How to Buy a Home in 2020

2020 is an excellent time to consider picking a new address. This year, interest rates are extremely low, and that there are a variety of options to choose from. Keep in mind that even though it’s an excellent year to buy, it’s also essential to have some preparation for this journey. 

At Zumbly, we streamline the home buying process for real estate investors, first-time homebuyers, and Airbnb property owners. Here’s a checklist to help anyone that is interested in purchasing a home in 2020.

Related: Is Buying A Home Without A Realtor A Good Idea?

Review Income and Spending

Before buying a home, it’s vital to understand your financial situation based on income, financial assets, and spending habits. This can help establish a home budget to obtain an excellent mortgage rate.

Review your investment, credit card, and banking statement thoroughly to ensure that buying a home will not be taking a big chunk out of your spending for unnecessary expenses. Evaluate your income to see if it has increased over time or not. 

Maybe it’s a good idea to ask the boss for a raise or consider a higher paying job. After that, review your current housing spendings, such as a mortgage, insurance, rent, and monthly homeowners association fees. This will help you decide if you can afford to buy a more expensive home or if you should scale back and find one that’s more affordable.

Down Payments

A homeowner has a 20% down payment ready for a new house. However, other mortgage options can give a lower down payment. However, they usually require private mortgage insurance to do that. Some companies protect lenders if their mortgage has defaulted. The lower your down payment and credit score, the more you will have to pay for the private mortgage insurance, therefore taking a significant chunk out of the monthly house budget.

 Either way, the HOA requires a minimum of 20% down payment. Plus, a significant down payment can help you save money over the span of the mortgage. For example, a 20% down payment on a $300,000 home with a 30-year mortgage could save an individual over $54,000 over a lifetime of loans. This is a wise investment compared to a 5% down payment.

Improve Your Credit Score

When it comes to buying a house, the three factors that determine the home loan are income, credit score, and down payment. It can take several months to address the credit report issue, but there are some ways around it. 

The first step is to request a copy of the full credit report from the three agents. Check each statement thoroughly for errors, mistakes, and ways to remedy it. Then pay down the balance as much as possible while meeting the down payment saving goals.

It’s vital to improve the utilization ratio, which is the percentage a person owes divided by the total credit line. This will increase the credit score more than paying off a single credit card. The goal is to aim for a 30% or lower utilization ratio for all credit cards.

Gather the Paperwork

The essential part of buying a home in 2020 is to keep everything organized. This is the perfect time to organize all the necessary paperwork to begin the journey of being a homeowner. The essential paperwork that is required is the:

  • Federal and state taxes for the last two years, along with the W-2 or 1099 forms. 
  • Comprehensive statements for the bank accounts of the last month. 
  • Statement for investment accounts. 
  • Don’t forget loans, along with minimum monthly payment. 
  • Income statement or letter from the employer. 
  • Additional records that show proof of rent payment, bankruptcy, foreclosure, recent divorce papers, gift letters, and much more.
  • For any business owners out there, it’s imperative to prepare a profit and loss statement to verify the income.

Choose a Broker

It’s vital to have a trustworthy and knowledgeable broker. With this in mind, a face-to-face interview to ask the agent about his or her experience, availability, and communication style can make a huge difference. 

Don’t forget to ask about the fees and recent success stories, along with references. Understand that an agent can provide guidance through the ins and outs of the real estate and market trends. They act as advisers to offer valuable knowledge and perspective.

 A skilled realtor has a significant network of professionals such as lenders, attorneys, and contractors who can help renovate the house to get some pretty good deals.

Related: How To Start An Airbnb Business With 5 Easy Steps Using Zumbly

Understand The Real Estate Trend

According to real estate experts, the prices in real estate will continue to rise by 2.8% in 2020. When it comes to mortgages, the interest rate will be decreasing in 2019 and drop below 4% in 2020. Economic expert predicts that in 2020, the interest rate will be around 3.2% for a 15-year mortgage and 3.7% for a 30-year mortgage.

What High Prices Mean for Buyers?

Anyone who plans to purchase a home should get ready for an expensive market. With this in mind, it’s imperative to budget wisely. Avoid rushing into a home purchase that does not financially make sense. 

If putting down 10% on a 15-year conventional loan is impossible, then it’s probably not a good idea to purchase a home in this market. Down payment of less than 10% will destroy the budget with a higher than average monthly mortgage payment.

