We recently merged with GVA Management, Inc. Now we have a maintenance crew, a custodial crew, more properties, and staff.
GVA Management, Inc. now doing business as Red Compass Realty is a subsidiary for profit entity of Hilltop Community Resources. This means that the profits that we generate, now support the community services Hilltop provides. Their values transfer to our operations as well:
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We Challenge the Status Quo
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Going away to college or university means finding a suitable place to stay, and often as inexpensively as possible. Does it make sense to buy something instead of renting?
When I went off to school at BYU my grandfather had purchased a condominium for his grandchildren to stay in while they were going through school. I still had to pay rent but had the option of subletting two of the three bedrooms to cover my rent. I wish I still had a copy of that first lease agreement that I drafted up. It contained a fair bit of ideology for my tenants to comply with.
That initial opportunity to be property manager on a very small scale was an excellent introduction into business and real estate contracts. Aside from the excellent education it would provide your son on daughter as they head into their years of higher education consider the following rules of thumb on renting versus buying during the college years.
I lifted the chart above from a book written by the founders of Zillow back in 2014. They did some statistical analysis of the the amount of time it has taken to figure out how long someone needs to plan staying in a house in order to make financial sense of a purchase. Unfortunately not all of the areas of the country are represented here but it gives a general idea that you'd have to plan to stick around for 2.3 years in order to break even on a property. So if you plan to take four year four or five years in school, and remain in the same residence for the duration. It generally would allow you to break even and in most cases realize some appreciation on on the investment.
While this may be the case, comparing the amount of money you are willing to pay in rent for housing relates to the anticipated cash outflows for owning a property, would need to be a part of the decision process. At Colorado Mesa University the housing cost without a meal plan per semester is 3,400, or 6,800 per year. That works out to be $567/ month. For that monthly amount, assuming you are by yourself and $250/ month of utilities, maintenance and taxes, would afford a house that is worth $61,000, however if you anticipated sharing the space with three other students that number would jump to $278,000. As of January 2017 the average sale price in Grand Junction is $233,000. So if your destination is Grand Junction Colorado, and assuming you have a couple friends to room with, there are homes available that would be within the budget.
In my opinion, if you want the experience of owning property, have three years to go in college, feel comfortable filling rooms with roommates, and have a down payment, then buying makes sense when looking for college housing.
Many times when we contemplate real estate, we see it only as a place to do business, or raise a family. These are primary and original functions of the land we live on. It didn't take mankind long to become territorial about the space they occupied, and lay claims of ownership. Like that Coke bottle that fell from the sky to the people of the Kalahari, we discovered "a feeling of wanting to own, of not wanting to share. Other new things came. Anger, jealousy, hate and violence (The Gods Must Be Crazy-1980)." The conquest of territory, and the wealth it holds is a cause of political tension and even war today. Fortunately across the world there are statutes, laws and libraries of case law that lay out a civilized system that governs realty, or the possession of rights in real property (not to be confused with rights associated with personal property, or personalty, and often referred to as chattel).
Modern real estate conquests follow a structured process of purchasing or leasing rights to property, harvesting income from the use of the property itself, or income from leasing the rights, and finally divesting of the property through selling the rights the next user or investor.
There is only 57.5 million square miles, 36.8 billion acres, and 16 quadrillion square feet of land covering the surface of the earth. Of that land approximately 33% is desert. The people of the Kalahari live in peace on their land, because "where any other person would die of thirst in a few days they live quite contentedly in this desert that doesn't look like a desert. They know where to dig for roots and bulbs and tubers and which berries and pods are good to eat." Their site selection was not as much a personal as an inheritance and way of life." Real estate is scarce yet abundant, and each piece of property has a unique location that in large part determines the value it has to a buyer. Only a small fraction of this land is desirable or prime.
