Find a Better Return

Return on Investment.pngA certificate of deposit will generate a cash flow based on the interest rate that it pays which is the only way it generates a return for the investor.

An investment in a stock that doesn’t pay dividends, would need to be worth more than you paid for it to earn a profit.  On the other hand, a stock that paid dividends could make the investor a profit even if it sold for the same price that he paid for it.

Investors can profit four different ways with an investment in rental real estate.

1. Cash flows that result from having a surplus after collecting the rent and paying the expenses.

2. Equity build-up results from a portion of each monthly payment reducing the unpaid balance.

3. Tax benefits can result from the depreciation allowed on the property and the preferential long-term capital gains tax rate.

4. Appreciation benefits the investor when the value of the property increases.

The most conservative investors in real estate make decisions to purchase a rental property based on its ability to generate a cash flow and reduce the mortgage through normal amortization.  If the property can offer an acceptable rate of return compared to other available investments, the tax benefits and possible appreciation become an added bonus.

With increased rents and low mortgage rates for investors, rental property can offer significantly higher returns than many of the available alternatives.  Contact me for more information- Bob@bobgifford.com; you may be amazed about what is available in the market.

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February 2014 Sales Statistics

Sold Statistics for February 2014
Limestone and Madison Counties/Residential

Area # of Sales Total Sales Avg Sales Median Sales
6L LIMESTONE CO 47 $6,323,740 $134,547 $123,900
HE Huntsville East 13 $3,561,500 $273,961 $167,000
HM Harvest/Monrovia 55 $10,938,659 $198,884 $175,000
HN Huntsville North 22 $1,381,700 $62,804 $50,300
HS Huntsville South 39 $6,777,100 $173,771 $140,000
L1 ATHENS CITY 11 $1,713,100 $155,736 $119,900
MC Madison City Limits 48 $12,477,005 $259,937 $227,500
MCV Mountain Cove 27 $7,934,664 $293,876 $279,900
MD Mill District 9 $452,761 $50,306 $55,000
MNE Madison County NE 15 $2,754,036 $183,602 $150,000
MNW Madison County NW 27 $4,153,276 $153,825 $136,000
NHX New Hope/Owens Cross Roads 8 $551,450 $68,931 $67,125
NMR New Market/Riverton/Gurley 22 $3,316,683 $150,758 $155,000
RPA Research Park Area 3 $557,900 $185,966 $205,900
WH Wheeler Area 21 $4,630,008 $220,476 $200,028
TOTALS 367 $67,523,582 $183,987 $154,900

 

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Sold Statistics for January 2014 – Limestone and Madison Counties/Residential

Sales By Area
Area # of Sales Total Sales Avg Sales Median Sales
6G MORGAN CO 1 $65,000 $65,000 $65,000
6L LIMESTONE CO 40 $6,138,009 $153,450 $140,450
HE Huntsville East 17 $2,937,952 $172,820 $116,085
HM Harvest/Monrovia 42 $7,784,894 $185,354 $164,950
HN Huntsville North 21 $1,263,277 $60,156 $45,100
HS Huntsville South 42 $8,288,922 $197,355 $160,170
L1 ATHENS CITY 13 $1,631,766 $125,520 $87,000
MC Madison City Limits 37 $10,431,505 $281,932 $247,000
MCV Mountain Cove 14 $3,986,783 $284,770 $258,500
MD Mill District 6 $204,832 $34,138 $36,500
MNE Madison County NE 21 $2,747,888 $130,851 $115,000
MNW Madison County NW 31 $4,006,873 $129,253 $122,000
NHX New Hope/Owens Cross Roads 3 $259,700 $86,566 $53,200
NMR New Market/Riverton/Gurley 18 $2,241,560 $124,531 $119,450
RPA Research Park Area 5 $591,850 $118,370 $140,000
WH Wheeler Area 13 $2,919,493 $224,576 $229,900
TOTALS 324 $55,500,304 $171,297 $146,500
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Sales By Area

Sold Residential Listing for
Madison & Limestone Counties
from 11/1/2013 to 11/30/2013
Area # of Sales Total Sales Avg Sales Median Sales
6L LIMESTONE CO 52 $6,754,634 $129,896 $119,950
HE Huntsville East 12 $2,399,500 $199,958 $138,750
HM Harvest/Monrovia 64 $13,115,818 $204,934 $192,450
HN Huntsville North 26 $1,155,016 $44,423 $42,250
HS Huntsville South 50 $9,185,904 $183,718 $175,000
L1 ATHENS CITY 17 $4,284,495 $252,029 $160,713
MC Madison City Limits 45 $11,993,842 $266,529 $219,795
MCV Mountain Cove 17 $5,662,764 $333,103 $311,210
MD Mill District 4 $226,400 $56,600 $58,450
MNE Madison County NE 26 $4,184,008 $160,923 $147,175
MNW Madison County NW 24 $2,993,271 $124,719 $120,450
NHX New Hope/Owens Cross Roads 8 $1,264,600 $158,075 $157,450
NMR New Market/Riverton/Gurley 29 $4,900,960 $168,998 $135,000
RPA Research Park Area 6 $560,400 $93,400 $93,500
WH Wheeler Area 16 $3,506,529 $219,158 $208,500
TOTALS 396 $72,188,141 $182,293 $152,750
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Sales By Area

