Roadmap with Irina - April 2024

Market Snapshot

Investments with HELOCs

Quality Time

MARKET SNAPSHOT

Hi Iren,

In March of this year, the median sale price for single-family homes increased by 5.5% since February and 14% since March of 2023, almost returning to the March 2022 level. The number of closed sales was nearly 50% higher compared to February, with homes spending fewer days on the market. It's great to see that inventory has doubled; however, this increase unfortunately didn't reflect in the sale prices.

The median sale price for condos and townhouses rose by 6% since February but remained below the 2022 level. There were also more closed sales in March, and the number of new condos and townhouses on the market doubled.

Although there were more homes for sale in March and the first half of April, homes continued to receive multiple offers and sold for an average of 5-10% over the asking price. However, the number of offers received was lower.

Currently, there are 1,443 active properties on the market in Santa Clara County, including 359 homes that are officially getting ready for sale. Additionally, there are properties that have not been announced yet, so hopefully, the inventory will continue to grow. Historically, by the end of May, market activity decreases due to the end of the school year, and the summer market is typically calmer than the spring one. Let’s see how it plays out this year.

If you are thinking about buying or selling, let’s connect, talk about your options, run some numbers, and see if this is the right time for you. Call me, I am always here for you.

Questions? Comments? Contact me!

HELOC ON AN INVESTMENT PROPERTY

I read an interesting article about using HELOC on an investment property to buy more investment written by David McMillin. I want to share it with you in case you are considering investing in real estate.

“A home equity line of credit (HELOC) on an investment property is a loan taken out against a piece of real estate that you use to earn income or a financial return. So, instead of taking out a HELOC on the property where you actually reside, a HELOC on an investment property leverages a place where you do not live as collateral to borrow money.

While many borrowers have been interested in HELOCs over the past two years, HELOCs on investment properties aren’t nearly as common — or as easy to get. The vast majority of HELOCs are taken out against primary residences; lenders are more comfortable with a loan against the actual roof over your head because they know you’ll prioritize repaying that loan.

However, some lenders do offer HELOCs on investment properties. Here’s how they work, and how to decide if they’re a good strategy for your financing needs.

How do you get a HELOC on an investment property?
Getting a HELOC is similar to getting a mortgage (in fact, HELOCs are a type of second mortgage). Here’s how the application process works.

1. Know your finances.
Before you apply for a home equity line of credit, you’re going to want to estimate how much equity you have. Property values have continued rising this year – albeit more slowly than they had been during the peak of the pandemic – so you’ll want to get a sense of what your property is worth versus how much, if any, you have left to pay on the first mortgage. The difference between how much you owe and the investment property’s fair market value equals, roughly, the amount of your equity stake. In ascertaining the value, you might want to consult a real estate professional who specializes in similar properties to issue a broker price opinion on yours.

2. Shop around to find the best deal.
Shopping around for a HELOC on an investment property is going to be more limited than for the regular, residence-based variety: There simply aren’t as many lenders that offer these lines of credit. Still, there are always choices, and it’s always important to compare. Try to find at least three lenders, and try to suss out how practiced they are in this sort of HELOC. Look at the APR that each lender offers, and be sure to scrutinize the fine print to understand whether there are additional fees such as a penalty for closing the line of credit early.

3. Apply.
When you’re ready to officially apply for a HELOC, be prepared for the kind of complete under-the-hood type of financial scrutiny you would receive with any type of request to borrow a sizable chunk of money. A lender will look at your credit score, your debt load, your cash flow, your cash reserves and every other detail about your finances to determine a) whether they will loan you the cash and b) how much they’re going to charge you to borrow it. The lender will also probably do an appraisal of your property, which sets the official value on it. In determining its worth, they’ll look at its condition and also the amount and sort of income it generates.

4. Close.
Closing on a HELOC is typically a much faster process than closing on a traditional mortgage. Some lenders will close in as little as three days, and you can access the cash within a week.”

I hope this subject interests you, so please read the whole article HERE. If you are thinking about buying an investment property, let’s hop on a short conversation to see how to get started.

QUALITY TIME

Last week was very unique for me: I had the chance to spend one-on-one time with two of my kids. We went to Death Valley with my youngest daughter, and then I spent a few days in Philadelphia with my son. Spending one-on-one time with our kids is crucial, and finding uninterrupted time is challenging. So, the best way to do it is to go away together for a few days.

I had been to Death Valley a few years ago with my son and a group of teenagers. Since then, I've wanted to show this place to the rest of my family, but everyone was busy, so only two of us could go this time. On the way there, we stopped at the Cat’s Heaven place in Dunlop to see the wild cats (my family is crazy about cats). It was amazing to see the usually dry Badwater Basin with water and walk on the salt flats. We hiked in Golden Canyon and Natural Bridges, walked on sand dunes, drove through Artists Palette road, visited Zabriskie Point, walked on the edge of Ubehebe Crater, and did many other things. We talked about everything: cats, geology, relationships between people, our family, and books. Rita read “Fahrenheit 451” at school, and they watched the new movie in class, but she didn’t understand a few things, so we listened to it while we were driving. It was great to refresh my memory and discuss the book with her.

On the way back home, Rita said that it was the first vacation when nobody argued, complained, delayed us, or interrupted our conversations. We spent five full days together, but it felt much longer.

On Wednesday, we safely got back home, Rita rejoined the family, and I had a plane to Philadelphia to catch. My son had a meeting with his professor and other mathematicians, and after that, he wanted to stay for a few days to see the city and visit the most important historical places. It was a great opportunity for me too, so I couldn’t miss it. I miss the time when he lived with us, so having him around for a few days was a blessing.

We stayed at a hotel in a magnificent building right next to Independence Hall, so we started exploring the city right away. During those three days, we visited as much as we could: Independence Hall, the Liberty Bell exhibit, the Museum of the American Revolution, the Seaport Museum with the submarine and old cruiser ship, and the United States Mint. We walked through City Hall and Penn University, ate their famous cheesesteaks and barbeque ribs in Reading Terminal Market, and tried local beer in a pub on a river bank. And we talked a lot about everything: American history, our family, my son’s study and math meeting, our plans for future trips, food, and much more! So many things to remember from this trip!

I don’t know how many steps I took per day for the last week, but my knees remind me of the excessive walking and hiking every day. However, now I have a legitimate reason to skip my tennis practice tomorrow.

Yes, I worked every day during my trips. I canceled all my coaching calls and focused only on the most important tasks. Rita helped me answer text messages and emails while I was driving, so she got involved in my work a bit. I even submitted an offer from the Philadelphia airport, and we got it accepted a few hours later! So, the trips were not only entertaining; they were very productive too.

My older daughter is patiently waiting for our special trip to Italy this summer, just the two of us, and I am sure this will be another unforgettable adventure. Kids grow up so fast and leave us. We won't remember how much money we spent on any trip, but we will remember forever what we felt during these travels and who we were with. So, pick your travel companions very carefully and make great memories wherever you go!

Always yours,
Irina