Inheritance has played an important role in the transfer of property rights and wealth, however that doesn't fall under the category of conquest. In modern times, understanding the viability of a site can be analyzed by statistical, financial, geographic, demographic, and psycho-graphic models. These models allow a buyer to overlay in three dimensions the location of a property in relation to the human interactions with the property. Purchase prices, income levels, traffic patterns, crime rates, walk-ability, lifestyle match-ups, proximity to amenities, and other factors.
On your quest to acquire real estate, selecting the right location certainly matters, above everything else if you want to preserve value and be able to harvest a return on your property through the time you own the property (hold period), and or when you decide to sell the property.
You will need a compass to guide your conquest to win the best property and for the right reasons. The purchase process, the hold period or harvest period, and finally selling. A Coke bottle to the people of the Kalahari was worthless, but with the right guide they would not need to travel to the end of the world to find a willing buyer.
Owning your own home is far from the beginning of real estate ownership. There are countless success stories of people who made a fortune, retirement, empire—or even just a comfortable extra income—by investing in real estate. Investing in real estate typically is not just investing in buildings, but rather investing in the income stream tied to a particular building, which is generated through the rent paid by the tenants. Here’s an overview to get you thinking about an investment property. Residential is a great way to start with rental properties, because they are relatively inexpensive compared to commercial property, however there are plenty of commercial opportunities that will compare in price to the residential opportunities.
Is investing in Real Estate Risky?
In general, real estate is usually considered to have a risk that is somewhere between that of stocks and bonds. The leases on real estate are similar to bonds, while the rents lucubrate with the market like stocks and the anticipation of a future sale at a higher price is similar to stocks. This is somewhat of an oversimplification but serves to place real estate among other capital investment alternatives. Real estate provides diversification benefits to investors because it performes differently from stocks and bonds, and has proven to be an excellent hedge against inflation. There are several ways investors approach real estate investing.
Improving a home
Quickly flipping a home is one way to make money off a real estate investment, but it can be risky. Grand Junction presents fewer flipping opportunities than other communities with larger housing inventory, however there are great deals to be had even in Grand Junction. A safer play than flipping is to buy a fixer upper and carefully manage costs over a year or so as you improve the property. You’re likely to get a great return, and there are more houses like this available. This stratgy is based solely upon the appreication gained by market appreciation over the hold period and maximizing value through improvements.
Instead of selling your investment property, you can rent it and make a good monthly profit if the rent exceeds your costs. Renting to a stable, reliable tenant can put extra money in your pocket every month for years on end. You can even hire a property manager, like Red Compass Realty, to handle repairs, rent collection, and other administrative tasks. And if you’re ever ready to stop dealing with tenants, you can sell the home and profit on the improvements and appreciation of your asset.
Multi-family rental properties
Renting out a single family home is a good starting place for investment properties, but you can get an even better return once you learn the ropes and move on to multi-family homes. Buying an apartment building or dividing a larger home into several apartment units comes with some added complications with taxes and regulations, but it also comes with huge income potential.
Commercial properties are governed by a separate set of rules and regulations by the federal and local governments. Taxes are higher and depreciation costs are spread across more years (unless it is a residential use like multi-family). Some of the advantages to commercial real estate investment include: working with businesses who typically have more pride of ownership and tend to lease for periods longer than one year. Lease rates also tend to be higher, however fluctuate more with the local economy.
Now that the house or investment property is under contract, the lender will be asking for all of the documents necessary to satisfy their underwriters. This will be a good time to practice patience as lenders ask for things that can seem tedious, nit-picky, and seemingly unnecessary. Underwriters are paid to cover every detail to comply with the many laws governing the lending of money, so take a deep breath and get them the paperwork they ask for and you'll get the satisfying words "clear to close" from them.
While the bank is asking for your financial life history, your will have time to inspect the property. A property is made up of many systems and home inspectors are trained to look at all of these systems and identify areas that could need to be repaired or replaced. This doesn't mean that the seller should be responsible for the repairs. If you find items that come-up during an inspection that you feel need to be repaired prior to purchasing, these can be written into a document called the inspection objection. The seller will then have the opportunity to present a resolution to the items listed in the objection. Should the seller refuse to repair any or all of the items listed you, as the buyer have the option to either terminate the contract or withdraw the objection. The seller however, does not have the right to terminate the contract based on the objection, just the right to refuse.
