it reflects a wider trend in housing affordability across the nation where, according to recent data, buyers are contending with similar challenges.

The Mortgage Rate Landscape

Interestingly, mortgage rates have recently declined, offering a glimmer of hope to prospective homebuyers. Currently, mortgage rates are hovering around 6.08%, a reduction from the previous year’s rate of 7.07%. This drop marks the lowest rate this year and is significant as it may potentially increase the number of people who are able to afford a mortgage.

However, despite lower mortgage rates, the general trend of rising home prices has overshadowed any short-term benefits that might come from reduced borrowing costs. While it's true that lower rates can make monthly payments more manageable, the overall price of homes continues to escalate, leaving buyers grappling with affordability concerns.

My Take

The current state of Seattle's housing market is particularly alarming. With such high income requirements, it feels increasingly impossible for average families to achieve homeownership. The gap between income growth and home prices creates a daunting hurdle that needs to be addressed.

Comparison with National Trends

On a broader scale, the challenges faced by Seattle’s homebuyers resonate nationally. As reported, the national income requirement to buy a typical starter home has seen a slight decrease to $76,995, a 0.4% drop compared to last year. This is the first annual decline since 2020, hinting at some potential easing in the market. However, this decline does not alleviate the heavy burdens many markets, including Seattle, are grappling with.

In fact, starter homes in Seattle remain vastly less affordable compared to pre-pandemic levels. In 2019, the typical household in the city earned 57% more than was necessary to afford a starter home, highlighting how drastically the landscape has shifted in just a few years.

Nationally, the affordability situation seems dire; buyers are facing a significant challenge to obtain even the simplest starter homes, with competition pushing prices into unrealistically high territories. Notably, there are metro areas, primarily in Texas and Florida, where the affordability situation has improved, contrasting sharply with Seattle's ongoing struggles.

Housing Market Outlook for Seattle

The prospects for Seattle's housing market are cautious at best. Redfin warns that the typical starter home affordability may not see much improvement soon, as prices tend to trend upwards over time while mortgage rate reductions have likely already been absorbed by the current housing dynamics.

The competition in the housing market isn’t only between first-time buyers but also includes older and wealthier buyers who often have far more capital to spend. This has only added to the squeeze on affordability for those just looking to get their foot in the door of homeownership.

Even with a slight improvement in the overall housing inventory, which recently hit a post-pandemic high, the demand remains strong. Homes in Seattle city limits typically sell within 21 days, compared to 14 days last year, indicating a rapid turnover that keeps prices high. For many, the dream of owning a home in Seattle appears more a distant fantasy than an achievable reality.

Final Thoughts

Navigating the Seattle housing market as a potential buyer can be exceedingly complex, especially for first-time buyers. The stark disparity between income growth and skyrocketing home prices presents a critical challenge. With a required annual income of $178,332 to afford a typical starter home, many potential homeowners find themselves at a crossroads, caught between rising prices and stagnant wage growth.

Lower interest rates on mortgages sound great, but house prices are also way up. This makes it really hard to say what will happen to housing in the future. With so many people trying to buy homes right now, it's important to understand what's going on before you make a big decision like buying a house.

4 Real Estate Investment Strategies For New Investors

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What are the best ways for beginner investors to get started in real estate? There is more than one way to invest in real estate. What you choose may depend on your immediate needs, long-term goals, your aptitudes, and resources.

4 Real Estate Investment Strategies for New Investors

1. Lipstick Flips

Lipstick flips involve purchasing a property, making minor cosmetic improvements, and then selling it for a profit. These superficial enhancements could include painting, landscaping, or updating fixtures and fittings. The key to success with lipstick flips is to find undervalued properties that require minimal work, thus maximizing the potential return on investment.

2. Wholesale

Wholesaling in real estate involves contracting a home with a seller and then finding an interested party to buy the contract. Essentially, the wholesaler acts as a middleman and earns a profit from the contract sale without ever actually owning the property. This strategy requires a keen eye for undervalued properties and a strong network of potential buyers.

3. Buy & Hold

The buy and hold strategy is a long-term investment approach where an investor purchases a property and holds onto it for an extended period. The goal is to benefit from rental income and potential appreciation in property value over time. This method is ideal for those who are looking for a steady stream of income and are comfortable with being landlords.

4. Buy, Renovate, Rent, Refinance, and Repeat (BRRRR)

The BRRRR strategy is a more involved process that combines flipping and holding. An investor buys a property, renovates it to increase its value, rents it out to generate income, refinances it to take out equity, and then repeats the process with another property. This strategy can be highly effective but requires a good understanding of renovation costs, property management, and refinancing options.

Each of these strategies has its own set of risks and rewards, and choosing the right one depends on an investor's financial goals, risk tolerance, and level of involvement they wish to have in managing their investments. It's also important for new investors to conduct thorough research, possibly consult with a financial advisor, and understand the local real estate market before committing to any investment strategy.

The following infographic by Offer Climb Houston and Offer Climb Phoenix breaks down these options in an easy-to-analyze way, followed by more in-depth examples, and sources for empowering new property investors to get started.

Remember, real estate investing is not a one-size-fits-all endeavor, and what works for one investor may not work for another. It's about finding the strategy that aligns with your goals and comfort level. With the right approach and due diligence, real estate can be a powerful addition to your investment portfolio. Happy investing!

4 Real Estate Investment Strategies For New Investors

 

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