I recently wrote a blog post on a Wilmington, North Carolina real estate blog discussing how many properties there currently are listed in the local MLS for under $100,000. Just a couple years ago the only properties in this price range were either tiny or in need of some serious repairs. Fast forward to 2011, and there are over 148 properties in Wilmington $100K and under and there are 372 when you throw in some of the surrounding communities. With so many depressed properties, now may be a great time to swoop and find some great bargains, especially if you have the down payment to make the financing a reality. Most local mortgage lenders and brokers that I have spoken with require at least 20% down and some require 25% before the pricing becomes attractive.
When considering houses in this price range, investment buyers may be more interested in rapidly gaining equity rather than turning a net profit from the monthly rental income. One of the fastest ways to payoff a mortgage is not to position yourself in a long term 30 year product.
Loans such as ten year loans or fifteen year home loans, which may seem unnecessarily risky for more expensive homes, may not seem like such a stretch when you are talking about hundreds instead of thousands of dollars in monthly rent loss in the event of a vacancy. Another way to speedy up the accumulation of equity is to make additional principal reduction payments whenever you can. You’d be surprised to see just how much of a difference one extra monthly payment a year can save you in interest over the life of your loan.
There are plenty of great mortgage companies throughout the country who can help you find the right mortgage program to meet your needs. You can use the rate tables on ForTheBestRate.com to compare mortgage rates, closing costs, and point information from competing mortgage providers and brokers. Keep in mind that the terms posted are for primary residences so expect some pricing adjustments when you connect with the companies.
Investment Property Calculator – Rate of Return Calculator
Looking for a tool that can help you quickly and easily give you a snapshot of numbers relating to an investment property? KJE Computer Solutions put together a cool calculator for people interested in rental properties. Simply enter information on your property such as your loan amount, interest rate, amortization period – the value or your land, personal property, and building – your estimated annual rent, projected vacancy rate and depreciation rate – and a breakdown of your annual expenses, and click “View Report”. The result will be a detailed summary of the featured property including estimated cash-flow and projected rates of return. Pretty cool stuff.