Once you've inspected the property and resolved any issues that arose during that process the lender will be ready to order the appraisal for the property. Since the real estate crash of 2008 the Federal Government has placed restrictions on the appraisal process to prevent appraisers from being influenced by brokers and lenders to suit their personal interests. These regulations limit a REALTOR's ability to influence the appraised value. Depending on the availability of an appraiser in your area, they can take between one to three weeks to complete. Once complete and the property appraises, you'll be one step closer to closing. If it doesn't appraise, then you will have another opportunity to back-out of the contract. At this point you can begin a negotiation with the seller to reduce the purchase price of the home or figure out how to come up with the additional cash needed to close. The lender will have loan to value ratio restrictions. For example they will only lend 80% of the appraised value. So if your purchase price is $120,000, and the appraisal comes in at $100,000. You were planning to pay 20% down on 120,000 or 28,800. Now that the appraisal came in at 100,000 you'll have to pay 20% of 100,000 or 20,000 and the difference between the appraised value and he purchase price, an additional 20,000. So 40,000 instead of 28,800; a significant difference.
This is a good time to start packing if you haven't already, especially if you have a short contract to close timeline.
After the appraisal is complete or resolved, the settlement company or title company may contact you to get documents necessary to satisfy title insurance requirements (to be covered in a separate post). They will be ordering a pay-off if there is an existing loan and preparing the final settlement documents. The final settlement usually will be ready three days prior to closing. The settlement statement will detail every expense of the sale, which typically includes lenders fees, title fees, recording fees, closing services fees, pro-rated utilities/taxes, water transfer fees, and credits due to concessions. The lender must ensure that the buyer receives the closing disclosure (essentially the lenders portion of the settlement statement) no later than three business days before the closing.according to the Truth in Lending RESPA Integrated Disclosure Rule (TRID 11/2013)..
Once the numbers have been provided, arrange with your bank, lender, and title company how you will bring funds to the closing. This is typically in the form of a cashiers check, but can sometimes be provided with a wire transfer.
A day before or the day of closing you'll have a contractual right to have a final walk-through of the home to make sure that the refrigerator that was included in the contract didn't accidentally get moved by the movers, or that the floor didn't cave in.
Closing often takes place at the title company, but can be arranged at a different location if all parties agree. You will need to bring the funds, and your drivers license. All buyers who are listed on title or the contract will need to be present unless otherwise arranged through power of attorney, advanced signing, or mail-out to out of town sellers/buyers.
After signing the mountains of documents the property will be yours. Don't forget to pick-up keys.
In order to go under contract both an offer and acceptance of that offer are required. The offer will state an acceptance deadline which allows the seller a period of time, usually between 1-3 days to review the contract and either accept or present a counter proposal. There are both simple and complicated reasons the seller may object to the contract.
The most important item that will counter balance every other term of the offer is the price, and the level of risk the seller takes on by accepting the offer. If the offer is full price, there will likely be some other contract terms that can be easily overlooked. Some common simple objections the seller may include: 1) seller unable to be present at closing on the date proposed in the offer, 2) other proposed timeline items such as a prolonged inspection period, 3) buyer is asking for seller concessions (amount asked for to help pay the costs of buying the property)., 4) selected Title Company, 5) specific survey requests, or 6) requested property inclusions. Any of these items could be overlooked based on the offered price.
