Over the last month several people have been asking me what they should do to take advantage of the real estate market right now. Rents are going up, buyers are everywhere, and Denver is one of the hottest markets in the country. Below I wanted to give you 4 different situational scenarios and the REAL numbers for each one, no B.S. or hidden fees.
1) If you're renting, buy now.
If you're renting right now, you need to buy. Rents have been going up and vacancies have been going down for the last 12+ months, making it actually much cheaper to buy right now than to rent.
Here are the real numbers:
Purchase Price: $175,000
Total Monthly Payment = $1040/month right now (mortgage, taxes, insurance, and mortgage insurance!)
Rent: A house with this value rents for $1200-$1600 right now.
3.5% Down Payment: $6125
Result: Owning your own home, building equity, AND paying less per month than rent.
Note: When your get your loan down to 80% of the value of the home, you would no longer pay mortgage insurance and your payment would be $890/month!
(Email me to get numbers for different house values: click here)
2) Get a bigger house for the SAME PAYMENT you are paying now
If you need a bigger house, it's a perfect time to sell, have the same mortgage payment for a much bigger home! Inventory is way down and prices are going up, which makes it a great time for sellers right now. There are multiple offers on any well-priced property right now.
Trading-Up Numbers - Case Scenario: Step 1: Sell Your Current Home
Current home: purchased 4 years ago for $200,000 with a 5% Down Payment
Original loan amount= $190,000
Current loan amount = $179,750
Present monthly payment = $1,257 (at 6% interest rate)
Sell Property at Current Value: $210,000
Pay off your current loan = -$179,750
Real Estate commission for 2 agents (6%) -$12,600
Total proceeds to you
Purchase Price = $265,000.
Down Payment: Use the proceeds from your sale to pay 5% down payment
Total Monthly Payment = $1263/month (including mortgage, taxes, and insurance)
Result: For almost the same payment, you now own a bigger and better home worth $55,000 more than your previous home.
(Email me to find out how to avoid mortgage insurance without putting 20% down)
3) DownsizingIf your house is just too big for you now, it's a perfect time to downsize. The numbers are HUGELY in your favor.
Current Home: purchased 15 years ago for $300,000
Current Monthly Payment = $1650
Step 1: Sell Your Current Home
Sell at Current Home Value = $310,000
Current Loan Amount = -$187,000
Commissions (6%)= -$18,000
Sale proceeds: = $105,000
Step 2: Buy a smaller (but still beautiful) home for $225,000
Down Payment: Use part of the proceeds from your sale to pay 20% down payment ($45,000)
New Total Monthly Payment = $936
Result: You save over $700/month ($8400/year) AND you made $55,000! NO-BRAINER!
4) Buy an investment property and make 30% return on investmentAlthough the rental property market is extremely competitive right now, the reason is because the numbers are ridiculously profitable.
Purchase Price: $115,000
Down Payment: $23,000
Rent amount: $1200+
Total Monthly Payment:
Optional Property Management: 10%= - $120 (so you do NOTHING)
Result: You are making 6,360/ year (27.6% return on investment) and DOING NOTHING, or $7,800/year (34% ROI) without property management.
(Email me for exit strategies with market changes)