 Sold/Residential
Statistics for Madison & Limestone Counties from
9/1/2013 to 9/30/2013
Area # of Sales Total Sales Avg Sales Median Sales
6L LIMESTONE CO 57 $8,648,805 $151,733 $142,500
HE Huntsville East 31 $10,483,154 $338,166 $191,500
HM Harvest/Monrovia 81 $16,268,569 $200,846 $199,900
HN Huntsville North 32 $2,037,051 $63,657 $49,225
HS Huntsville South 69 $15,786,058 $228,783 $180,000
L1 ATHENS CITY 16 $2,802,390 $175,149 $158,750
MC Madison City Limits 60 $15,696,773 $261,612 $246,500
MCV Mountain Cove 29 $8,785,948 $302,963 $269,140
MD Mill District 10 $542,180 $54,218 $50,250
MNE Madison County NE 20 $2,876,575 $143,828 $119,000
MNW Madison County NW 33 $4,142,291 $125,523 $118,000
NHX New Hope/Owens Cross Roads 8 $865,085 $108,135 $109,900
NMR New Market/Riverton/Gurley 32 $5,152,565 $161,017 $154,950
RPA Research Park Area 8 $1,418,129 $177,266 $127,500
WH Wheeler Area 25 $5,847,477 $233,899 $241,890
TOTALS 511 $101,353,050 $198,342 $170,000
Posted in Ask a REALTOR, For Buyers, For Realty Professionals, For Sellers, General Information, Huntsville, Listings, Marketing Reports, Regional News | Tagged , , , , , | Leave a comment

Don’t Do It!

You’ve seen lists telling buyers what to do to find the right home but knowing what not to do can be just as important. After finding the right home, negotiating a contract, making a loan application and inspections, buyers, understandably, start making plans to move and put their personal touches on the home.

In today’s tenuous lending environment, little things can derail the process which isn’t over until the papers are signed at settlement and funds distributed to the seller. Verifications are made by a lender at the beginning of the loan process to determine if the buyer qualifies for the mortgage. The verifications are usually done again just prior to the closing to determine if there have been any material changes to the borrower’s credit or income that might disqualify them.

Simply stated:

1. Don’t make any new major purchases that could affect your debt-to-income ratio

2. Don’t apply, co-sign or add any new credit

3. Don’t quit your job or change jobs

4. Don’t change banks

5. Don’t open new credit accounts

6. Don’t close or consolidate credit card accounts without advice from your lender

7. Don’t buy things for your new home until after you close

8. Don’t talk to the seller without your agent

Your real estate professional and lender are working together to get you into your new home. It’s understandable to be excited about one of the biggest decisions you’ll make and that you feel you need to be getting ready for the move.

Planning is smart but don’t do anything that would affect your credit or income while you’re waiting to sign the final papers at settlement.

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The Rules

 

rules3.png

The profit potential in single family homes for investment has been a consistently good long-term investment. They offer investors the opportunity of high loan-to-value mortgages at fixed interest rates for 30 years on appreciating assets, tax advantages and reasonable control that other investments don’t offer.

Last year, Warren Buffett said that if he had a way of buying a couple hundred thousand single-family homes, he would load up on them. Blackstone group L.P. (BX) has now purchased over 30,000 homes and American Homes 4 Rent (AMH) has more than 19,000 for rental purposes.

 

Individual investors actually have an advantage over the institutional investor but if they are not familiar with rental real estate, some basic rules could be very helpful.

 

1. Invest now to get more in the future.
    Whether it is time, effort or money, the prudent investor is willing to forego immediate gratification for something more at a later date.

 

2. Real estate is an IDEAL investment.
    IDEAL is an acronym that stands for income, depreciation, equity build-up, appreciation and leverage.

 

3. Invest in single family homes in predominantly owner-occupied neighborhoods at or below average price range.
    This strategy should involve homes that will increase in value, rent well and appeal to an owner-occupant in the future who will pay a higher price than an investor.

 

4. Location, location, location.
    The same homes in different areas will not behave the same. You can improve the condition, modify the terms or adjust the price but the location can’t be changed.

 

5. Understand your strategy – buy and sell, buy and hold or buy, rent and hold.
    These three distinct strategies involve big differences in acquisition, management and taxation.

 

6. Know where your profit is coming from before you invest.
The four contributors to profit are cash flow, appreciation, amortization and tax savings. They don’t contribute equally or the same in all investments.

