Dear Michael: Five year ago, I put my house on the market and could not sell it. I am thinking of re-listing it. Is this the right time to sell? I am hearing from some people that it is slowing down again.
Answer: Timing a market to achieve the highest price point is an almost impossible task! There has been a slight slowdown in the past couple of months. This is mainly due to higher interest rates and a 10% price increase from beginning 2015 to end of 2016. The “right time” can be defined as: today, tomorrow or yesterday! In other words, the decision is yours to make. What is your motive for moving? if it’s to cash out, relocate to be near family, employment, divorce, retirement, heath issues or any other matter the decision is yours to make. No matter what you decide, the price of you home is dictated by the current market value given comparable homes which recently sold in your area. If you are not sure what the price of your home is, consult with a real estate agent who is active in your area. He/she will give you an accurate price evaluation for your home. If you do not agree with the price, then waiting to sell your home could be the better option for you.
Dear Michael: We are buying a 4-unit apartment building and would like to know at what rate of inflation should we calculate our investment return?
Answer: When buying an investment property in today’s market the most accurate way to calculate your equity appreciation is to use 4% to 5% rate of inflation. In other words, if you purchased an investment property for $1 million today, in 10 years it would be worth $1,500,000. This number is never guaranteed but historically has been in line with equity appreciation. Keep in mind that your rental income from each unit is and should also be a source of income. Make sure to complete an income and expense spread sheet. This will allow you to calculate your exact monthly overhead. When buying an investment property, think: long term!
Dear Michael: I want to rent out my home as we are relocating. How do I know how much I can get for it? We rather not hire a real estate agent for renting and do this ourselves.
Answer: Check the comparables for prices and rental incomes of similar properties within your immediate area. Take note of the size and features of your home prior to researching comps. You will also need to advertise on internet rental sites for most of your ads. Rent your home for a price that matches local comps so you can attract demand. Keep in mind that every month your home is vacant, is loss of income. Be diligent but also cautious to whom you rent. There is nothing worst then a “deadbeat” tenant! No perfect strategy exists for setting rents. Rates vary per economic trends and neighborhoods. Lowering rents beyond mortgage and upkeep costs may also create a financial burden for you. The current rental market trend allows for landlords to be selective as there is high demand for rentals.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com