Maintaining knowledge of the most recent real estate jargon is crucial for Montrose rental property owners. Keeping up with these changes can help you safeguard your investments and expand your portfolio as the real estate market is undergoing significant changes. You can use it to your advantage when haggling with prospective tenants or buyers. The next six terms should be understood in order to succeed in a competitive market. Examine each one in great detail.
A real estate firm that uses technology to make instant offers on homes is called an iBuyer. As they provide a simple and quick way to sell your home, these businesses have grown in popularity over the past few years. Since they offer homeowners much more convenience, iBuyers have significantly altered how people buy and sell residential properties.
“Days on market” is what DOM stands for. How long a property has been up for sale is gauged by this metric. The DOM of a property is calculated from the day it is put on the MLS (multiple listing service) to the day someone who wants to sell signs a contract. 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). Moreover, by observing the average DOM for a given area, you can identify whether the market is weak (high average DOM) or strong (low average DOM). Buyers typically gain from a weak market.
“Real estate owned” is referred to as REO. Usually, because it didn’t sell at the foreclosure auction, this term refers to a property that’s been foreclosed on and is now owned by the lender. Although most banks and lenders might rather sell a property than hold it, REO properties present an opportunity for investors to purchase below market value. It is worth noting that these sales are usually “as-is,” making financing tricky.
FHA 203k Rehab Loan
The purchase of a fixer-upper can be financed with an FHA 203k rehab loan, which is a government-backed loan. Investors looking to purchase properties in need of repair may find this type of loan to be a desirable option because it can be used to finance repairs and renovations. Additionally, it can be applied to update older homes’ energy systems. It is not intended for “luxury” additions like installing a pool.
DTI refers to “debt-to-income” ratio. This metric is used by lenders to calculate the percentage of your income that is allocated to paying off debt. DTI is determined by adding your monthly housing payment and total debt expenses, dividing that number by your monthly gross income, and multiplying that by 100. It’s meant to determine how much mortgage you can manage. Keep this number low because a high DTI can make it tough to be approved for a loan. Lenders typically favor borrowers who pay no more than 36% of their monthly income on debt and no more than 28% of their income on housing.
“Earnest Money Deposit,” or EMD, is another term you’ll also frequently come across. This deposit is required from buyers when submitting an offer to purchase a property and is occasionally referred to as a “good faith deposit.” A seller might be persuaded to accept an offer by an EMD, which can show how serious and willing a buyer is. 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 typically kept in escrow and used, if the deal closes, to reduce the cost of the house.
Clearly, Montrose property managers must be familiar with a variety of real estate-related terms. Knowledge is key in a competitive industry.
Your greatest asset in a market for rental properties that are constantly changing is having experts on your side. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.