 

7. Profit starts with purchase.
Buying the property below market value builds profit into the investment initially.

 

8. Risk is directly proportionate to the reward involved.
    An investment that has a high degree of upside also will have considerable downside possible.

 

9. Avoid functional obsolescence unless you have a plan before you buy.
    The lack of usefulness or desirability of a home that exists when you buy it will still be there when you sell it. Unless it can be cured, it will affect future profit.

 

10. Good property + good tenant + good management = great investment.
These are three solid components for a successful investment.

 

11. Problems left unresolved have a tendency to get worse.
    It is generally cheaper in time or money to fix a problem earlier rather than later.

 

If you’d like more information about the opportunities in our market, contact me.

Posted in For Buyers, For Realty Professionals, For Sellers, General Information, Huntsville, Listings, Regional News | Leave a comment

Sales By Area – August 2013

Sales By Area
Single Family Dwellings
Statistics for Madison & Limestone Counties
from 8/1/2013 to 8/31/2013
Category:1
Property Type:SF
Counties:MAD,LIM
Area # of Sales Total Sales Avg Sales Median Sales
6L LIMESTONE CO 55 $8,656,535 $157,391 $139,900
HE Huntsville East 29 $7,334,270 $252,905 $193,500
HM Harvest/Monrovia 77 $15,661,350 $203,394 $187,900
HN Huntsville North 35 $2,393,639 $68,389 $56,000
HS Huntsville South 72 $15,715,555 $218,271 $189,750
L1 ATHENS CITY 20 $3,364,061 $168,203 $159,064
MC Madison City Limits 82 $21,811,505 $265,993 $259,926
MCV Mountain Cove 40 $12,891,911 $322,297 $330,000
MD Mill District 6 $343,700 $57,283 $62,250
MNE Madison County NE 23 $4,819,945 $209,562 $149,900
MNW Madison County NW 33 $3,939,475 $119,378 $122,000
NHX New Hope/Owens Cross Roads 8 $823,099 $102,887 $88,000
NMR New Market/Riverton/Gurley 26 $3,898,662 $149,948 $137,700
RPA Research Park Area 5 $855,639 $171,127 $167,000
WH Wheeler Area 26 $5,828,906 $224,188 $220,300
TOTALS 537 $108,338,252 $201,747 $170,000
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Sales By Area – July 2013

Sales By Area
Single Family Dwellings
Statistics for Madison & Limestone Counties from
7/1/2013 to 7/31/2013
Area # of Sales Total Sales Avg Sales Median Sales
6L LIMESTONE CO 62 $9,022,540 $145,524 $142,750
HE Huntsville East 23 $8,382,614 $364,461 $247,500
HM Harvest/Monrovia 89 $18,881,877 $212,155 $190,000
HN Huntsville North 53 $3,781,110 $71,341 $46,500
HS Huntsville South 76 $15,364,254 $202,161 $163,500
L1 ATHENS CITY 16 $3,108,458 $194,278 $151,441
MC Madison City Limits 101 $27,528,937 $272,563 $249,900
MCV Mountain Cove 49 $15,407,203 $314,432 $280,500
MD Mill District 8 $410,288 $51,286 $51,450
MNE Madison County NE 23 $3,011,986 $130,955 $133,500
MNW Madison County NW 41 $4,840,389 $118,058 $113,000
NHX New Hope/Owens Cross Roads 7 $726,420 $103,774 $110,000
NMR New Market/Riverton/Gurley 24 $3,859,428 $160,809 $146,387
RPA Research Park Area 6 $1,189,109 $198,184 $175,154
WH Wheeler Area 23 $5,174,761 $224,989 $205,000
TOTALS 601 $120,689,374 $200,814 $170,900
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Retirement Without a Mortgage – 7/15/2013
Planning for retirement is obviously important and many times, an activity plagued by procrastination. Some people plan to have their home paid for by that magical date so they won’t have payments after they retire. It makes sense to eliminate a large recurring expense before they quit working.

One strategy would be to be make regular principal contributions in addition to the payments so that it will eliminate the debt by the target retirement date.

Let’s say that a homeowner refinanced their $200,000 mortgage at 4% last year with the first payment due on May 1, 2012. Under normal amortization, the home would be paid for at the end of the term; 30 years in this example.

By making additional principal contributions with each payment, it would accelerate the payoff on the home. An extra $250.00 a month would pay off the mortgage in 20 years. $524.55 extra with each payment would pay off the loan in 15 years; and $796.23 would pay off the loan in 12 years.

Having a home paid for at retirement has the obvious benefit of no house payment. It is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.

Another strategy might involve purchasing a smaller home now to use as a rental that you intend to live in when you retire; see Retirement Home Now.

To make some projections to pay off your own mortgage, use this Equity Accelerator.

Equity Accelerator.png

 

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