Tag Archives: coastalgeorgia

Home Inspections for Co-ops or Condos

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Do you need a home inspection when you buy a condominium or a co-op? According to BrickUnderground.com, home inspections are common for single-family homes, but they’re also increasingly being requested by urban homebuyers of condos and co-ops. Condo and co-op owners share common spaces such as elevators, lobbies, parking, and grounds, but where they differ is who’s responsible for maintenance and what the inspection can cover.  

Condos are privately-owned units within a community of other privately-owned units, explains Bankrate.com. Owners share common areas, but inside their apartments, they own the air space and interior walls of their units plus the structural components of the exterior walls. Condos are managed by a homeowner’s association that collects monthly or annual dues to pay for common area maintenance, repairs and replacement. These services are typically provided by a third-party property management company.

In a co-operative, or co-op, a corporation owns the building, common areas and all apartment units. Instead of buying an apartment, homebuyers buy a share of the corporation, according to Amfam.com. The corporation holds the title to the property, and homebuyers build equity when future buyers pay more for their “share.” The board of directors is responsible for maintenance inside each unit and the building as a whole.

A housing inspection is the homebuyer’s right, but only for the unit and the major systems that the homebuyer is responsible for, including plumbing, electrical and heat and air systems, patio or balcony, kitchen, bathrooms, bedrooms, appliances, walls, doors, windows and flooring, advises AllAspectsInspections.com.

Homeownership Builds Middle Class Wealth

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A new study by the National Association of REALTORS (NAR) found that between 2010 and 2020, nearly 980,000 households shared $2.1 trillion in housing wealth. How did they do it? Time and patience.

NAR defines a middle-class homeowner as one earning an income of over 80% to 200% of the area median income in markets with 50,000 or over middle incomers. If they purchased in 2010 at $162,600, they were likely to accumulate $229,400 in housing wealth, 86% of which is attributable to price appreciation over time. Within these markets, median single-family residences appreciated by 8.3%.

The top 10 rising middle-income housing markets were Phoenix-Mesa-Scottsdale (103,690), Austin-Round Rock (61,323), Nashville-Davidson-Murfreesboro-Franklin (55,252), Dallas-Fort Worth-Arlington (53,421), Houston-The Woodlands-Sugarland (52,716), Atlanta-Sandy Springs-Roswell (48,819), Orlando-Kissimmee-Sanford (35,063), Portland-Vancouver-Hillsboro (34,373), Seattle-Tacoma-Bellevue (31,284) and Tampa-St. Petersburg-Clearwater (28,979).

Another word for housing wealth is equity – the percentage of ownership you have in your home as opposed to the bank. When the housing market is good, it raises the value of your home because homebuyers want homes like yours. You can also build equity by paying down your mortgage, making extra payments toward your principal, and making attractive improvements to your home.

Housing typically increases in value by two to three percent annually, so the record gains of the past few years are atypical. However, housing inflation plus mortgage interest rates well below overall inflation are inspiring homebuyers to leap into the market. While quick gains are possible, the buy and hold strategy works better for most homeowners.

House Flipping 101

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Home improvement television makes flipping homes look so easy anyone can do it. But the reality is much different. You can make a lot of money or lose money to problems that slow down your timetable and increase your risk.

There’s a reason why flipped homes are only a small percentage, about 6.2%, of the market. As an investor, you’re buying a property to sell quickly at a profit. You have to know the market and adhere to a strict acquisition formula to meet your estimated after repair value (ARV). The ARV informs your asking price that will both attract homebuyers and meet bank appraisals.

A hot market, with a low supply of homes and rapidly escalating home values, is ideal for flipping because buyer demand and price appreciation are “built-in.” But if homes to buy are hard to find, you may have trouble staying within your budget. 

The flippers who make the most money are full-time professionals who use cash to buy homes, do all the repair work themselves, and sell the home themselves. They know the market well enough to negotiate the right purchase price and have the skills and experience to estimate improvement costs accurately and do the improvements that appeal most to homebuyers. They know how to minimize out-of-pocket expenditures such as mortgage payments, utilities, property taxes, insurance and other costs of home ownership.

Can you do the same? If not, then buying and holding a home may be a better idea for you than flipping.