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Buying or Selling Your Home? Think Like a Real Estate Investor

Buying or Selling Your Home? Think Like a Real Estate Investor

By Devon Thorsby. July 20, 2016, 12:39 p.m.

One of the toughest parts of buying or selling a home is the fact that you’re doing a business deal that involves something so personal. It can be difficult to separate the emotional aspect of where you’re going to live with the fact that you need to make a smart decision on what is likely the biggest investment you’ll ever make in your life.

Fortunately, there are people who make this kind of investment their business to show us how it’s done.

Real estate investors of all levels make a living out of buying, selling and owning property, both commercial and residential, and they better understand the nuances of real estate deals than the typical homebuyer or seller who will only go through the process a few times during their life.

Any property purchase is an investment of your money, regardless of whether you’re planning to live there yourself or make money off it. You want to be able to make a profit when it comes time to sell your home again, or at the very least get back what you originally spent. Here are key strategies from real estate investors that you can adopt to make your personal investment a success.

[See: 10 Tips to Sell Your Home Fast .]

Assess the risk. Before you spend your savings on a down payment and lock yourself into monthly mortgage payments for the next 15 to 30 years, assess the chances the property will be worth the purchase price when you decide to sell.

Look at the home you’re purchasing in the context of the bigger picture: the city, neighborhood and even the traffic near the property. And if the property is affected by negative factors while you live there – maybe it’s in a declining neighborhood with an increasing number of vacant houses or the county decides to take a piece of your property to widen a road – are you able to take the hit on your home’s value?

Any monetary investment comes with risk, explains Harmel Rayat, a Vancouver, British Columbia-based real estate investor and author of “Winning With Commercial Real Estate.” “It comes with things you can’t control,” he says.

Rayat says a great example is his own home, which he purchased about 20 years ago. “I bought it in a great area, paid a very healthy price for it, and a year and a half later my home was down 40 percent,” he explains.

An international political situation lowered interest in the area of Vancouver where the property is located, and as a result home values dropped. While the area has not only recovered but significantly increased its value and interest, Rayat notes it took a long time to get there – and had he opted to sell after 10 years there would have been little profit.

It’s essential to understand the risk you’re taking on before making an offer. If you’re putting your entire life savings into a down payment and you know you’ll be stretching your money simply to make mortgage payments, taking a leap on a home that may not pay off could leave you underwater.

While risks can pay off big – like buying in an up-and-coming neighborhood or purchasing a home sight unseen – there’s no harm in selecting a house you’re more confident in.

Know the market. To calculate the potential risk factors involved with the home you’re considering, you have to know and understand the local market – or bring in someone who does.

Because you’re not in the business of buying and selling on a regular basis, having a real estate agent who can explain the nuances of homes and values in the area is imperative to bring you to the level of understanding that most real estate investors already possess. A knowledgeable agent should provide insight on the variation in cost based on certain features, like the number of bedrooms or an updated kitchen, as well as manage expectations for a competitive pool of other interested buyers.

“Making sure the agent knows that micromarket [is key],” says Tom Pietsch, managing partner and broker associate with Tom & Cindy and Associates at Long & Foster in northern Virginia, who works with homebuyers, sellers and real estate investors.

Making an offer is a decision only you should make, so select an agent who can help you understand the market in relation to your needs and the available properties, and then assess your options from there. That means considering the local school district, transportation, community amenities and more, explains Fred Cooper, senior vice president of finance, international development and investor relations at home building company Toll Brothers.

“Homebuyers should not only analyze the specific property they’re buying, but look at the ancillary aspects of the community that they’re moving into,” Cooper says.

[See: The Best Apps for House Hunting .]

Be realistic when it comes time to sell. Your understanding of the market is important again when it comes time to sell your home. Regardless of the sale price you were hoping for when you purchased your home, you have to accept what comparable sales in the area tell you.

“Successful investors understand the dynamics of the local property market, so that allows them to be realistic in their expectations of what they can sell for and what they can buy for,” Cooper says.

He adds that it is important to recognize any parts of your home or the area that may not be appealing to buyers, and set the listing price accordingly to ensure the property is still enticing to them.

“Pricing the property realistically is going to make it a lot easier to sell it,” Cooper says. And with information about the market easily accessible online through sites like Zillow, and even public record databases, there’s no reason to make an uninformed guess at what your home is worth compared to your neighbor’s. By viewing comparable properties that recently sold and researching the value of certain updates versus others when it comes to home sales, you can find a more confident price point for your home.

Your feelings still matter – but control them. When you’re making a decision about where you’re going to live, there’s no way to extract emotion from the equation – something that’s not as difficult to do in investment deals. “How do you remove emotion from one of the biggest decisions in life you’ll ever make?” Rayat says.