 Ready to make a purchase? Then here are some options to consider: 

  • Make sure to save for a five-figure down payment.
  •  Find the least expensive home in the best neighborhood that is affordable and upgrade as the income improves. 
  • Expand the search in a less popular neighborhood.

Are those high prices worth it? Find out using our estimated value scores on Zumbly.

What Do Lower Rates Mean for Buyers?

Since mortgage interest rates will be low, it’s best to go for the conventional 15 years fixed-rate mortgage. That way, anyone can feel secure in knowing what their payment will be over the life of the loan.

Final Note

Buying a house in 2020 is an exciting journey. However, the prices are high despite a low mortgage interest rate. Luckily, with the right strategy, it can be possible to purchase a dream home. It’s essential to find a trustworthy broker, gather all the financial paperwork, and budget wisely. 

The tips and strategies above should help bring anybody’s dream home to reality. Get started looking for your next home at Zumbly, and check out property scores and estimated values to make the process even easier.

Related: House Hacking: Live For Free With An Airbnb Investment Property

Top Airbnb Host Tips

Airbnb is an excellent way to make money with the extra room in the house or apartment. Some say it’s the modern way of doing real estate. 

Even though the Airbnb app has made the process of renting out a place extraordinarily efficient and easy to follow, there are some strategies that the host should take into consideration. 

At Zumbly, we help you find homes to live in or put on Airbnb for your side hustle. With that in mind, here are some top Airbnb host tips that can help bring in more customers and encourage former clients to return. 

Related: House Hacking: Live For Free With An Airbnb Investment Property

Be Honest

Everyone wants to put their best foot forward when it comes to marketing their listing. Some would go as far as embellishing and exaggerating, whereas others would be honest and truthful even though it hurts their listing.

It’s always essential to be honest with a listing. If you say that a particular service is available when in fact, it isn’t, this can easily lead to a bad review. In turn, this can deter other customers. 

For example, if there’s no space for multiple people to sleep, don’t say that there is plenty. If the balcony does not have a great view, don’t say it does. If something is not working, provide the guest with a discount. 

Don’t forget to be honest with the pictures. Airbnb can send a photographer to take professional photos. They will make the place look as good as it can be without masking reality. The last thing an Airbnb host wants is to mislead anyone about the space, amenities, and size.

It’s also important to be honest about the kind of host you plan to be. Just how some guests like more interaction while others prefer to be self-sufficient, hosts have preferences too. Being up-front about how often you’ll be at the property and whether or not you plan to share meals with them or provide social perks will help set expectations.

Ready to set up an Airbnb property? Get started by browsing homes on Zumbly.

Make The Rules Clear

Before letting the guest book the room, it’s essential to let them know about the rules. Ask them if it’s OK, and if they agree, then it’s appropriate for them to make the purchase. 

The rules should entail:

  • Adding community-related regulations, such as keeping the noise down after 11 PM.
  • Letting them know if pets or babies are allowed.
  • Enforcing a check-in time.

Related: How To Start An Airbnb Business With 5 Easy Steps Using Zumbly

Adequate Check-in and Check-Out Time

The most common mistake that people make is trying to maximize revenue by allowing guests to check-out on the same day that other guests check-in.

An Airbnb host can quickly clean up if they are only renting out one room. However, it can be challenging if they decided to rent a whole apartment and need to clean it in a short period of time. This can be very stressful for you and for your guests, so it’s not advisable to do same-day check-out and check-in for consecutive bookings. 

The worst part is that the host might need extra sets of bed sheets and towels in case they can’t clean it on time. The best system is to have the proper preparation time or day between guests, and occasionally allow consecutive check-in or check out. 

Keep in mind that not every guest will treat your space with care. Some will leave everything a complete mess and it may take you over 5 to 6 hours to restore it. Some guests barely cook, while others enjoy creating a culinary masterpiece every day – without washing their dishes and leaving your kitchen in order. With that in mind, anyone renting out an entire property should make sure to give themselves enough time between guests.

Send Emails a Week Before The Guests Comes Over

A week before the guests arrive, it’s a good idea to send a personalized email with information about the property, neighborhood, cafés, gyms, places to eat, and activities. This is important because not every visitor will have access to data on their phone. Don’t forget to ask if they will be driving to your property, and if they are, let them know where they can park.

