How Can You Be Sure You're Making a Good Investment?

It's not always easy to know if your investment is going to pay off but here's an article with some easy tests that will help you decide. Is This House a Good Investment? REAL ESTATE | 25. JAN, 2012 BY AFFORD ANYTHING Forget fancy-pants calculus. The most important math is the stuff you learned in fourth grade. How do you know if an income property (rental property) is a good investment? Start with The One Percent Rule: Does the monthly rent equal one percent of the purchase price or more? Example: Purchase Price: $100,000 $100,000 x 0.01 = $1,000 Is the monthly rent greater than, or less than, $1,000? If the monthly rent is greater than $1,000, this property merits further consideration. Otherwise, ignore the property and move on. In other words: for every $100,000 in price, I look for $1,000 in rental income. If a house costs $225,000 – as mine does – it needs to rent for $2,250 per month or more. One percent is the bare minimum level of return I’d accept. Some people shoot for the “2 Percent Rule” (get $2,000 per month in gross rent for every $100,000 of house), but those tend to exist in higher-risk, less-stable areas. Keep in mind, there’s usually a tradeoff between risk and reward. Example: Midtown, Atlanta is a stable neighborhood with high rental demand. Tenants are highly likely to be college-educated, and many will hold graduate degrees. Tenants are likely to have perfect credit. Many are saving for their own home. The tenant risk is lower, so your returns will also be lower. One percent is probably the best you’ll find in an area like this. (I got lucky.) Hypothetical Town, in contrast, is an area with a high crime rate. Tenants are likely to have bad credit and bankruptcies. The tenant risk is higher, so your returns should also be higher. I’d demand at least 2 percent in a place like this. READ THE REST OF THE ARTICLE

TOP TEN TIPS FOR BORROWERS

Top 10 tips for mortgage borrowers in 2014

By Polyana da Costa • Bankrate.com

The clock is ticking for buyers and homeowners who want to grab a low mortgage rate in 2014. But if you stay on top of your game, keep your finances in order and act quickly, you can still grab attractive mortgage deals.

These 10 mortgage tips can help you with your mortgage decisions in 2014.

1. Document your finances.

Lenders will be extra diligent when underwriting home loans in 2014, as new mortgage regulations go into effect in January. The rules put pressure on lenders to verify that borrowers have the ability to repay their loans.

Keep good records of your finances, including bank statements, tax returns, W-2s, investment accounts and any other assets you own. Be ready to explain any unusual deposits to your accounts. Yes, the $500 that Grandma deposited in your account for Christmas could delay your loan closing if you can't prove where the money came from.

2. Lock a rate as soon as you can.

Rates will likely climb in 2014 as the Federal Reserve is expected to reduce the pace of the economic stimulus program that has long helped keep rates low. If you are planning to get a mortgage, lock in a rate as soon as you are comfortable with the numbers.

3. Refinance now -- if you still can.

Many homeowners lost the opportunity to refinance at a lower rate when rates jumped in 2013. But those who are still paying more than 5 percent interest on their home loans might still have an opportunity.

If you think you may be able to save with a refinance, but you are not sure, it doesn't hurt to try. Speak to a loan officer and take a look at the numbers to see if refinancing still makes financial sense for you after you consider how long it will take to break even with the closing costs.

4. Buyers, use your bargaining power.

As mortgage rates climbed, lenders lost a big chunk of their refinance business. In 2014, they will turn their attention to homebuyers and will fiercely compete for their business. Buyers should take advantage of bargaining power they gain with that increased competition. Shop around for the best deal and look beyond the interest rate on the loan.

5. Learn your rights as a borrower.

Mortgage borrowers will get many new rights as consumers this year when new mortgage rules created by the Consumer Financial Protection Bureau go into effect in 2014. If you run into issues with your mortgage servicer in 2014 or fall behind on your payments, make sure you are aware of your rights and put them to use.

