www.TampaHouseMan.com
For those of you interested in commercial investment opportunities, here is a brief explanation of CAP rate, a common way of comparing one investment property against another.
The CAP rate is simply what percentage of the purchase price will be earned back each year as Net Operating Income (before taxes and debt service). So for example, if the purchase price of a property was $100,000, and Net Operating Income is $10,000/year, the CAP rate would be 10%, meaning 10% of the purchase price will be earned as NOI each year if income and expenses stay the same.
Here's another example:
Annual Income $30,000
Annual Expenses $5,000
Net Operating Income $25,000
Property asking price = $450,000
Let's assume the eventual sale price is $400,000
The CAP rate would be $25,000 divided by $400,000 = 6%. Although not out of the range of possibility, most investors won't start looking at these types of investments until the CAP rate is 9%, and they would rather it be 11% -12% so their investment is paid for more quickly.
If you are the seller, in order to get your CAP rate up to say 9% so investors will start looking at it, either the Operating Income needs to be higher or the sale price needs to be lower. If income and expenses are accurate, you can reverse the equation to find what the sales price should be in order to meet the 9% CAP rate requirement.
$25,000 NOI divided by 9% CAP rate = $277,778 necessary sale price. Now this will most likely frustrate the seller, but a property is only worth what a buyer is willing to pay for it, and most investment buyers are sophisticated enough to do this simple math and find out that a sale price of $400,000 is way over priced for investment purposes.
I hope this explanation of CAP rate is helpful. Please call or email me if you have any questions about residential or commercial real estate in Brandon or Tampa Florida.
Randy, The House Man
Randy@TampaHouseMan.com (813) 846-9190.
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Dear Homebuyers,
Here are a few mistakes that are made by buyers. If you can, try to avoid making these mistakes:
Not using factual data to qualify for a loan - Despite being fraudulent, if you overstate your finances to qualify for a loan, you are doing yourself a huge disservice because YOU CAN'T AFFORD THAT HOME!
Buying a house that doesn't meet your needs - Sometimes when we are in the moment, there is an ether that makes us do things we don't really want to or mean to. I'm convinced this leads to buyers remorse. Make sure you have a checklist of the features that are important in the house and features that are mandatory in the house you want to buy. If the house doesn't meet the requirements, despite the great view of the water, don't buy it.
Not using a Realtor to help you - Realtors are trained to help you. Yes, they are paid for this, but the fee usually comes from the commissions paid for by the seller. Realtors can not only help you narrow your search, but also help you negotiate a better price.
Paying too much for the home - There are many reasons for paying too much, but it usually comes down to an irrational feeling by the buyer. As stated before, use a Realtor to help you find the right house for you in your price range, and let them help you through the negotiating process.
If you have any questions, please call or email me at (813) 846-9190 or Randy@TampaHouseMan.com
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FOR SALE BY OWNER MARKETING TIPS
Even though the National Association of Realtors tell us most For Sale By Owner (FSBO) properties will eventually list their property with a Realtor, homeowners continue to try to sell their homes on their own. The reason they usually switch to a Realtor is because most homeowners have regular jobs and lives and don't have the time to properly market the home for sale. They soon realize that very few buyers (if any) are coming to see their home and those that do never come back. The reason why is that most homeowners believe if they put a sign up in their yard, the home will sell. They overestimate how many people actually drive into their neighborhood and by their house and really do care about price. The fact is most buyers who are looking to purchase a home are working with or through a Realtor and the Realtor advises them on current market values. When Realtors search for homes for buyers, they generally look in the MLS system since it is a massive database, easily sorted by criteria determined specifically by the buyer.
As a FSBO seller, you will be at a disadvantage because you won't be able to "market" to the agents looking for their buyers because you won't have the home listed in the MLS, so buyers agents who aren't acutely familiar with your neighborhood and house will never know it's for sale. Despite all of these reasons to not sell your home yourself, if you still decide to try to do it, here are some tips for you:
It is important to understand that doing all of these things take quite a bit of time. The best way to sell your home is to have a Realtor market your home to not only the public, but all the other agents who have buyers just waiting to buy.
If you have any questions about selling your house or are interested in buying a home, call or email me.