Ask About Food Preference

Every guest has different preferences on what they like to eat. If you plan to be a more hands-on host, it’s best to email them to ask about food preferences ahead of time, such as how they want to take their coffee, or dietary restrictions. 

This will let them know that when they arrive, they will experience something unique and personalized. You can even provide the guests with a basket of fruit, chocolate, or anything special upon their arrival.

Greet The Guests At The Door

The guests are most likely to be stressed from traveling to their destination. Whenever it’s possible, greet them at the door and be sensitive to their needs. Some have a lot of questions, some want to be left alone, and still others want company and a good conversation to start their adventure. 

Try to read their body language, but if they are mysterious, ask them if there’s anything they need.

Final Note

Airbnb provides a new way of doing real estate. It’s simple as renting out an entire apartment or house to rent out a room. It’s like giving someone a more affordable living area with a personalized touch. 

Just like real estate, Airbnb does come with some tips and tricks. The host needs to know some common courtesies so their guests will feel welcome at home. 

Fortunately, the strategies listed above are excellent Airbnb host tips that can help anybody dive into the Airbnb business venture. Now that you know about being a good host, check out some properties that would make great Airbnb spaces on Zumbly.

Related: Is Buying A Home Without A Realtor A Good Idea?

How to Make an Offer on a House

Looking for a new home is an exciting journey. The real struggle, however, begins once you’ve found a place you want to live in. What comes after that? In a competitive market where numerous individuals could be eyeing the same house, how do you make your offer stand out? There are several strategies and factors to keep in mind while making your offer on a house, starting from offer letters to contingencies and down payments. 

At Zumbly, we make life easier for real estate investors and those looking to buy a home by providing useful property scores and values. Let’s take a look at some of the important elements of making an offer on a house.

Related: Is Buying A Home Without A Realtor A Good Idea?

The Process of Making an Offer on a House

After you decide that you’re interested in a property, the process of making an offer begins. You have to be prepared to negotiate or even walk away if the terms don’t suit your conditions. Do your research and know your local market well. Also, keep other properties in mind and be aware of comp prices so that your offer is well-informed.

Here’s how the process of making an offer for a house works:

  • You make a written offer to the seller.
  • The seller either accepts, declines, or presents a counter-offer.
  • If the seller presents a counter-offer, you can either choose to decline or accept the offer or negotiate back and forth until you’ve both reached a conclusion you can agree on.
  • If the seller accepts your offer, you move on to sign the purchase agreement. This means that you’re now under a contract. This duration of time is known as the contingency period. Any inspections, appraisals, and anything else mentioned in your purchase agreement will take place during this period.

Contingencies and Other Offer Details

Contingencies are events that could happen between the signing of the purchase agreement and the closing that could end or alter the contract. These contingencies protect you by allowing you to make changes to the contract or even walk away if you discover issues with the house or find out that it isn’t worth as much as you’d imagined. 

Non-financial perks can also be included to make the deal better. For example, you can offer to close quickly in case the seller is in a rush to move. Or if they’re unable to find a place, you can rent out the place to the seller after the closing, until they find a new property. Your real estate agent can help you to decide what contingencies to include.

Some common contingencies when buying a home include:

  1. Home Inspection

Before closing the deal, you can ask for a home inspection. A home inspector examines the house or property and points out defects or issues that the buyers might overlook. This can include issues with the roof, the attic, or any major problems that could surface. 

Post the home inspection report, the buyers can either choose to ask the seller to resolve these issues, or lower the price. They can also decide to back out altogether if the problems are too many or if the seller doesn’t agree to repair the damaged areas.

Check out property scores for your next property on Zumbly.

  1. Hazard Inspections

Hazard inspections look to dig up issues that aren’t uncovered in a home inspection, such as radon, pests, and lead paint. Although these are optional, they’re recommended, especially in areas where the rate of termite infestations or radon contamination is high.

  1. Sewer and Well Inspection

Sewer and well inspections are conducted in order to evaluate the condition, functionality, and safety of a property’s water and sanitation system. This usually costs a non-refundable amount anywhere between $200 to $500. A contaminated well or a damaged sewer line will have to be fixed by the seller, and if that can’t be agreed on, the buyer can cancel the agreement.

  1. Early Occupancy

An early occupancy situation occurs when the buyer doesn’t have a place to stay before the closing date, which happens if their previous house is sold before the current deal takes place. In such a scenario, the seller can allow them to move in before the closing date and make changes to the purchase agreement accordingly. 

