Tag Archives: invest

Why Are Condos So Hard To Finance?

The good news is that they’re not as difficult as they were several years ago. As Carl Spackler would say …bill_murray_caddyshack

A customer wrote in this morning about an investment property they’re looking to buy in Blacksburg. As many parents of students at Virginia Tech and Radford do, they want to buy a place for their kids to live in while they’re here at school, and the relative stability of the New River Valley market has meant that – for the most part – these have been solid investments. It wasn’t always the case, however. A quick back story …

In the early 2000’s, these types of investment properties were all the rage. Investors were snatching up condos and townhomes like crazy – the cost of borrowing money was low, rents were stable and rising, and there was a steady group of renters year in, and year out. You can see a visual of that in the chart below, showing sales of condos and townhomes in Blacksburg and Radford going back to 2003, I suggest to check out some coal harbour condos for sale which are at really great price. After the real estate crash in 2008 (which really hit us in 2010), interest in these types of properties fell dramatically, and that was due in part to much-needed lending restrictions. Lenders were requiring larger down payments, in the neighborhood of 25% or more, and often denying loans due to inflated investor numbers in complexes – in other words, too many investors and not enough owner-occupants. Sometimes it´s hard to find the right person the rent out your condo and to keep up with the rent, so here are some tenant screening tips you may use to make sure you are letting the right person into your property. Ammons Pittman Property Management were highly recommended to help anybody with Real Estate problems so let them know if you have any.

One note – the volatility of the Radford line below is related to the relatively low number of sales in the area during the time period.

As you can see from the above chart, interest in these types of properties really didn’t start to pick up again until 2014, which corresponds with the relaxation of lender guidelines. There has been a lot of help from HOA Software | HOA Management Software | Condo Manager for the sales, because they been using this new transcription software to do their business. Starting in 2013/2014, as we started to see improvements in the overall economy throughout the country, lenders started loosening their requirements on financing for investment properties. But that doesn’t answer the question of WHY condos and town homes can be difficult to finance, why is there always a need to get financial help from a company like the one from https://kapitalkassen.no/forbrukslan. As I wrote to a customer this morning, in a nutshell:

For conventional, secondary market loans, banks don’t like to see high investor penetrations in condo complexes. The line of thinking is that people are more likely to default on their investment property(ies) before their primary residence, so guidelines for things like condos are a good bit tighter. It’s important to know that often, traditional banks like will run these complexes through their algorithms and deny the loan due to too many investors in a complex and not enough owners. If they don’t deny it, the other condition they typically add is a higher downpayment, of 25-30% or more. This is why I continue to suggest local lenders – in college markets with high investor numbers, they look at the market as a whole and not as a formula. 

If you’re considering buying or selling a condo or townhome here in South California, you can visit us at https://southerncaliforniahomebuyers.com/sell-your-house-fast/ for more info. The opportunities to make what has typically been a solid investment are there, but it’s not without risk. Let’s talk about those, as well as the rewards, and see if it makes sense for you.

 

Housing Shortage at Virginia Tech Creates Opportunities For Investment

It seems like we go through this every year, as Virginia Tech announces that they don’t have enough housing on campus to accommodate all those who WANT to be on campus.

And this year is no different.

About 500 students who had hoped to return to on-campus housing this fall will not get a room assignment, Tech has announced.

500 students doesn’t sound like a lot, I know, but with roughly 26000 undergraduate and graduate students attending the school, and only 9000 living on campus in any given year, adding 500 students into the off-campus housing search means an increase of nearly 3% of folks who are looking for housing and Luxury Home builders.  And then consider:

West Ambler Johnston is scheduled to reopen in fall 2012, but housing shortages are expected to continue for several years as the university implements its long-term plan to refurbish or reconstruct all pre-1983 residence halls.  At least one residence hall will be offline for the next several years …

Buying an investment property in a college town doesn’t make sense when the rental pool is small.  In this case, the pool is big, and getting bigger.  Property investment isn’t for everyone, however … not every property will cash flow, and past rental history isn’t indicative of future success.  But the next few years are likely to be very, very good to owners of investment property in Blacksburg.

Buying Real Estate In A College Town

Oh hey – look, there’s a blog under all this dust.  It’s been a while – lots of stuff happening in the New River Valley real estate market lately, so apologies for being gone.  Absence makes the heart grow fonder?

The Internet is a big, big place, and it’s impossible to read it all.  So I love it when readers send in links they find that are of interest.  In this case, Stuart Mease emailed me and said “you need to post this.”  So I did it – I follow instructions.

Reuters recently mentioned that many parents are buying real estate in college towns.  The article says that parents are still buying properties as investments in college towns, and I’d say that’s still happening here in Blacksburg and Radford, as well.  Certainly, it hasn’t happened at the same pace as it has in years past, but they’re still a popular choice among parents looking for an alternative to rent, or for investors looking to take advantage of the constant turnover a college town brings.  But it’s not for everyone – if you don’t expect to own the home for more than three years, I would caution you to run the numbers with your real estate agent very, very carefully.  Not every property will produce cash flow, and if your time frame is less than three years than you need to decide if the purchase is for investment purposes or for convenience.

The article notes:

  • room and board rates have increased more than 4% – Virginia Tech and Radford rates can be found here
  • the average cost for a four bedroom, two bath property in a college town is less than $250000

Average sales in Blacksburg and RadfordTo compare, I took a quick look at the average cost for four bedroom, two bath properties in both Blacksburg and Radford over the last few years, and the numbers line up with what’s reported in the article.  In Blacksburg the average price is $254000 in 2010, while in Radford it’s $156000.  Pretty close to what’s reported in the article.

Interested in investing in the Virginia Tech, or Radford University, markets?  Let’s talk – we can run a couple of different scenarios and see how the numbers bear out, whether for single or multiple properties – even apartment complexes.