Real Estate & Investment Perspective by Karen Lee Bertiger
Strategic Real Estate Consulting
It’s the Friday before Thanksgiving week and I’m looking forward to not having to prepare anything this year. I won’t be visiting any of my extended family for Thanksgiving either (not invited.) I will be working on my house, visiting the beach with puppy Kobie, enjoying the cool mornings and beautiful sunrises and trying not to eat too much! Also starting a couple of new health habits even before the New Year.
It could be a fatal mistake to invest in a property that appears to be a free standing house, but is actually a detached condominium! ALWAYS check the legal description if you are actually looking for a single family detached home; if it’s actually a detached condominium you’ll see “unit” or “condo” in the legal description.
Many MLSs, title companies and yes, even lenders misclassify this kind of ownership, thereby creating appraisal, mortgage and title problems. Realtors/MLSs add to the misclassification by quoting “lot size” — there is no individual condominium lot size — the lot size is for the entire development! Detached condo owners typically own the “surface” of the land under the structures, the structures, 200 ft. above the land, the systems, tree roots and anything that supports the home. The HOA owns everything else.
Detached condominiums are widely found in Texas, California, Florida and many other states.
Now represent about 42% of today’s buyers and 53% of today’s sellers. (Source: NAR)
Depending on your situation, you should be marketing to boomers if you’re an investor. If you’re attempting to buy a property you should be researching boomers and those who have been in their homes for more than 7 years (although the length of time people are staying in their homes is trending up towards 12 years!) An agent who wants inventory should be looking at boomers.
Recently the WSJ published an article titled “The Case Against 30-Year Mortgages.” They claim the main obstacle for millennials is “an insidious financial instrument so predatory and deceptive that it has warped the housing market for nearly a century.” The argument is that subsidized credit raises prices.
Keep in mind that in an era of inflation, a 30 year fixed rate mortgage is an instrument which builds financial wealth for the borrower. This is HOW you make it work in your favor. Become educated on amortization schedules. When you have an accurate amortization schedule for your loan, you have a flexible blueprint for reducing the total interest you pay, as well as paying off your loan sooner. But you can always just pay your regular 30 year principal and interest if you have a period of time when you cannot afford to devote extra funds to paying off your loan. If you do devote extra funds to pay down your principal, you have earned the equivalent of your loan’s interest rate on those funds in addition to saving on interest over the life of your loan.
Here’s a link to do the math…
Wait, what? Is there really a state of being “location broke?” YES! There are some states where $10k can buy you what would cost $1M in California, for instance. If you’re constantly feeling broke because you live in a high cost state, my advice is that you could move to a more affordable state (you’re not a tree.) Some people just will not consider a move under any circumstances. Moving is a hassle, but you could gain savings, peace of mind, an easier pace of every day life and tha ability to retire if you do consider it.
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