How Much Should You Put Down for the Earnest Money Deposit?

Depositing earnest money is a crucial part of the home-buying process. It provides proof to the seller that you’re serious about the purchase and also helps with your down payment. The earnest money is usually cashed and kept in a title company trust account, or in the broker’s escrow account. Once you hand in the earnest money, you will receive a receipt from your brokerage.

On average, you can hand over about 1% to 2% of the total home purchase price as your earnest money deposit. In some real estate markets, the earnest amount can be more or less than the average amount. This depends on whether the demand is high or if you’re buying from an area where the houses aren’t selling quickly. 

Your agent might recommend that you’re more likely to win a bid if you provide the seller with a large deposit. The seller can even negotiate on the overall price if your deposit is big enough for them to know that you really are interested in the property. 

On the other hand, depositing a lot of cash as earnest money isn’t always the best decision. Gathering that amount and losing the use of it for weeks or months prior to the closing date is not something everyone can choose to do. If you can provide the necessary documents and show that you’ve been in possession of that money for at least 60 days, you’ll be good to go. 

Related: How To Start An Airbnb Business With 5 Easy Steps Using Zumbly

What are the Elements to Include in Your Offer Letter?

When you’re making an offer on a house, you’re probably dealing with a lot of competition depending on the market. With so many others bidding for the same house, how do you make yourself unique? The answer to that is an offer letter. Your offer letter to the buyer shouldn’t just include technical details such as the expected closing date or information about your mortgage, but personal details as well. 

Here are the most necessary elements to include in your offer letter that can make it stand out:

  • Address the seller by their name. This adds a personal touch and makes the seller feel a warm sort of welcome from your end. Writing them as “X” or so is something many can do, but the minute you address them by their name, they know that you’ve done your research and are respectful towards them. You can either find the name of the seller online or through your real estate agent.
  • Tell them what you like most about the house. Mention little details that you really admire. The house is probably a place they’ve owned for a long time and are naturally attached to; therefore, it will make them feel good to know that you’re someone who appreciates the nuances of the house and has an eye for the minute details.
  • Share a few personal details about yourself. In addition to flattering the seller, this point works really well. When you open up to the seller, they get an idea of the kind of person who wants to buy their house and increases their confidence in you. You can tell them about why you want to move in, how much moving into that particular house with your family will mean to you, and so on.
  • Mention what you have in common with them. Good friendships are usually formed based on common likes and dislikes, right? Use that to your advantage. You could do that by taking features from the house. For example, if you saw a painting whose artist you admire as well, or if there are posters about sports celebrities that you follow, too, etc. 
  • You can choose to throw in a personal picture of you with your family. This will be a good touch to the letter. Also, remember to keep it short instead of turning it into an essay. There are probably many letters they have to get to. Therefore, in order to make yours memorable, get to the point quickly, and tell them how much you would love to buy their house. 

Summing Up

The duration between making an offer for a house and the closing date can be a long one. Therefore, you have to be patient and play your cards right. If the seller says no, you can try negotiating. However, if they don’t budge, it’s okay to forget about that particular house and move on to a property that will suit your better.

Make sure your offer letter is precise and complimentary. Also remember to conduct the respective inspections well in case the seller does accept your offer. If you follow the above-mentioned steps accurately, your offer is sure to go through, and all that’s left is moving into the house of your dreams. Now that you know how to make an offer, start taking a look at which houses might be worth the investment at Zumbly

Related: House Hacking: Live For Free With An Airbnb Investment Property.

How to Get Out of a Lease

A lease is a written agreement that allows you to rent a property for a set period of time. This usually lasts for a year. Once the lease is up, the tenant can either choose to move out or renew the agreement in order to keep living at the said property.

However, it can happen that you need to end the lease before the term is up. This could be due to a variety of reasons, be it relocation for a new job, a tense roommate situation, and other unforeseen circumstances. While some landlords are understanding and let the tenant walk away without any hassle, others are not so kind. 

What do you do in such a situation? At Zumbly, we expertly help you through the house hunting process by providing you with property data and useful tools. Let’s take a look at what a lease entails, the penalties you might have to face, and how to get out of it without a penalty. 

Related: What Is A Good Cap Rate For Rental Properties In 2019?

How Does a Lease Work?

A lease is a legally binding contract that states the rules that a landlord and a tenant have agreed upon. It states how long you will be renting the unit (which could be for six months or a year or two years and so on), and how much rent you will be paying per month. A lease can also mention the date by which a tenant is required to pay the monthly rent.