But being able to control those emotions can make the business aspect of the deal smoother, especially when you’re selling.

“It’s undeniable that emotions play a role in everything that involves spending money,” Cooper says. “For a homebuyer, and also for an investor, I would caution against blowing up a deal over small things.”

Rather than holding out for an extra $50 in rent, a good landlord will recognize the value in having a tenant occupy the home instead of paying to keep a vacant space and hoping to fetch a higher rent down the line.

Pietsch says real estate investors who rent out a home they previously lived in often exhibit detachment. “Those people tend to then move on emotionally because it’s not their house anymore and try to keep it looking good but for the least [money] they can, while getting the most that they can in rent.”

[See: 10 Unorthodox Ways Your Real Estate Agent May Market Your Home .]

Recognizing the home is no longer yours once you put it on the market can remove your emotional attachment and help you focus on how to appeal to the new buyer’s feelings.

“Turn your home back into a house. On the other hand, think about the buyer’s emotion, and do what you can to appeal to that emotion,” Pietsch says.

Thorsby, Devon. “Buying or Selling Your Home? Think Like a Real Estate Investor.” U.S. News & World Report. U.S. News & World Report, 20 July 2016. Web. 21 July 2016.

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Top 5 Reasons Why Millennials Should Enter The Housing Market Now

Top 5 Reasons Why Millennials Should Enter The Housing Market Now

Tuesday, July 19, 2016 – by Chris Mabee, president of Home Builders Association of Greater Chattanooga

With the economy and housing market still recovering in Chattanooga and surrounding areas, some potential first-time home buyers may be hesitant to invest in a new home. Yet there are several reasons why now is a great time for Millennials and other first-time home buyers to start building their American Dream.


1) Interest rates are low.

Today’s historically low interest rates are helping first-time home buyers find affordable housing options. Average weekly interest rates for a 30-year fixed mortgage have remained under 4.0% for most of 2016.

2) Large down payments are not necessary.

While lenders are looking more closely at borrowers today than in recent years, there are options for purchasing your first home without a 20% downpayment. For example, the Federal Housing Administration (FHA) offers loans to first-time home buyers with downpayments as low as 3.5%. However, these loans require mortgage insurance.

3) New homes are built to fit your lifestyle.

Designed to accommodate today’s busy lifestyles, new homes – including urban condos and single-family homes – feature open floor plans, flexible spaces, low-maintenance materials and other amenities that appeal to younger buyers.

4) Technology makes house shopping fun and easy.

Today’s tech-savvy home buyers use mobile apps to quickly gather all of the key information on a property and to see extensive photos from their cell phones or tablets. If you’re just beginning your search, is a popular app because it generally contains the most accurate information gathered from more than 800 local MLSs (multiple listing services). There also are several free mortgage apps to help you determine how much you can afford and to compare real-time rates from multiple lenders. Popular mortgage calculator apps include Zillow and Trulia.

5) Owning a home can help young families build wealth and combat rising rents.

For most Americans, homeownership is a primary source of net worth and is an important step in accumulating personal financial assets over the long term. As the housing market continues to recover, property values have begun to grow again. In fact, home values up 6.3 percent nationally in the first quarter of 2016, compared to the first quarter of 2015.

Mabee, Chris. “Top 5 Reasons Why Millennials Should Enter The Housing Market Now.” –, 19 June 2016. Web. 20 July 2016.

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Hosting a Summer Party

Hosting a Summer Party

A List of Home Prep Tasks for Hosting Friends and Family this Summer

Temperatures are rising and summer is about to be in full swing. While we all know that Chattanooga’s weather can be extremely variant and unpredictable, one thing that is guaranteed is a good amount of heat. While beach trips and other vacations are often a first pick for the summer season in the south, here are a few tips for utilizing your house for hosting.

  1. We all want our homes to be up to date, fresh and clean. If you are hosting a dinner party in your Chattanooga home, you will want the front of your home to have curb appeal. Consider adding new landscaping to your front yard. At the very least, a mow, weed eat, and blow will make a great difference.
  2. A fresh coat of paint can go a long way. Whether it is the front entryway to your home, dining room, or living area, something as easy and simple as a fresh coat of paint can make your home all the more welcoming.
  3. Backyard space is perfect for a cookout this summer. Utilize the property space that you have. A pressure wash to a walkway, addition of a flower bed, or whitewash to your fence might be the very thing needed to make your backyard stand out.

Whether you are in Chattanooga, a nearby town, or travelling the world this summer, remember these tips for having a bright, welcoming space for hosting friends and family.