investment

Homeownership: An Investment In Your Future

January 15, 2023 by khproperties Leave a Comment

There are many people thinking about buying a home, but with everything affecting the economy, some are wondering if it’s a smart decision to buy now or if it makes more sense to wait it out. As Bob Broeksmit, President and CEO of the Mortgage Bankers Association (MBA), explains:

“The desire for homeownership is strong. Many prospective buyers are waiting for the volatility in mortgage rates to subside, as well as for a clearer picture of the economic outlook.”

Homeownership Is An Investment In Your Future

If you’re in that position, remember that it’s important to consider not just what’s happening today but also what benefits you may gain in the long run.

There’s a lot of information out there about how homeownership helps build a homeowner’s net worth over time. But even today, many people think first about things like 401(k)s before they think of owning a home as a wealth-building tool. It’s especially important if you’re a young prospective homebuyer to understand how homeownership is another key way to invest in your future. An article from Bloomberg notes:

“Millennials have higher average 401(k) balances than Generation X did when they were the same age, but they’re not any better off financially. . . . A lot of that has to do with being less likely to own a home.”

To help you understand just how much owning a home can have a positive impact on your life over the years, take a look at what the data shows. The same Bloomberg article helps show the gap in wealth between renters and homeowners who are 65 years and older (see graph below). The difference is substantial, even when incomes are similar.

So, if you want to create wealth to help set you up for success later on, it may be time to prioritize homeownership. That’s because, whether you decide to rent or buy a home, you’ll have a monthly housing expense either way. The question is: are you going to invest in yourself and your future, or will you help someone else (your landlord) increase their wealth?

Buying a Home With a Tenant Living In It

February 25, 2016 by khproperties Leave a Comment

Whether you’re an investor or purchasing for your own use, you may consider buying a home with a tenant living in it. Regardless of your intended use, you’ll need to take some things into consideration and make sure you do your homework in order to provide for a smooth transaction and know exactly what you’re purchasing. The tenant has rights, even after you complete the purchase and it’s important for you to know your responsibilities up front in order to keep out of legal hot water and allow yourself the enjoyment of your new home, whether you move into it or continue renting it out. Buying a home with a tenant currently living in it requires a bit of extra work, but with a bit of forethought and knowledge, it can be done successfully.

Like most real estate purchases, your best friend is knowledge. If you find a home that you absolutely love and it has a tenant living in it, your first step should be to find out how long the tenant has a lease for. Many people erroneously think that the tenant must move out once ownership changes hands. This is not the case. The lease stays with the property after the home sells and you as the new owner must honor the conditions set forth by the lease, which may or may not be favorable to you or in worst case scenarios, could be a nightmare lease that you want nothing to do with. We’ve seen leases written so poorly that their legality and enforceability come into question (this is why we always recommend having a Realtor involved in the process as the Texas Association of Realtors® provides an excellent Residential Lease for use by its members).

Paragraph 10 of the One to Four Family Residential Contract (Resale) covers the sale of a home that is currently being leased and states that the seller must provide a copy of the lease(s) and any move-in condition form signed by the tenant with seven days of the effective date of the contract (Paragraph 10.B.(2)). It is highly recommend that the buyer has an option period that extends beyond this date to give them time to receive and review the lease to be sure it meets their needs and criteria.

If you find the lease terms satisfactory and are happy with the situation, then you may proceed with the purchase. If there is something you do not like in the lease, you may want to reconsider your purchase. Remember, you have to honor the lease and everything in it, you cannot simply decide that you’ll do things differently as a landlord. You cannot evict the tenant because you are buying the home and find the lease to be unfavorable. The lease stays in place and you are obligated by its terms. If you’re buying a home with a tenant living it and you cannot agree to take on the lease under the terms as set forth, you do not want to buy that house. We know we’ve said that a few different ways in this paragraph, but it really is that important and it is often misunderstood.

Responsibilities of Buying a Home With a Tenant

If you agree to take on the lease by buying a home with a tenant, you in effect become the new landlord upon closing and funding of your purchase. As a landlord, you have a host of new responsibilities and you may want to familiarize yourself with the Texas Property Code. This is one of those areas where ignorance of the law will not excuse you from complying with it. If you don’t feel you know enough or you don’t want to find yourself on the wrong side of the Texas Property Code, Fair Housing laws, or the Consumer Financial Protection Bureau, you may want to consider hiring a property manager to take on the day to day operations of your new rental business. Don’t forget, your homeowners insurance will most likely not cover you in a renter-landlord situation, so you’ll want to contact your insurance agent to make sure your coverage is up to snuff.

