Is 2012 the Time to Buy to Let Mortgages?

For many, homeownership has become impossible. People are leaving their homes in record numbers and this means that rental properties are in demand. As investors consider whether or not to take on a buy to let mortgage, they are shopping around for the right property as well as the right interest rate.

So how do today’s rates stack up to the rates of the past? Is this the year to take on that investment project and purchase rental property?

Lower Rates

When compared to the buy to let mortgages of the past, today’s rates have decreased somewhat, making it a great time to take the risk. While these rates are typically more than a traditional mortgage, the rates often follow the same pattern. Any change in interest rates means paying less for the property in the long run. There are benefits to taking advantage of these low rates.

In the future, as the financial situation gets better, there is a chance that the rates will once again increase. However, the interest rate is not the only thing to consider when determining whether or not 2012 is the year to venture into the buy to let industry.

Financing Difficulties

While the rates may be low, it does not mean that everyone can pick up rental property. The amount of money needed as a down payment has increased significantly. An individual looking to become a rental property owner needs to come up with much more capital down if they want to take on the venture.

In the past, lenders required around 15% of the property’s value to be put down. Now, the down payments often start around 25% and increase from there. If someone has the money to invest, they can pick up a great deal.

More Opportunities

With homeowners vacating their properties because of finances, there is a demand for rental property. People need a place to live and they are looking to rental companies and individuals to offer housing at an affordable price. For some, this means that a buy to let purchase is less of a risk.

They feel fairly confident in the fact that they will be able to find someone to rent the property. If they can find a tenant that pays on time, it can be a positive investment with long-term benefits.

If you are looking into a buy to let mortgage, be sure to shop around for the best deal or even consider Melbourne Mortgage for your needs. While you need to keep an eye on the interest rate, you also need to pay attention to the amount you need to put down as well as any fees or penalties that you will need to take care of.

5 Reasons Why Renting is Better than Buying

reasons why renting is better than buyingWith marriage around the corner I seriously considered buying my first place.   After talking this idea over with Hannah, we both decided that it would be best if we rented and purchased a place later down the road.

So, this got me thinking, what are the advantages of renting over buying?   I’m sure you can do a simple Google search and find your answer but I’m going to share with you a couple reasons that really stick out to me, especially in this stage of my life.

 

1-  No maintenance or hidden costs

This is a real beauty of renting.   Anything that goes wrong is on the landlord’s shoulders.   Talk about a big relief!   It costs some big coin to fix things like broken refrigerators, heating and air conditioning units, and plumbing problems.   When you rent, all you have to do is make a call and hopefully it gets fixed stat.   I’ll be honest, getting married is expensive.   I wouldn’t want to add any additional expenses to my life!   I’d rather settle down with Hannah and get our finances in order before we made a move on a condo or home purchase.

 

2-  Flexibility for employment

We all know that the economy is still in shambles and could get worse at any moment.   If I had owned a home in Washington, I wouldn’t have been able to start my career down in San Diego!   When you rent, you can move around the country for employment opportunities.   This is assuming that your lease is up.   But heck, a 12 month lease is better than a 30 year mortgage!   I can’t tell you how many of my friends have had to move around the country to find a job.   Don’t let home ownership slow down your career growth.

 

3-  Fancier living and added perks

When you rent, you can typically live somewhere a little nicer than if you purchased.   We all have had dreams of living on the ocean or way high up in a high rise building.   If you rent, you can pursue these dreams and not break your bank.   I’m picky about marble countertops and updated bathrooms, so renting makes much more sense to be because it’s much more affordable when you don’t have a mortgage!

Another benefit is perks.   Many complexes that rent out their unit have community pools, BBQ areas, and even a gym.   What house has a pool or a home gym?   You’d have a shell out some cash to get these types of perks.   Plus, with a gym within your complex, you can say goodbye to gym memberships!   Perks often times equal cost savings.   It’s something to think about when you’re deciding between renting and buying your next place.

