Blog

5 Questions to Ask Yourself Before Investing in Real Estate

So you’ve decided to get in on the real estate investment game. Great! Real estate is one of the best investments you can make, but before you make the big decision to become a landlord or a flipper, you have to have a plan. As with any investment, there are risks and benefits. Here are five questions to ask yourself before you decide whether or not you’re really ready to invest in real estate.
 
Am I really ready?
Being an experienced homeowner doesn’t magically make you ready to become an investor. Buying and owning investment property is very different from buying and owning a primary residence. This is not the “get rich quick” plan some tout it to be. Millenials are especially vulnerable to this myth. Don’t fall victim to those home improvement reality shows; there’s a lot that happens behind the scenes there. Owning an investment property is hard work. There are also many liabilities involved. Landlords must comply with fair housing regulations, building codes, and safety measures.
 
Do I have enough cash on hand?
Investing in real estate is a whole new financial ballgame. If you’re not paying cash for the house, you’ll need enough cash for a down payment and any other closing costs not paid by the seller. If you buy a fixer-upper, make sure your cash on hand exceeds whatever budget you set up. (And yes, having a budget is an absolute must.) Unexpected issues almost always crop up during renovation. You’ll also need to set money aside for regular maintenance and emergency repairs. If you rent the house out, a good rule of thumb is to put 10% of each month’s rent into an escrow account to prepare for any emergencies. Other expenses to prepare for are water/sewer, garbage pickup, and utilities (unless you leave those up to the tenant, which many landlords do), accounting, evictions, vacancies, possible legal fees, and capital improvements.
 
Am I prepared to deal with tenants?
Of course there are dream tenants who pay their rent on time each month and take care of your property like its their own. But let’s face it. If you own it for a while, you’ll probably end up with problem tenants at some point. A good landlord cannot be a doormat. Don’t let your sympathetic side get the best of you, because some tenants will take advantage of it. Don’t just threaten them with late fees and eviction; follow through. That brings us to the next question…
 
Will you manage your investment yourself or hire a property management company?
If you’re not sure you can check your sympathy and anxiety at the door, you can always turn the property over to a management company. They can find tenants and take care of all communication and financial dealings. A good property manager will decrease vacancy and have a working relationship with vendors to make repairs less expensive. Most companies take around 10% of the monthly rent for their management fee, which isn’t much in the grand scheme of things.
 
Do you have a plan and an exit strategy?
Don’t go into this blindly. Know what you’re going to do with your investment property and how long you will keep it. Because the housing market is constantly changing, you have to give yourself options. If you’re new to real estate investing, consider yourself a startup. Make a business plan with an end goal. Things might change along the way, but at the very least, you’ll have something to aim for.

Why It's Important to Get Pre-Approved for a Home Loan

Before you make an offer on a home…

Before you begin shopping for a home…

Before you even think about making a list of homes you like…
 
It’s important to get pre-approved for a home loan.
 
The real estate market moves quickly these days, and the inventory of Charleston homes for sale is low. The rule of supply and demand is very much applicable in the real estate industry, so sellers have the upper hand right now. This means that when you find a home you love, you need to make an offer ASAP. Because inventory is low, it’s entirely possible that you might end up in a multiple-offer situation. If you want to show the seller how serious you are about buying their home, you must include a pre-approval letter with your offer. Most sellers won’t even consider your proposal until they see proof that you are financially able to buy their home. They don’t want to waste their time, and a pre-approval letter will put their minds at ease and show them that there is a much smaller chance of the deal falling through due to your inability to obtain financing.
 
Getting pre-approved is beneficial for you as the buyer, too. Meeting with a loan officer opens up more options. You might think you know your top purchase price, but you could be surprised. In most cases, you won’t own the home for the full 30 years of the loan, so instead of looking at the "sticker price," consider what you can afford to pay each month for your home. A loan officer can tell you what type of loan you qualify for and what percentage rate you can expect. When you look at what you can afford to pay per month instead of fixating on total purchase price, you may find that you can afford more house than you originally thought.
 
Basically, getting pre-approved isn’t an option anymore. It's a must. As long as all your ducks are in a row, pre-approval should be easily obtained and is an extremely useful tool that can make the home buying process smoother for both parties. 

