WHAT SHOULD YOU DO WITH YOUR REMODELED FIXER-UPPER?

Buying a fixer-upper to renovate is an appealing investment opportunity for some, but once

the property is repaired, should you rent it out or sell it? In some areas, renting can be a

reliable long-term revenue stream, while in others, it makes more sense to sell. If you’re not

sure what the best move is, use this advice from the Rural KC Real Estate Team to help you

decide.

Tips for Making a Property More Desirable

The trick to making money flipping homes is to find a property that's undervalued, then

make small improvements to get a better price for it. Some of the simplest improvements

are ones that increase a property's curb appeal.

For example, a property with a garden might look a lot better with a fresh lawn and a new

fence. If you're not skilled at this kind of work yourself, you should hire a fencing

contractor. Don't just hire the first contractor you find, though—read Angi fencing reviews

online and get multiple quotes. The average cost of a new fence is around $4,500, but actual

prices vary depending on the materials, the size of the fence, and your area. Choose a

contractor who's licensed and insured, and make sure they check the area for any

underground utilities before starting work.

Why Flipping Is Often More Convenient Than Renting

Flipping a property can offer a one-off profit. Many flippers follow the 70% rule. This rule

dictates that the cost of a property and any repairs done to it should be no more than 70%

of the value of the property after the repairs are completed.

Finding properties that are this undervalued can be difficult, but foreclosure auctions do

still offer such opportunities. People who are experienced DIY enthusiasts and can make

basic repairs themselves can often turn flipping into a revenue-generating side business

this way.

A 30% return on investment can be appealing, but it's a one-off source of income, and once

the repairs are completed, the flipper will need to find another property and do the work

again to get the next payout. Unless you have enough funding to have more than one

property on the go at a time, flipping can be stressful and the income stream may not be

stable—especially compared to the monthly income of rental properties. There's a reason

there are nearly 50 million properties being rented in the U.S.

The Responsibilities of Being a Landlord

Renting out properties can generate a steady income and could offer tax deductions, too.

However, for landlords to benefit from tax deductions and property value appreciation,

they have to do a lot more day-to-day work.

Many landlords find themselves having to pay property managers to handle the daily

operations of their portfolios, as well as landscapers and other maintenance contractors to

look after the properties. This can quickly eat into profits. Non-paying tenants can also be

an issue because the process of evicting them can be long and slow in some states. Being a

landlord is not easy money.

Have a Business Plan Before You Start

Property renovations should be approached like any other business. Whether you decide to

rent out the renovated property or sell, it's a business decision. Run the numbers, talk to

some professionals, and understand the market in your area before you start spending

money.

Are you in search of an investment property or for your forever home in the Kansas City

area? Contact the Rural KC Real Estate team!

SHOULD I BUY A HOME RIGHT NOW?

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The Future of Home Price Appreciation

Each quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation.  The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):

As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to the more normal price appreciation of 4%, 5% a year."

For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.

What Does That Mean for You?

To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):

As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.

Bottom Line

If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Partner with the Rural KC Team-Keller Williams Partners to begin your homebuying process today.  Give us a call at 913-837-0760 or 913-837-0411.

WHY ARE PEOPLE LEAVING CALIFORNIA?

 

California is home to scores of iconic sites, dreamy beaches, amazing scenery, top-tier infrastructure, and unique job opportunities. What’s more, it has the fifth-largest economy in the world. So why on earth are so many people moving out of California? Who would leave such a state, and why?

These are a few of the problems:

1.  Rising State Taxes-The top marginal income tax rate is significantly higher than the rest of the United States. 

2.  Housing Crisis-Put simply, if you’re not rich or willing to live with friends or relatives, you just can’t afford to live in the state.

3.  Political Issues-Many California residents strongly support their state’s policies. However, many conservative and even moderate voters feel the state is moving too far to the left.

4.  Social and Economic Problems-California has more than 150,000 homeless people, more than any other state.

5.  Filth-It’s not uncommon to see human poop in the state’s largest cities, with San Francisco winning the award as the "doo-doo capital of the US". 

6.  Insecurity-Violent crime is on the rise and many feel the COVID-19 lockdowns are to blame for the problem.

7.  Devastating Wildfires-Former residents that moved out of California express frustration over the fact that the fires aren’t likely to become less dangerous in the near future. Others say they’ll leave if their home burns down one more time as they simply can’t take the cycle of continual rebuilding and destruction.

WHO IS LEAVING CALIFORNIA?

Most pundits agree that it’s mostly middle and low-income people who are leaving the state. It’s not hard to see why. It’s difficult if not impossible for middle and low-class workers to find a decent place to live in any of California’s big cities. What’s more, the cost of groceries, utilities, and transportation is higher than the national average.