A few other points a lease can include are: 

  • First-and-last-months’ rent requirement
  • Pet rules
  • Security deposits 
  • Repairs and maintenance guidelines 
  • Utilities guidelines 
  • And so on. 

Landlords may include guidelines to other fine details, like rules for guests staying over, access to the parking lot, pool privileges, and more.. 

A lease serves as a contract to assert both the landlord and the tenant’s rights. A landlord gets to protect their property, and the tenant receives legal safety knowing they have a roof over their head and that it’s all written in the documents. 

The lease you sign for the apartment you’re renting is particularly important not only because it states your responsibilities and your landlord’s responsibilities, but because it outlines the financial specifications. It tells you important details about rent payment and the security deposit.

The security deposit is usually returned to the tenant once the lease gets over. However, if the tenant damages or tampers with the apartment, specific deductions could be applied to the total amount of the security deposit. 

Before you sign a lease, make sure it’s reasonable. For example, the curfew hour can’t be something as early as 5 pm, or you should not have to fix damages that weren’t caused by you, and so on. Read the agreement carefully before signing it. If you have doubts about certain conditions, clear them out with your landlord before finalizing the deal. Reading the lease details closely minimizes your chances of having to get out of a lease.

What are the Penalties for Breaking a Lease?

Breaking any legal contract comes with consequences. In the case of a lease, these consequences are mostly financial. It could extend to a legal scenario, too, and perhaps even affect your future as a renter.

If your landlord is understanding, the maximum you will have to do is stay or continue paying rent until they find a tenant. You can also do your bit by putting up the listing and helping them find a new person to rent out the apartment. However, if that doesn’t work, here are the penalties you might have to face for breaking the lease. 

Paying a Fee

  • Breaking a lease usually equates to having to pay a hefty fee. Read up your contract to see if it mentions anything about lease fines. If it does, see how much they are, and have a conversation with your landlord accordingly.

At times the fee you have to pay could be the rent of a month or two. Landlords can also ask you to pay the rent for the remaining term of your lease, regardless of whether you’re staying or not. You might not even get the security deposit back, if the contract states so. 

Facing Legal Action

  • If you really need to move out and your landlord refuses to come to a compromise, then you probably have to take the legal road. Although getting involved in a lawsuit for an early lease termination is not too common, it could come to that if your landlord is particularly stringent.

If you’re on good terms with your landlord, you might be able to avoid legal consequences. If they ask you for a fee, just pay up. Or pay them for the term that was agreed on, because it’s much better than winding up with additional legal fees.

Finding a New Home

  • One of the consequences of ending a lease before its due date is having trouble finding a new apartment. Landlords want tenants they can trust, and having a poor case history with landlords won’t look good on your record.

Landlords often contact the owners of the previous place you were staying at in order to get some references, and if they hear that you either didn’t follow the rules or caused a hassle, they might not be willing to rent out their place to you. 

This is why it’s better to be honest with your potential landlord from the beginning. Give them valid reasons as to why you had to end the lease, and if they’re practical, they will understand your reasons and give you the benefit of the doubt.

Related: The Ultimate Beginner’s Guide On How To Find Investment Properties

How to Get Out of a Lease Without Penalty

Laws related to landlords and tenants vary from one place to another. It’s better to check with a state attorney general to know how things can be sorted out. There are certain scenarios under which you can get out of a lease without having to pay a penalty for it. Those situations are as follows:

  1. Being Called to Active-Duty Military Service

Active-duty uniformed service members are allowed to break housing leases without penalty, as per the federal Servicemembers Civil Relief Act (SCRA), under certain conditions. The protection extends to National Guard members and reservists called to active duty, active-duty Coast Guard members serving in support of regular armed forces branches, and active-duty members of all regular armed forces branches.

If you need to break your lease before entering active-duty status, you need to provide a copy of your military orders about 30 days before breaking the lease. In order to break it after entering active-duty status, your landlord needs to receive a copy of deployment or permanent change of station orders lasting at least 90 consecutive days.

  1. Your Unit Suffering Serious Damage

State laws allow renters to break their lease early if their unit suffers damage and becomes uninhabitable due to situations that are beyond their control. This includes your unit being hit by a natural disaster, the outbreak of a disease, or the report of criminal activities taking place in your building or neighborhood. 