Most Active Charleston MLS Areas // January 2015

According to data released by ShowingTime and the Charleston Trident Association of Realtors, showings of listings in the Charleston area in January 2015 were up 6% from one year ago. ShowingTime's data shows that the company managed 30,407 showings for 8,010 listings in the Charleston area. That's an average of 3.8 showings for each listing. Our chart below shows the five most active Charleston MLS areas for showings this January.

5 Most Active MLS Jan. 2015

8 Expenditures New Homeowners Might Not Be Prepared For

Buying a home can be a costly process. During all the excitement of searching for and finding the perfect house, negotiating a price and terms, and getting ready for settlement, it’s easy to lose sight of what happens after closing. Sometimes buyers aren’t prepared for the expenditures that might be required after closing. Here are 8 of the top things new homeowners spend money on.

 
  1. Appliances:  This doesn’t apply to all homeowners, but if you’re buying a brand new or outdated home, you might need to work new appliances into your budget. If you’re updating a kitchen completely, be prepared to spend up to $10,000 on appliances, depending on your taste level and how technical you want to get. If you’re on a budget, Craigslist is a great source for finding inexpensive appliances.
  2. Window Coverings:  Again, the total cost here depends almost entirely on your tastes and budget. If you’re the DIY type, you’ll be able to save a lot in this area. If you prefer to buy window treatments, be prepared to spend up to $2,000, especially if you go custom.
  3. Furniture:  If your new home is bigger than your previous one, will your current belongings be enough to fill it? If you’re downsizing, you’ll need to determine whether your current furniture will fit in the new house. Taste dictates how much you spend on furnishings. (We’re sensing a pattern here!) Options range from big box stores like Target and IKEA, to specialty stores like Rooms To Go and Ashley Furniture, to high-end boutiques and custom-built furniture.
  4. Homeowners Association or Regime Fees:  Most HOAs and property regimes can run on about $100 a month, but some charge more and some charge less. Make sure you look into a neighborhood’s HOA fees and what amenities are included before you decide to buy. Some higher end neighborhoods have charged up to $1,000 per month. Others offer fewer amenities and are able to charge just a couple hundred per year. Fees can go up annually, and some HOAs and regimes might charge additional assessments for unexpected repairs or other issues.
  5. Insurance:  The cost of homeowners insurance varies by state, but a good nationwide average is about $700 per year. Insurance payments may be tied into escrow or included HOA dues, or they might be due annually or monthly. Some areas also require flood insurance, which is an additional policy that can get pretty expensive. Check whether your policy covers things like hurricanes, earthquakes, and personal property loss or damage. You might need to purchase these separately.
  6. Property Taxes:  Buyers who purchase new construction could be surprised when their property tax bill goes up. Tax assessments for new construction are usually based on the empty lots on which the homes are built. Upon reassessment, that amount could double or triple. Taxes also vary by state and school district.
  7. Utilities:  Utility bills can be a rude awakening for some homeowners! Older homes tend not to be energy efficient, which makes for higher heating and air costs. The size of the home and number of residents come into play here as well. Before you buy, call the local utility company and get a free estimate based on the history of how much has been charged in the past. Don't forget to budget  utilities for both summer and winter.
  8. Repairs and Maintenance:  It’s always a good idea to keep a few thousand dollars in an emergency fund. Maintenance and repair issues can crop up out of nowhere (an HVAC system on the fritz or a backed-up sewer system, for example). Charges can include standard fees, labor, and parts, so there’s really no telling how much you can expect to pay in any given situation.
 
What other expenditures do you think new homeowners might not expect? Let us know us in the comments section!

Market Report // January Sales Highest in 8 Years!

January 2015 was a phenomenal month for real estate in the Charleston region. Charleston home sales were the highest they've been in 8 years, with a total of 890 homes sold at a median price of $209,603. The last time sales surpassed the 800 mark was January 2007.

That year's statistics were almost identical to this year's. 890 homes sold in January 2007 at a median price of $209,945. The inventory, however, was 37% higher than in 2015. In 2007, the inventory was at almost 9,000, whereas the current inventory is at just over 5,500.

Here's the breakdown by county:

1

2

3

search-sc-homes

blogging

BadgeTestiimonials

A friend of ours who recently bought a house enthusiastically referred us to Johnson & Wilson. Our friend's recommendation was top notch - Johnson & Wilson. is AWESOME! - Brian
 
Read Unbiased Consumer Reviews Online at AngiesList.com
Real Estate Agents in Charleston

Leverage Seal 1.png191