6. Take good care of your credit.

It's nearly impossible to get a mortgage without decent credit these days. That will continue to be the case in 2014. If you are planning to get a mortgage, monitor your credit history and score until your loan closes. The best mortgage rates usually go to borrowers with credit scores of 720 or higher. You may still get a mortgage with a score of 680, but lower scores will mean higher rates or higher closing costs.

7. Don't overspend.

Lenders don't want to give out loans to borrowers who will have little money left each month after they pay their mortgages and other debt obligations such as credit cards and student loans. If that becomes the case, the lender will tell you that your DTI, or debt-to-income ratio, is too high and you don't qualify for a loan. Try to keep your monthly debt obligations, including your mortgage and property taxes, below 43 percent of your income.

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2014 is a Time For Optimism

2014 is right around the corner and isn't it time for some optimism? We in real estate believe there's good news on the horizon. Here's an article you might find interesting.
Warm wishes to you and your family in the new year.

Starting Gun Just Sounded For 2014 Housing Market - Time To Buy D.R. Horton
by John S. Tobey

This is it – the news we’ve been waiting for: New highs in the economy and homebuilder confidence. And they came at the same time. Moreover, we’re getting this good news in the final stages of “loss harvesting” in which investors mistakenly sell low for tax “benefits,” ignoring fundamentals. Sale candidates are homebuilders, at their 2013 low points, making them bargain priced for fundamental-focused investors.

Good news #1: U.S. industrial output hits new all-time high
As The Wall Street Journal reported (12/17), “Industrial Output Hits a Milestone." U.S. industrial output in November surpassed its prerecession peak for the first time, the latest sign of momentum for the economic recovery. Industrial production, which measures the output of U.S. manufacturers, utilities and mines, surged a seasonally adjusted 1.1% from the prior month, the Federal Reserve said Monday. That was the biggest jump in a year and puts the index above the pre-recession peak set in December 2007 and 21% above the recession low in June 2009.

How important is this news? Very, but not because it’s a standalone statistic. Such a one shot reading produces a reaction like this one from J.P. Morgan’s economist: “We’re getting a little more optimistic as we get these numbers.” However, this important news compounds the multiple other positive reports we’ve seen recently. In combination, they’re foreshadowing an excellent 2014, likely to be seen as the first full year of normality. Therefore, we investors, needing to act in advance to earn good returns, can now become optimistic without guilt.

Good news #2: Homebuilder confidence at 8-year high
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Stay On Track With Your Real Estate Goals

Holiday time is upon us; a time of family and friends and good will; a time to reflect on the year behind us and plan for the year to come. If a real estate sale or purchase is on your To Do list for 2014 now is the time to begin. Many people take a break at the holidays, thinking buyers are not looking and sellers are not selling. Yes, the real estate market is slower at this time but that’s good news; inventory is more focused, prices can be lower, mortgages may move more quickly, there’s less competition. All good reasons to stay on track with your real estate goals.

Selling Your House During the Holidays reprinted from Realtor.com By Diana Lundin Don't wait until the new year to list your property It’s the holidays and you have a house to sell. Isn’t it best just to wait until after the new year before putting it on the market? Not as far as Realtor® Camille Jasmin is concerned. The Southern California real estate agent has 11 good reasons why you should list your home during the holiday season.  People who look at your home over the holidays are serious buyers. Serious buyers have fewer homes to choose from over the holidays as most sellers take their homes off the market. That means less competition for you and more money for you. Since the supply of homes will drastically increase in January, they’ll be less demand for your particular home. Less demand means less money. Houses show better when they’re decorated over the holidays. Buyers are more emotional during the holidays and tend to spend more money on getting your price. Buyers have more time to look over the holidays and can come during the weekdays. Some people must buy before the end of the year for tax reasons. January is traditionally a month where employers have to move so they can’t wait until springtime. They have to buy now so you’re there to capture that market. You can still be on the market and you can have the option to delay your close or restrict your showings during those six or seven days if you want to celebrate the holidays. You can sell now for more money and provide a way for you to delay that closing and extend your occupancy until next year. By selling now, you have the opportunity to be a non-contingent buyer for next year when houses are less and you’ll have more opportunities to choose from. Copyright © by Move, Inc.