 

4-  Consistent budget

Don’t you just hate unexpected expenses?   I know I do!   When you rent, you will never have to worry about unexpected expenses like a broken shelve in the kitchen.   The landlord is required to fix any issues.   Not only are that but there hidden costs like HOA fees and taxes.   Let the landlord take care of it and you can go on living a worry free tenant life.   This also helps with knowing the exact amount of money you will owe your landlord at the end of the month.   It creates an environment where you can manage your money efficiently and know exactly how money is being spent.

 

5- Insurance is cheaper!

This is a little known fact but renter’s insurance is cheaper than home owner’s insurance!   I didn’t know this either until I did a little research.   Home owner’s insurance is sometimes 15 times the price of renter’s insurance.   This can result in hundreds of dollars every year.   I’ll take these savings any day!

 

Rent forever

In summary, as you can see, there are many reasons why renting is better than buying.   Now, if we were talking about investing in real estate for cash flow purposes, then this post would be completely difference.   But for the renting vs. owning argument, I’m still a believer in that renting is the way to go for most people!

Use Zillow Before Buying or Selling a Home

Recently, I was catching up with a friend of mine and the topic of business came up.  It had been several years since we last spoke, so I was excited to hear about what he was doing.  It turns out, he is working for a relatively new company called Zillow.  Our conversation took off and what he had to say about Zillow really sparked my interest.  So much in fact, that I felt the need to write up a review/informational post about the company.

First, a little background and history:

-Online real estate database that was founded in 2005 by  Rich Barton  and Lloyd Frink

-Uses a proprietary algorithm called the “Zestimate” to appraise property values based on undisclosed factors.

-Sellers can use Zillow as a marketing tool by appraising their properties, posting property information such as improvements and access to major roads; and comparing nearby property value appraisals.

-Buyers can freely access and track such information online.

-The website currently tracks 72 million valuations throughout the United States.Zillow is ranked in the top 300 U.S. sites in terms of traffic by Alexa.

Why should I care?

First off, Zillow is a totally FREE tool that provides easy access of home properties.  Zillow also offers many other home appraisal services.  Zillow is guided for both buyers and sellers of homes. If you’re a buyer, you can map out neighborhoods and do some research in aparticular area. You can inspect a home’s appraisal value and know if the asking price is too high or not.  Not only that, but you can check out recently sold homes to give you a better understanding of what homes are going for in that area!

Now, if you’re a seller, Zillow is an awesome tool for you!  There is something called the Zindex that calculates your home’s estimated value.  It not only gives you a number but shows you a comparison with your neighbor’s appraised values.

zillow review

Site layout and design

Zillow knows what they’re doing in terms of site layout and design.  Everything about their site platform is crisp and lightning fast.  They make it easy to find things through the use of an organized navigation bar at the top of the screen.  Everything from mortgage rates to their personal blog is linked at the top.  Finding things on Zillow is a breeze.  I was especially impressed with their home finder map, which was very interactive.  Zillow has made an effort to make the site visually friendly and it shows.

Zillow Mobile

As if their site wasn’t enough, Zillow has developed a completely free app for common electronic devices out there.  With the Zillow app, you can simply scan the surrounding area where you are standing and the app will tell you the prices of homes nearby.  It will also show you historical records, latest listing, and property pictures.  I can see this app being great if you were in the market to purchase a home and wanted to simply drive through neighborhoods and check out prices.  It’s instant and you don’t have to rely on a real estate agent or go through the hassle of navigating the many real estate websites.

zillow android

Zillow Advice and Blog

What I like about Zillow the most is their desire to be a client and customer focused company. Having a more personal blogging platform does the trick.  Zillow has an “advice” section to their site where you can ask industry experts questions about the real estate market.  Along similar lines, Zillow has a fantastic real estate focused blog.  It covers cool stories, market trends, home value information, mortgages, and the latest celebrity home purchase.

I recommend Zillow

After thoroughly navigating their website and reading what others have to say about Zillow, I definitely recommend their website for your next home endeavor.  Add this website to your tool box.  When you save thousands because of the free research Zillow does for you, you will be glad you started using it.

Although I’m a ways off from buying a home, I will keep Zillow in mind and will use them when that time comes for me.  In the meantime, I just found out that the house I’m renting is worth over $500,000!