Because buyers are often getting a loan to purchase a property, they present a risk of inability to close to the seller. If a contract is accepted and the buyer is unable to secure financing, the seller will lose precious time on the market, and another potential buyer may be lost. It is a good idea to present a solid pre-approval letter from the bank with a personal cover letter with any information that may persuade the seller to take a risk on you. Buyers frequently need to sell another house in order to buy a house. If a seller accepts a contract from a buyer who needs to sell, then the contract is at risk if the buyer is unable to sell. If you are in this situation it is best to have your house on the market before presenting an offer. The listing agent will be sure to check that the house is offered at a market price and is likely to sell before recommending that the seller accept the offer.
If the seller agrees to the terms of the offer without any changes, he or she may accept the offer by signing it and delivering it to the offeror. If there are minor changes that don't materially affect the contract, the seller may modify the contract then accept. If no objection to the minor changes is made by the offeror then it is still a contract (Under the U.C.C., an acceptance may slightly modify the offer and still produce a contract. If the parties fundamentally intend to contract and do not intend to insist upon their own terms, then a contract exists, even if the offer and acceptance are not identical. If the acceptance contains additional terms, they become part of the contract, unless the offeror promptly rejects them or they materially transform the offer.) . It is a good practice to have each modification initialed by all parties to the contract.
If the seller does not agree with the terms of the contract, they will either reject the offer, or prepare a counter proposal to the offer. If the listed price is 250,000 and the offered price is 200,000, the counter proposal may simply state that all terms of the contract are to remain the same except for the purchase price, which will be changed to 235,000.
It's best to be objective about the offer and acceptance process. Emotions can run high when dealing with homes in particular, so a cool head and evaluation of the facts will help guide the process. Real estate contracts carry a lot of provisions, timelines and conditions, that need to be satisfied in order to remain under contract. Violating the terms of the contract can result in default and potentially derail a deal. Your REALTOR will help guide you to closing and keep you from defaulting. The next step will discuss what happens from contract to closing.
Once you walk into a house and start making every excuse possible to make it your own, you've found the one. Now is the time to make an offer. As soon as you are interested in a house, inevitably another house hunter will be too. Waiting to put in an offer could mean provide a window for another and you'll miss your opportunity to purchase. Some buyers wait with the attitude that if the house is still there when They are ready to make a decision then it is supposed to be. That's fine too as long as you understand that it really might not be there and the house hunt will continue.
Your goal in writing an offer is is to write an offer that has hopes of being accepted. This depends on your reasonableness. There is a difference between “I want to write an offer” and “I want to write a winning offer” and can be found with important knowledge and accurate information. You need to dig for everything you can about the property and the seller's motivations. Not because you want to take advantage of them, but because in a negotiation you want to understand each parties interests in making the deal. It is your decision what price and terms to offer and you need to make it an informed decision. Here are a few things you and need to know about the seller and the property.
Call the listing agent and get more information. Always start by asking if the property is still available. If you cannot have this particular dream home, the earlier you know the better.
The second question should be the least significant and you always want to have insignificant questions. Maybe you want to know how long ago the seller replaced the air conditioner or if the pool has ever been acid washed. These questions lead into more significant property information such as the sellers timetable for moving, and if they've had other offers.
Now that you have the knowledge and information, your REALTOR will run comparable listings (comps) on the MLS and share with what other homes have sold for, what other homes are on the market, and what homes are currently pending. A word about comps: only so much can be inferred from what has happened on other homes between other buyers and other sellers. Regardless of the comps, this deal is going to be what your are willing to pay and what the seller is willing to take. I've worked with buyers who believe that a seller must take a certain number because that is what the comps say. This is untrue. A seller may do as they please. It is their property. Bear this in mind while negotiating.
Once you've decided on a price, terms, and timing for the offer, your agent will write it up using the Colorado approved forms along with the appropriate disclosures of necessary and submit it.
Generally acceptance or counter proposals can be expected between 36 and 48 hours. For institutional or governmental agency sellers this time frame will be closer 72 and 96 hours.
Next time I'll be discussing the acceptance and counter proposal process.