Impeccable Home With A Spectacular View

Here's an impeccable home in the best tier of the building with a panoramic lake view, AND on a high floor! There are two large bedrooms and two updated bathrooms, and the living room is surrounded with windows that offer a direct view of Lake Michigan. The large dining room has porcelain tile.
Heat is included - only pay utilities. There are only three units per floor. 
This is a unique buillding with tree-lined streets, steps from Michigan Avenue and moments to the lakefront. Easy access to dining, shopping and transportation. Guest parking and a deck with grills.

This would be a lovely primary home or a perfect in-town residence (furniture available). 

Call me to arrange a showing: 312.981.2359.
247 E. Chestnut Place #2102 - 2 BD/2BA - $350,000 - MLS #08474072

Now Is The Time To Buy

These past several years have been a great time for home buyers and real estate investors, due to low home prices and historic low interest rates. But things are changing; prices are going up, mortgage interest rates are starting to rise. If you're wondering if this is the time to buy, this article might help you make your decision. And, as always, I'm here to answer any questions and give you any information you need.

Three Compelling Reasons Why Your Buyers Should Buy…Now

By Wendy Forsythe

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1. Rising Home Prices
Home prices are inching upward at an accelerated rate. And since price is likely the most significant consideration among people deciding whether or not to buy, prospective buyers may initially be put off by this trend. Appeal to their desire for homeownership by bringing to their attention that home values are projected to increase even further moving into next year. By taking the leap now, they may be seizing their best chance to get into a starter home or upsize into something that’s more suitable for their changing needs. Depending on how high prices climb, they may even see an opportunity to build long-term equity.
2. Low Mortgage Rates and Faster Closing Times
Mortgage rates are at the lowest they’ve been in a long time. That fact—along with the trend among mortgage brokers to increase their turn times to give buyers a competitive advantage in a hot market—is great news for buyers hoping to get into a home before prices increase any further, and for sellers looking to sell their properties at the fair market price as quickly as possible. The Mortgage Bankers Association has already projected that mortgage rates will likely inch back up—possibly to a full point—within the next year, creating yet another reason why now is the time for buyers to make their move.
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Foreclosure Filings Drop

Foreclosure filings drop to lowest level since 2007
Article from ChicagoRealEstateDaily.com

By: David Lee Matthews
Local home foreclosure filings have fallen to their lowest level since the crash, but lenders are still churning through plenty of distressed properties.

New foreclosure filings in the six-county Chicago area plunged to 22,342 in the first half of 2013, down 36.1 percent from 34,978 at the same point last year, according to a report from the Woodstock Institute, a Chicago-based consumer research and advocacy group. Foreclosure filings this year fell in all but one of Chicago's 77 community areas, and overall sunk to their lowest point since 2007, when the foreclosure crisis was just beginning. Woodstock defines a filing as "initial filing of papers" in court, such as a lis pendens.

The data offer more good news for the local housing market, which is recovering after years of decline. The drop in foreclosure filings eventually means fewer bank-owned properties littering neighborhoods and dragging prices in the future.

Yet foreclosure auctions are proceeding at elevated levels, displacing homeowners and distorting prices. Harder-hit communities blighted by vacant homes are continuing to struggle.

“There is some reason for optimism, but it needs to be tempered with that understanding there are parts of the region that aren't doing as well,” Woodstock Vice-President Spencer Cowan said.

The number of Chicago-area foreclosure auctions fell just six percent in the first half of 2013 to 16,332. In some areas like Roseland (up 31.5 percent from last year), south suburban Harvey (up 56.3 percent), and west suburban South Elgin (up 41.2 percent), foreclosure auctions are surging.

Though thousands of people are losing their homes, auctions play an important role in clearing the market, by making distressed properties available for sale, albeit at depressed prices. The percentage of foreclosures seized by lenders also dipped 3.7 percentage points in the first half of the year compared with the same period in 2012, indicating more investor demand for foreclosures and more distressed properties returning to productive use.

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