  1. Facing Domestic Violence

If you’re facing domestic violence, you will be allowed to get out of a lease. Although the rules vary from state to state, you will generally be able to get out without facing any penalty if you provide a notice period of 30 days. A situation as extreme as domestic violence shouldn’t force you to stay in a place that’s causing you harm. Therefore, talk to your landlord about the situation and leave as soon as you can.

  1. A Health Crisis

If you or one of the people living with you are faced with a physical or mental health crisis, you will be permitted to leave without penalty. It usually requires the documents from a physician and a 30-day notice, and you will be allowed to leave. 

  1. Unfulfilled Landlord Duties

Constructive eviction is a term that refers to the ability of a tenant to leave before his/her lease ends if their landlord isn’t performing the duties related to maintaining the peace of the housing in question. In order to qualify for constructive eviction, certain rules must be met.

It’s not enough to complain about your landlord not fixing a broken fridge. However, if it’s related to a problem that’s persistent and severe, it will be considered. For example, if your landlord fails or refuses to fix the broken hot water system, that’s something you can complain about.

Merely complaining won’t do. You also have to provide evidence of when the problem started and how it has been escalating. Once sufficient data is provided, you’ll be able to walk out without paying any penalty. 

Final Note

When you’re buying a new property, it’s a good idea to take a good look at the lease agreement so you can avoid problems later down the line. Whether you’re trying to get out of a lease and looking for your next place, or you’re looking for a property in which to invest, Zumbly provides useful property scores and more. With our tools, you can make sure a property is a good investment for your portfolio or for your future.

Related: How To Find Out Exactly Who Owns A House

How to Look for a Fourplex for Sale

For anyone that wants to look for investment options in the real estate market, there seems to be a seemingly never-ending list. When it comes to real estate investment options, there is one that stands out: a fourplex. At Zumbly, our property database provides investment scores, estimated rental values, and other data for fourplexes and other kinds of homes. Here’s what you need to know about fourplexes.

Related: What Is A Good Cap Rate For Rental Properties In 2019?

What is a fourplex?

A fourplex property is a multi-family home that has 4 individual units. Fourplexes fall under multi-family real estate properties. Fourplex gives all the benefits of having a shared space without any of the drawbacks. A fourplex property owner who chooses to live on the property in one of the units can offset costs, since they are receiving rent from the other 3 units.

Fourplex properties have separate entrances, separate living spaces, and separate lives. This adds the benefits of privacy and personal space into their living situation.

Why invest in a fourplex?

As a real estate investor, there are many reasons why a fourplex might be the right horse to bet on. A fourplex has many features to it, most of them incredibly positive from an investor’s perspective.

Related: The Ultimate Beginner’s Guide On How To Find Investment Properties

Higher Rental Income

Owning a fourplex comes down to simple math. The rental income that is generated from a fourplex is equal to that of owning four different investment properties. Not just that, when it comes to a fourplex, there is diversification of rent. If a single-family home is vacant, the owner is out of all of their rental income for that period of time. When it comes to a fourplex, the chances of all four units being vacant at the same time are next to none. 

This puts the investor at an advantage of higher cash flow and lesser risk as compared to a single-family home.

Privacy Matters

The name of the game with a fourplex is privacy. Unlike many shared spaces, fourplexes aren’t codependent. Again, all units are completely separated. This means that privacy is a huge plus point, helping to separate fourplexes from other investment options.

Even if the investor chooses to stay in one of the units, there is still a sense of separation and independence between the tenants and the landlord.

Easy Management

Having a property as an investment is no piece of cake. It comes with its fair share of responsibilities and commitments. Property owners are largely responsible for the upkeep, management, and repairs of their properties. For investors that own multiple properties, this becomes a huge pain point, mostly due to their different locations and different requirements.

While the thought of owning a fourplex is intimidating to many, there are noticeable upsides to it. One such benefit is property management. All four units are on the same property. That means that, despite the scale, managing these units and carrying out any maintenance or repairs becomes fairly easier. They share a common infrastructure,so the investor or the property manager only needs to familiarize themselves with these logistical technicalities one time.

Economies Of Scale

Owning a fourplex is all about tapping into the benefits of scalability. Everything from taxes, cleaning, lawn care, etc makes sense for a fourplex from a financial perspective. These operations only need to be completed once each cycle. As a result, it is more affordable than having to do complete separate paperwork for several properties time and time again.