Wild honey amazes me. My wife Jen and I bought a house in town so we could be close to everything we do and within walking distance to schools, parks and stores. When Jen suggested getting bees I thought they might be a lot of work, but supported her ambition. The first package of bees turned out badly, the built strange comb and eventually the hive died. The next spring my dad, also a beekeeper helped Jen to get another package of bees. This time they were the Italian variety. We got them in May and two months later we have 28 pounds of beautiful golden honey! When we harvest the honey we have to uncap the wax. The honey saturated cappngs are delicious to chew.
whether you reside in the city or in the country raising a hive of bees is a rewarding and exciting adventure.
With advancements in technology finding a home can be easier than ever for the home buyer. Pulling up available listings through Zillow or Trulia or from an agents website make searching online an enjoyable experience that can be accomplished from home. Your criteria for a house is an important place to start, but may not lead you immediately to the right home. I've learned that when buyers walk into a home meant especially for them, criteria goes out the window.
In the house hunt hiring a realtor adds the benefit of having someone on your side who knows what is available and what has sold. We can also schedule showings offered by multiple firms in a row. Whether it's listing you find or the agent suggests, they can put them o. A list and schedule the showings, print-up comparisons and optimize a driving map so your time can be efficiently spent.
For some people the search takes 6 months and 100 houses. I recently closed on a house with a nice young family who moved to town from out of state. I assisted in their efforts to find a rental property that was close to work and in a good safe neighborhood. They started looking at houses about six months after moving in. We would look at 5-6 houses each time we went out. The husband's criteria didn't exactly match the wife's. He was looking for a great price, close to work and wanted ample space while less concerned with finishes. The wife preferred a house that didn't say "project" everywhere she turned and had a layout the worked for raising children, accommodating in-laws, and close to good schools. We looked on and off for 6 months hovering just below the $300,000 price range, when 50+ houses later I got a message that they wanted to see an address that was priced at $235,000. We took a look that night because it seemed like a great bargain, made an offer and it was accepted.
The house was a well cared for mid-century home, that certainly had projects, but it was well cared for, clean, sized right, close to work and schools and bargain. Some criteria got set aside and they knew when they walked in, it was the house for them.
Be patient with the processes and keep looking until you find what fits. Sometimes the realtor will lead you to the house that fits, but often it's a house you come across on your own.
Tips for homebuyers with children:
1. Plan for fussy children if looking at houses near meal times. Bring snacks that will help them through until the showings are over.
2. Limit the number of showings to 3 or 4, if you can.
3. Allow your children to enjoy the wonder of seeing other homes, they can find it as enjoyable as you if allowed.
Whether you are buying a home or a business location, it is important to have sufficient money or consideration* to purchase property. A real estate contract includes a promise from the buyer to buy in exchange for a promise from a seller to sell. In order to be prepared to make that promise it is important to have your ability to back the promise lined out in advance..
So, who do you engage first when navigating the home buying process? A lender, a Realtor, or an attorney? A Realtor has specific knowledge and experience in the home buying process. This activity is what they do and have done on a consistent basis over a period of time. They have sold many properties and experienced the process over and over again. We have worked with many lenders and aware of which lenders are able to deliver on their promises. A lender will have specific understanding the products they offer, but may not be able to provide you with a complete solution for the home you want to buy. An attorney will understand the legality of the process (their specialty), but may not be the best at facilitating all of the moving pieces to coordinate a timely closing.
A Realtor can also conduct a mini pre-qualifying interview to guide you to a lender that best suites your situation. Self-employed home buyers have requirements unique from W-2 employed home buyers. Home buyers interested in buying land for future construction have different requirements than home buyers building a home through a builder. Business owners in searching for a home for their business, have a separate series of decisions to make.
While ensuring that you have the money (consideration) lined up to make an offer to purchase is the first step in buying a home, the person you turn to for guidance and direction while navigating the process from start to finish will be you real estate agent and REALTOR.
*consideration (legal) - Something bargained for and received by a promisor from a promisee; that which motivates a person to do something, especially to engage in a legal act.