At closing, you should be given the security deposits from the current lease (and the tenant will have to be notified in writing of the change in responsibility for that deposit) and any prorated rents that may have already been paid. You will need to notify the tenant of where to send their rent and who to contact for repairs and in emergencies (did we mention you’re now responsible for all of that – read your lease, it should outline what your duties and responsibilities are).

Whether you intend to continue renting the property out or you bought it for your own personal use, you’ll need to watch your timelines on the lease. Whether you’re using a TAR Residential Lease or one drawn up by your lawyer, there should be timelines for notices and termination of the lease. For instance, in the TAR Residential Lease, there is a whole section (Paragraph 4) about automatic renewal and notice of termination – failure to comply with these timelines could renew the lease into a month-to-month lease without either party even noticing.

Buying a home with a tenant living in it isn’t impossible or even that much harder than buying a vacant home, but like anything in life, you need to pay attention to the details so that you know exactly what your responsibilities are and what you’re signing up for by taking on a lease that someone else wrote. Remember to get those copies of leases early so that you may review the documents and make sure you understand the terms and conditions set forth, because as the new owner, you are legally bound to the same.

image courtesy of kozumel

Singing Hills Development Brings Investment Opportunities

April 25, 2014 by khproperties Leave a Comment

Singing Hills Development Makes Bulverde and Spring Branch Prime Areas for Investment

The Singing Hills development at the corner of 281 and 46 in Bulverde is causing quite a stir. From all reports, the size of the development encompasses at least 250 acres and is going to be a combination of commercial and retail, as well as residential apartment homes and single family dwellings. Back in February, it was announced that WalMart will be the anchor store in the development and it will be a welcome addition to the Bulverde community, contributing to job growth and providing opportunities for shopping and other community activities that were non-existent before.

A recent article in the San Antonio Business Journal, “Singing Hills poised to bring new retail and residential life to Bulverde,” indicated that the community will have its own wastewater and reuse treatment plant, which is a needed addition to the area. There are some other developments, including the introduction of “managed” toll roads between 1604 and Borgfeld Road extending north on 281, that are also going to contribute to the growth and success of the Singing Hills Development, making it much easier to access in the future.

What does this mean for those who own or are trying to sell lots in the Bulverde and Spring Branch areas? I think these owners are poised to find much more interest in their lots and potentially command higher prices than previously possible. With this in mind, I think that purchasing for investment (or for future personal use) decent sized lots with little to moderate topography that are outside floodplain mapping, would be a very attractive consideration.

A great example is the beautiful community of Crossing at Spring Creek. There are beautiful one to three acre tracts available for purchase right now in the neighborhood. They are relatively flat, meaning they will not require as much in the way of cement and foundation work to build, they are not far off of 281, and the neighborhood is not crowded. Homes in the neighborhood are beautiful and are selling at an excellent price for all they offer.

This is just one example of a community that is well worth considering now that the road infrastructure is on its way to providing ease of access to these areas and there will be substantial job growth due to the Singing Hills development. As this development begins to grow, expect to see other construction taking place in the area – retail and commercial spaces typically attract more residential development (and vice versa).

So take a drive north on 281 and see all that is happening in the towns of Bulverde and Spring Branch. These beautiful little Texas towns are retaining their charm, but are growing, and you may just find the perfect investment opportunity to suit your needs or maybe you’ll fall in love with the Hill Country and find yourself building your very own home.

Don’t let HGTV guide all of your decisions.

November 12, 2011 by khproperties Leave a Comment

In reference to our recent post, “How to be a good home buyer or seller.,” we thought it might be good to cover some real world examples to help showcase why these items were so important.

“Seek advice of experts.”

There once was an individual who was an avid HGTV watcher. He loved the designers, watched the reruns of rehabs, and ate up all of the handy, do-it yourself tips. He approached his agent with grand plans to install an astroturf lawn on his property. He saw it on television, it got rave reviews in it’s Arizona neighborhood and he just knew that spending the extra $15k was going to bring him loads more when he went to sell. His agent advised against investing so much money in something so rare in his neighborhood. He chose not to listen to his local REALTOR®, and instead went ahead with the project on his $98,000 home.

He did get the property under contract eventually, but when it came time for an appraisal, there was a problem. Not only could the appraiser not find any other properties nearby with a similar feature (to determine value), but this particular appraiser actually the perpetually green lawn as a detraction and subtracted value from the property for it. Not only was the seller not able to sell the property for what he wanted (the property did not appraise and a lower sales price had to be negotiated), but the seller ended up losing money on the deal because the extra $15K investment could not be substantiated.

As Chris Griffith, a Bonita Springs real estate agent, wrote in her MLS Fail Shots post on AgentGenius, “Design on a Dime lied to you.“

Need expert advice for your next real estate transaction? Contact us and one of our agents will help guide you through your next home sale or purchase.

image courtesy of !!!! scogle