Recent statistics show that most people who split the state earn less than $30,000 a year. What’s more, well over 450,000 of these individuals don’t have a college degree. Conversely, most of the people moving into California are educated and expect to earn more than $50,000 a year.

At the same time, it’s not just poor and middle-class Californians who have discovered that the Golden State isn’t as shiny and promising as it looks. Even upper-class media industry workers and wealthy individuals are leaving the state for one reason or another.

Clearly, the benefits of living in California have diminished in the last several years.  Now that's not to say that every state doesn't come with its own issues; however, California seems to have more than its share.  

If you find yourself in this situation, feel free to contact The Rural KC Team-Keller Williams Partners.  We have helped many people move out of their undesired situation into a place where living is just more satisfying and easier. These are some of the reasons to move to rural areas:

Americans are moving to rural areas in ever-increasing numbers reflecting their increased desire to seek out more space, embrace entrepreneurial opportunities, and take advantage of a lower cost of living. 

And whether their move is made to start a farm or business, the sense of community found in these rural areas and perhaps more importantly the ability to secure a piece of property at a reasonable price, has ensured the rural migration trend is one that's here to stay for the time being. 

   We are a real estate team out of the Kansas City area and we specialize in rural property.  We recognize that you are looking for a simpler, easier lifestyle.  We take the time to listen to what you are looking for in a lifestyle and we do everything possible to find that lifestyle for you.  So if you find yourself thinking about more land around your family, fewer people, affordable property, a safe environment and clean water for your family, and a lower cost of living, please feel free to contact The Rural KC Team-Keller Williams Partners.  We will make that dream come true!  913-837-0760 or 913-837-0411.  If you would like to take a look at what properties the Kansas City area has to offer, please go to RuralKC.com.  

THE DROP IN MORTGAGE RATES BRINGS GOOD NEWS TO HOMEBUYERS

 

Over the past few weeks, the average 30-year fixed mortgage rate from Freddie Mac fell by half a percent. The drop happened over concerns about a potential recession. And since mortgage rates have risen dramatically this year, homebuyers across the country should see this decline as welcome news.

Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):

But why is this recent dip such good news for homebuyers? As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains:

“According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home buying is about 5 percent more affordable than a week ago.  This translates to about $100 less every month on a mortgage payment." 

That’s because when rates go up (as they have for the majority of this year), they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. The inverse is also true.  A decrease in mortgage rates means an increase in your purchasing power.

The chart below shows how a half-point, or even a quarter-point, change in mortgage rates can impact your monthly payment:

If your home doesn’t meet your needs, this may be the opportunity you’ve been waiting for. Contact the Rural KC Team-Keller Williams Partners today to see how you can benefit from the current drop in mortgage rates.  913-837-0760 or 913-837-0411.

A MAJORITY OF CONSUMERS SAY IT'S A GOOD TIME TO SELL YOUR HOUSE

If you’re a homeowner thinking about selling your house, you’re probably looking for the best time to make your move. That means you’re likely balancing a number of factors, like your changing needs, where you’ll go when you sell, and today’s mortgage rates in order to time it just right.

According to recent data, that sweet spot could already be here. The latest Home Purchase Sentiment Index (HPSI) by Fannie Mae finds that 76% of consumers believe now is a good time to sell. 

The graph below shows the percentage of survey respondents who say it’s a good time to sell a house. The big dip in March and April of 2020 reflects how consumer sentiment dropped at the beginning of the pandemic as uncertainty about the health crisis grew. Since then, the percentage has grown consistently as more people feel confident it’s a good time to sell.

In fact, survey respondents think it’s an even better time to sell a house today than they did in 2019, which was a strong year for the housing market. The latest survey results indicate one of the strongest peaks in seller sentiment in nearly three years (see graph below):

What Makes Today a Good Time To Sell?

One reason so many people think it’s a good time to sell is that there are still more buyers in today’s market than there are homes for sale.  That's driving home prices up, making it a good time to sell your house. 

And if you’re on the fence about whether or not to sell because you don’t know where you’ll go once you do, know that you might have more options today than in previous months. That’s because the number of homes coming onto the market has grown each month since the start of the year. When more homes come onto the market, it gives you more opportunities to find one that meets your changing needs.

Bottom Line

While the number of homes available for sale is growing and giving you more options for your move, inventory is still low overall. That could mean it’s a great time for you to sell. If you’re ready to address your changing needs and take advantage of today’s favorable conditions, contact the Rural KC Team-Keller Williams Partners.  913-837-0760.  913-837-0411.