It’s crucial to keep abreast of the most recent real estate terms as a Lawrence rental property owner. The real estate market is facing significant changes; keeping up with these changes can help you grow your portfolio and protect your investments. Furthermore, it can help you make rational choices when negotiating with prospective buyers or renters. In a competitive marketplace, it is essential to understand the following six terms. Examine each one in great detail.
An iBuyer is a real estate company that makes instant offers on homes using technology. These businesses have grown in popularity in recent years due to the convenience and speed with which homes can be sold through them. Since they provide much more accessibility to homeowners, iBuyers have fundamentally changed how people buy and sell residential properties.
DOM means “days on market.” This metric measures the length of time a property has been on the market. The DOM of a property is determined from the day it is put on the MLS (multiple listing service) to the day a seller enters into a contract to sell it. A high DOM could be a warning sign, but it could also be a sign of seasonal changes in the housing market (homes are bought faster during spring than in the winter). Additionally, by examining the average DOM for a specific region, you can discern which market is strong (low average DOM) or weak (high average DOM). Generally, a weak market favors buyers.
REO is an acronym for “real estate owned.” This term refers to a property that has been foreclosed upon and is now in the possession of the lender, typically because it failed to sell at the foreclosure auction. Since many banks and lenders would prefer to sell a property than hold it, REO properties can offer investors the chance to buy below market value. It is vital to recognize that these sales are often “as-is,” which makes financing hard.
FHA 203k Rehab Loan
The FHA 203k rehab loan is a government-backed loan that lets purchasers finance the acquisition of a home that needs repairing. This kind of loan is an appealing choice for investors looking to buy properties that need repairs because it can be used to pay for repairs and renovations. This can also be used to update older homes’ energy-related features. However, the addition of a swimming pool or other “luxury” upgrades are not intended for this loan.
“Debt-to-income” ratio is referred to as DTI. This metric is used by lenders to calculate how much of your income is being used to pay off debt. Your DTI is calculated by adding your monthly housing payment to your total debt payments, dividing that amount by your gross monthly income, and multiplying that by 100. It’s meant to determine how much mortgage you can manage. Maintaining a low DTI is crucial because a high DTI can make it hard to be approved for a loan. Borrowers who pay 28% or less for housing and 36% or less for monthly debt payments are typically preferred by lenders.
EMD is an acronym for “earnest money deposit.” Also known as a “good faith deposit,” this is a deposit that buyers are required to make when making an offer on a property. An EMD can demonstrate a buyer’s seriousness and eagerness, thereby encouraging a seller to accept an offer. In most instances, the amount of EMD given is between 1 and 5%, but this can vary based on the situation and market competition. The EMD is normally held in escrow and adapted to the purchase price of the home if the transaction closes.
Lawrence property managers must be conversant with a wide range of real estate terminology, as you can see. Knowledge is power in a market that is competitive.
In a fluctuating rental property market, your greatest asset is your team of experts. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.
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