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Real Estate Investors: Buy, Sell or Hold?
Brandi Brand is Sales Director for Breakwater Mortgage in
Virginia Beach, Virginia. Brandi and her husband, Scott also
rehab and resell real estate investments in Southeastern
Virginia. The following interview consists of common questions
real estate investors have at this time, when mortgage interest
rates seem to be on the rise.
Q: What is the overall tenure of the real estate and mortgage
industry in Virginia at the end of 2005 and leading into the
first quarter 2006? A: The local market has slowed in Virginia
over the last six months. Houses are staying on the market
longer. This means more time is involved for real estate
investors who want to sell. Q: Are the real estate and mortgage
markets headed for a downturn then? A: The market is still very
strong despite a slight decrease in activity. In Southeastern
Virginia, home sales dropped approximately 3% in November 2005,
which indicates a slight adjustment. Q: Is it a buyer's market
now? A: Currently, the market is leveling out. When it was a
seller's market, contracts were signed on homes and properties
before anyone had a chance to think the purchase through fully.
Now, investors have the opportunity to price out necessary
repairs and renovations to get the most return out of the
property. Q: Is it a good time to buy? A: Yes. The market is
adjusting, and there are some great bargains for the real estate
investor. There are always good deals to be found. An investor
is looking to purchase property below the market value, this is
how they make a profit. Purchasing a property with cosmetic
issues, rehabbing and reselling is one strategy. Other good
deals can be found with For Sale by Owner real estate. Q: What
makes the Virginia real estate market different from say, the
market in the Northeast? A: In general the Northeastern market
is more expensive than the Southeastern, with the exception of
Florida. Southeastern Virginia real estate is more affordable,
so investors come from the Northeast to buy here. Q: What do
mortgage lenders look for when they consider writing loans for
real estate investors? A: A mortgage lender is looking for a
strong employment history and six times the monthly payments in
leftover assets after paying money due at closing. For 100%
financing, the applicant can be required to have a 680 credit
score or above. Lenders ideally like to see two years of
experience renting properties if the real estate investor is
attempting to purchase multiple properties. On average a
property that brings in a return of at least $200.00 per month
(for maintenance and repairs) is considered a sound investment.
For new investors, banks will be inclined to limit the investor
to two properties in the first two years. Q: What are the best
real estate markets to invest in? A: One of the highest areas of
real estate investment is near military bases. Southeastern
Virginia has a wealth of bases. Soldiers on their own often
prefer to live in base hosing. Those with families often choose
to rent in order to have more privacy or a yard. Q: What are the
current trends in mortgage financing for real estate investors?
A: Prior to the summer of 2005, many investors were choosing
interest only loans or 2,3, or 5 year Adjustable Rate Mortgages
(ARMS) that required little money down. Most investors purchase
a property with 5 years in mind. The value of homes will
continue to increase, but investors see the 30-year fixed loans
as more solid while interest rates are on the rise. Young
investors seem less concerned about rising mortgage rates. Many
seasoned investors remember when the interest rates were 13-14%,
but investors under thirty have not seen comparable interest
rates during their adult lives. Q: What are the refinancing
trends for real estate investors? A: Many investors are choosing
to refinance by moving from a short-term mortgage to a long-term
loan. Investors with rental properties will be locking in rates
with 30-year fixed loans. Investors who want to rehab and resell
property will be refinancing in order to obtain cash for another
real estate investment. Overall, the refinancing boom has slowed
down.
About the author:
Brandi Brand is the Sales Director of Breakwater Mortgage in
Virginia Beach, Virginia. Brandi began in this field as a credit
analyst becoming a customer relationship manager, a loan officer
and Regional Manager in the mortgage-banking field. Continuing
Brandi's philosophy of giving back to the community,she and her
husband Scott Brand purchase and renovate property on the
Southeastern Virginia's Peninsula. E-mail
brandi@breakwatermortgage.com
Brandi Brand
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