(813) 846-9190 Randy@TampaHouseMan.com
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How do you find foreclosure properties to buy in Brandon Florida? Well, the easy answer is call me! Seriously, finding foreclosed properties is easy for realtors because we have instant access to all properties that are listed on MLS. Plus, to make it easier, we have access to a system that searches and delivers tax records for bank owned properties.
But, if you are a brave soul and want to go it alone, here are some tips to finding foreclosures.
Fee based foreclosure service companies: These companies will provide a list of foreclosures in your area for a fee. RealtyTrac is one and try www.foreclosure.com.
Auction Houses: There are many auction houses both nationally, regionally, and locally. To start your search, Google "Real estate auctions" for local auctioneers or look up these national companies: United Country Auction Services, Williams and Williams and Real Estate Disposition Company.
Asset Managers: Check with the banks in your area, but most major banks have asset managers that deal with REO's (bank owned properties). Check the bank websites for more information or call a branch and ask to speak with an Asset Manager. You can also goocheck with Keystone Asset Management (www.keystonebest.com).
Real Estate Signs: Drive neighborhoods in your area and pay attention to the real estate signs. Many properites that are bank owned, short sales or in foreclosure will have a rider on the sign that indicates that status. Call the agent on the sign and find out more details.
Unless you are a professional investor and have the time to do all of these things on your own, it is really probably worth it to just let a real estate agent work for you. They can quickly navigate the large amount of information out there and find you a great opportunity!
If you have any other questions about real estate in Brandon, Florida, foreclosure properties, short sales, or bank owned (REO's), please call or email me and let me help you. Randy@TampaHouseMan.com or (813) 846-9190.
Randy
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If you are looking for real estate in the Brandon, Florida or Greater Tampa area, the big question for sellers is do I sell now ....and if "I want to sell now, what do I price my home at". Here's the honest truth. This is a horrible time to sell your property. But, you have options. if a career move or divorce requires you to vacate your home, you can either rent it and hope to get enough rent to cover the expense of owning the home. That doesn't mean you need enough rent to just cover the mortgage payment. Remember that not only do you have monthly mortgage payments, but you may have escrowed taxes and insurance, property management fees, and unforseen repair bills. Your other option is to sell it. "What price do I set?" is the common question. The answer depends on a few things, one of which is how quickly you need to sell.
Here's the theory: If you want to sell quick, price it at just below market value. Trust me, realtors, their buyers, and investors will notice and offers will flood in. Assuming it is priced just below market value means it will most likely appraise for higher and provide the buyer with instand equity, a very attractive thing. On the other hand, if you are not in a huge hurry (say you can wait 2-3 months), you can price it just above market value to see if you get any bites. But if after a couple weeks the phone isn't ringing, then you'll probably need to come down a little to start attracting realtors and their buyers. A common mistake is to price a home significantly above market or possible appraised value and then follow the market down. This means that some buyers will price high, because they believe their home is special and will sell at that price even though the market does not agree. Then, in a real estate decline, they come down a little bit as the market values decrease. The problem is, they are always just above the market (following the market), and will most likely never sell. The other problem is that most educated (represented by a Realtor) buyers would never buy a home for more than appraised value and in even if they did, if they need financing, the banks won't lend to the purchase price, but the appraised value. This means buyers may have to come to the closing table with more cash than they expected to make up the difference. Here's an example:
A home is listed at $120,000 and it appraises at $100,000. If a buyer offers and seller accepts the $120,000 price, the bank will only loan say 80% of the appraised value ($100,000), requiring the buyer to put 20% of that amount down. Therefore the bank will only loan $80,000 and the buyers will have to bring $40,000 to the table. This is made up of $20,000 for the 20% down, and an additional $20,000 to cover the difference between the $120,000 sale price and $100,000 appraised value.
If you have any other questions about real estate in Brandon Florida, or the Greater Tampa area, please call me at (813) 846-9190 or email Randy@TampaHouseman.com.
Happy Fathers Day to all the fathers!
Randy, The Tampa Houseman
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Randy is a Realtor with Exit Bayshore Realty and serves buyers and sellers in the Greater Tampa Bay area including South Tampa, Brandon and the MacDill Air Force base area.
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