Similarly, any small upgrade or amenity inclusion will apply to all properties. Any addition to the backyard will increase the value of all four units on a monthly basis, while the cost of installation is just one time. Such additions truly put the benefits of scalability into perspective.

Easy Financing Options

Financing is key when it comes to purchasing any property. A fourplex, despite contrary beliefs, is one of the best properties to acquire financing for. 

The federal government classifies 1 to 4 unit properties as residential real estate. Buildings that exceed this limit fall under commercial financing. On the other hand, a fourplex is eligible for residential financing. This translates to a 30-year, fixed-rate term. Fourplex properties are also eligible for FHA loans. This usually comes with a decent down payment option of 3.5 percent, as it is designed for low- to moderate-income borrowers without a significant credit history. They do come with the requirement of living in a unit for at least a year.

Even in such a scenario, around 75 percent of the rental income counts as a qualifying income on the loan application. The fixed interest rate, no prepayment penalty or balloon payment, and low mortgage rates make financing easier for the purchase of a fourplex property.

Ways to find a fourplex 

When it comes to looking for a fourplex property to invest in, there are some reliable options for investors, whether they’re first-time investors or seasoned ones. These options are your best bet for finding the right fourplex.

Work With Investors

The role of networking in any space is an important one. The same is doubly true for the real estate industry. Insiders often know everything that is happening in their industry, so when it comes to seeking a multi-unit property, a good option is to reach out to investors. 

Many areas have a Real Estate Investors Association or REIA. Enrolling in such organizations brings investors together for learning, networking and sharing details on any properties that are up for sale. Fourplexes are likely to be found among investors because they see the value in owning or being informed about the sale of one rather than a layman. They’ll most likely tell the seeker about any such properties or at least get them in touch with someone who knows about them.

Use A Real Estate Website

Bring the search of a fourplex into the digital era with the use of a reliable real estate website like Zumbly. This puts the investor at an advantage, as they don’t have to rely on the connections and reach of a single person. 

With the help of Zumbly, one can filter to look only for fourplexes in any location and also opt-in to receive alerts for when a fourplex goes live on the market. A real estate website is also regularly updated to provide the latest information and developments in any particular market, thus making property search easier for any investor that wants to buy a fourplex.

What factors should you consider when choosing a fourplex?

Buying a fourplex can be beneficial, but the process has a lot of moving parts that an investor should consider. A home is not an easy investment to decide upon, especially if it is a fourplex. Here are some factors to consider before deciding on a property:

Location Is Key

Home is where the heart is, and the hearts of investors and homeowners seek a vivid, thriving location. As an investor or homebuyer, the location of the fourplex is one of the most important factors to consider. The location has to be a solid one with easy access to amenities such as schools, hospitals, recreational areas, shopping areas, etc. Finding a fourplex in such a location is key to making a safe and sound investment.

Inspect The Building Condition

There is nothing worse than surprise expenses for an investor. It eats into their buffer cash and the sudden expenditure is highly unwelcome. To prevent this from happening, one must have the building thoroughly inspected by a professional. This gives the buyer an idea about the actual health of the building, possible repairs and their costs, and whether or not the property is  a worthwhile investment.

Property Expenses

A large property such as a fourplex comes with its fair share of expenses. These include paying property taxes, insurance, maintenance, utilities, professional services like legal or accounting. One has to take into account mortgage repayment and various seasonal expenses as well.

Turnover and Vacancy Rates

Multi-family homes tend to have higher turnover and vacancy rates in comparison to other properties. While the average vacancy rate is around 7% in the US, the rate for a multi-family home such as a fourplex is considered to be higher than that.  It is best to talk to local investors to figure out the vacancy rate for a specific location. 

The tenant turnover and vacancy rate vary from location to location.

In Conclusion

A property investment decision shouldn’t be taken lightly. One must always carry out their own research, talk to as many people as possible, get informed and then start with the process of purchasing a property. There are many benefits to owning a fourplex, but it also comes with its fair share of responsibilities and duties that must be carried out by the property owner.

Do your due diligence, and enjoy your new property! Start looking for your next fourplex investment at Zumbly.
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What is a short sale?

A short sale in the real estate world occurs when a homeowner in poor financial standing decides to sell their property for less than its proposed value. The value is often less than the remaining amount on the mortgage. At Zumbly, we aim to provide real estate investors and home buyers with the tools to complete a property sale or purchase. Here’s our guide to the short sale.

