Canyon Gate Condominium at 7887 N. 16th Street in Phoenix. Aside from the rest is this beautiful condo located just north of the Pointe on 16th Street. This is a great short sale opportunity just minutes from some of the most popular hiking and biking trails in Phoenix. Don’t miss out on this one before it’s snatched up at this incredible price.
Archive for February, 2009
Is it a Virus, Infection, or well what!
On February - 5 - 2009
There’s a certain threshold in a given area regarding how much you should upgrade your home and how much it will make a difference in the competition. It would not make sense to put a $5000.00 stove in a $200,000 condomimium, etc. That’s just one example. So, when a prospective tenant or buyer is looking for a place to buy or rent, there’s also a threshold to their perception of value, and when something seems out of place, it won’t matter to them that you have the nicest property in the area, when it comes to considering the rent or price.
Most upgrades will increase the ability to sell or rent your home over the next door neighbors, but it won’t guarantee that you’ll be able to draw a premium based solely on those upgrades, especially if the area in which you’re renting or buying doesn’t warrant such upgrades.
For potential rental properties, if you ever find yourself saying, “I can’t drop the rent that low because my mortgage is more than that,” then it’s time to think about the cost of carrying a vacant property.
Let’s say your mortgage payment is $1500/month and your home can draw $1200/month in rent. That’s a loss of $300.00/month when it’s rented. If it’s not rented, it’s costing you $1500.00/month. If you rent it for $1200/month for one year, you’ll lose only $3600.00. Let’s see, $3600 divided by $1500 is 2.4.
You choose. You can be realistic about your asking price and get the property rented and lose $3600 in 12 months, or you could hope and pray you get someone to rent your house at your inflated price and lose $3600 in 2.4 months. Hmmm… 12 months versus 2.4 months.
If this is your way of thinking, it’s just not realistic and you may need to be innoculated from the virus, infection, or well whatever it is that’s keeping you from seeing the real market conditions.
Remember, time is money and the entire nation is getting a swift lesson in loss mitigation. Most of us are in a “collection” mindset. We want the full payment and we want it now, and we waste all of our time trying to hunt it down. The best method is to mitigate your loss by getting something going…anything.
The Case Against Waiting to Buy
On February - 5 - 2009
So you’ve been sitting on the fence because you think housing prices will continue to fall, right? Bad idea, unless you can afford to pay cash for a home outright. Why? Because the amount of your payment is determined by the rate at which you borrow. Here’s an example:
Buy a house today for $218,900 with 20% down and a 30-year fixed rate mortgage at current rates of roughly 5.5% and you’ll find yourself with a payment of about $994/month.
Let’s say you’d rather wait until the price of that home comes down to say, $197,000. GREAT! Right? That’s $21,000 less today than it was a year ago. But wait, the recession has ended and the fed has increased the rates to 6%, a mere half percent higher. Guess what your payment will be. You got it, $994/month.
The home purchased at $218,000 today will cost you $182,000 in interest over 30 years for a total cost of ownership of $400,000.
If you wait one year and lose one half of one percent, that same home at $197,000 will cost you $182,000 in interest over 30 years for a total cost of ownership of $379,000.
$400,000 – $379,000 = $21,000.
$218,000 – $197,000 = $21,000.
So now that we see that the difference in the total cost of ownership is the same as the difference in sale price, what difference would it make to you whether or not you wait a year.
How much money are you going to waste this year on rent? How much is a year worth to you? How important is your time and how are you going to feel one year from today when you’re still stuck in a rental that you can’t truly make into your own home?
The bottom line is, waiting for the price of a home to fall may cost you more than you know. Why wait? Buy now.
