If you’re looking to buy your first home or your first investment property, there’s a lot of terms thrown around during the process that you may be unfamiliar with. Here are six of the most common real estate terms you may not know.
Amortization is a way of paying off your fixed-rate mortgage that combines the principal and the interest. This equalizes the monthly cost of the mortgage and makes your payments predictable. During the beginning of paying back your mortgage, the interest payment is high while the principle is low, and at the end of the loan, the interest payment is low while the principle is high. This characteristic provides favor to a lender who will receive the majority of his interest payments early in the loan process. The borrower will stand gain the most by holding the property as long as possible toward the end of the term when the monthly payments will be more principal than interest.
The Comparative Market Analysis, or CMA, is a report of similar homes in the area that were sold recently or are on the market right now. These reports can be useful when to determine an appropriate value for your home. Real Estate Broker’s perform these and they are based on the values of similarly selling properties.
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2019 is here and with it new predictions for what will happen in the real estate market. In 2019, expect mortgage rates to increase. Costs will increase for home buyers, which will create a higher demand for rental properties.
Technology will continue to advance and change the real estate market this year. Real estate technology has evolved rapidly, and services like Zillow and Trulia have changed the way buyers, and sellers think of the market. It’s necessary for investors considering purchasing a property to realize and understand the difference between value and price.
New buying patterns
Baby boomers currently living in traditional two-story homes will start looking to downsize and move into ranch-style homes. A one-story house means no stairs to navigate into old age. This transition will cause the value of one-story homes to increase as they become higher in demand.
Millennials will continue to purchase homes this year. Experts predict millennials will account for 47 percent of mortgages this year, compared to 37 percent of Gen Xers and 17 percent of baby boomers. They’re looking for affordability and quality of life, meaning they need to trade in urban life for the suburbs.
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While it may sound like property management and asset management are different names for the same thing, the two careers are actually very distinct in nature. Both are essential parts of managing real estate properties, but the two roles handle different aspects of management.
A property manager is a person that handles the day-to-day of property operations for both commercial and residential real estate properties. This includes scheduling repairs, handling leases and collecting rent. An asset manager, however, focuses on maximizing and adding long-term value to a property, typically for commercial properties. This includes acquiring new properties, market forecasting and research, and financial analysis. This role requires more strategic thought in order to enhance the property and add extra value.
The lack of distinction between the two roles also stems from property managers being expected to do more at certain real estate firms. In some firms, there is a clear line between the two roles, while at others the line is much more blurred. Many property managers today are also responsible for financial analysis and preparing annual budgets. As the list of responsibilities a property manager is expected to perform continues to grow and change, the definition of what a property manager will as well.
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One of the largest decisions that most people make revolves around real estate. Should you rent an apartment or should you purchase a home? It may sound incredibly simple at first glance, but once you begin to dissect and analyze the question, it becomes very clear as to just how complicated the situation truly is.
As an experienced real estate professional with years of experience, I figured that I could offer some assistance to those looking for a new home. Here are some of the biggest differences between renting and owning.
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