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How does a short sale situation arise?

A short sale situation arises when the homeowner is under a high degree of financial stress. This usually results from unemployment or decreased household wages, resulting in an inability to pay back a home loan. Other causes include medical expenditures, unwise spending, being a fraud victim, or any situation that renders them unable to pay back a loan.

In such a scenario, they may make an agreement with a bank to create a short sale in order to get the property off their hands.

How long does a short sale take?

Short sales are extremely time-consuming and long-winded processes. There are a lot of hoops to jump through when it comes to closing a short sale. It takes patience for the short sale to go through. Buyers have to wait weeks or months to hear back from the bank. Even then, uncertainty persists about the rejection or approval of the pending sale.

This red tape makes the entire process seem tiresome. Nevertheless, there are quite a few undeniable benefits for those who can no longer afford to pay their mortgage.

Benefits of a short sale

It protects credit

A short sale only happens when the seller is financially strapped. In such cases, their credit score tends to take a hit, which makes it all the more difficult to bounce back up. When it comes to a short sale, the effect on one’s credit score is more favorable than that of a foreclosure. The foreclosure process is often more lengthy and expensive for banks compared to the short sale process, which is why banks may be more likely to opt for the latter.

It protects from foreclosure

No homeowner wants to experience the possibility of a foreclosure. A lot of collateral damage may worsen the situation, even after the foreclosure occurs. This process leaves a permanent mark on homeowners’ credit history, which makes any sort of borrowing immensely difficult. Apart from causing personal loss and added stress, foreclosed houses negatively affect the housing market by bringing down the value of surrounding property.

It’s a great deal for buyers

From a buyer’s perspective, a short sale is an opportunity to acquire a house for a really low price. Many of the short sale properties require some TLC, which the current lenders cannot afford to pay for. A buyer who is willing to invest funds to put in some work often finds the cost to be significantly lower and the benefits to outweigh the risks.

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The terms are more favorable 

The name of the game in the real estate market is negotiation and timing. In the case of a short sale, banks find it much easier to let go of a property faster and recoup as much as they can rather than foreclose it and hold on to it as is. Foreclosure means that the bank has to pay for any repairs and maintenance until they find a buyer.

Here, the person buying a short sale property often finds the terms to be highly favorable in case of lower payments or easy financing options provided by the lender or bank.

Easy co-operation from the seller

Evictions aren’t easy by any means. When it comes to foreclosures, there are often high levels of resistance from the previous owners of the properties. Many tend to leave the house in a worse condition because they can. In such cases, the new lender or buyer has to put in extra money to make repairs to the property.

When it comes to a short sale, sellers are desperate to get rid of the property because they have no other option as a foreclosure would severely hurt their credit reports. The seller tends to be highly cooperative during the process, making it easier for all the parties involved.

What are the steps to a short sale?

For a process that’s fairly complicated, these steps help to make it easier.

Short Sale Decision

Before the entire process can begin, the borrower has to prove financial hardship by submitting a financial package to their lender. This package includes financial statements, a letter describing the seller’s hardship(s), and financial records, including tax returns, W-2s, payroll stubs and bank statements.

The goal of this step is to convince the bank that they’re no longer able to pay off the loan and make monthly mortgages. This step puts the process of a short sale into drive mode.

The Offer

The next step in the short sale process comes after a seller accepts the offer put forth by a potential buyer. After this, the offer is sent to the lender by the listing agent in the form of a listing agreement along with various important documents. This may include a pre-approval letter of the buyer, the short sale financial package of the seller, and other documents. With this, the bank can start processing the sale. However, if the package is missing any documents, the process may be inadvertently delayed.

Bank Processing

The whole processing period can last for months. The only results are either an approval or denial. Unlike regular purchase processings, banks have a lot of say in whether or not the deal will go through. Here, even if the seller accepts the offer made by a buyer, the bank is fully within its capacity to reject it.

It often does so on the calculation that there’s a possibility of the bank making more money if the listing undergoes foreclosure. If not, the bank will approve the short sale.

Final Note

In summary, a short sale is a solution for homeowners under financial strain who are trying to avoid foreclosure. It can take a long time, but it provides a great deal for buyers and is often a better option than foreclosure or trying to hold on to the home with limited funds. If you are thinking about buying a new home after a short sale ensues, get started with the house hunting process at Zumbly.

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