Investments

BUY A HOME

The buying process incorporates many different people in many different steps. It begins with the decision to buy. As simple as that statement seems, the right time to buy may not be when home prices are lowest. Many factors such as income, family, marriage, and independence come into play when making that decision to buy. When searching for a home, we always recommend the help of a real estate agent. Whether you want them to play a large role or a small one, it is always good to have someone look out for your own interests. Once a home is found, an inspection, appraisal, and mortgage must be obtained. As escrow closes, plans to renovate and clean the new house should be made. Once the house is ready for move-in, the final step of packing and unpacking complete the experience of buying your home!

FIRST-TIME HOMEBUYER

There are a few challenges people face when buying their first property. Most see their biggest challenge trying to finance the house. Save a down payment and pay off debts. Many think the only way to get a down payment is to save at all costs. But paying off credit cards and other debts at the cost of your down payment will help you in the long run. The rates of home loans have always been lower than credit cards, so why not pay off the higher rates first. In addition, banks are more leery of first-time homebuyers as they have no history of making large sum payments. They usually charge higher interest rates to account for the lack of history. Finally, make sure you check you credit history early. Any mistakes or problems can be fixed prior to the loan application to boost your score.

2ND HOME/VACATION HOUSE

Many people like to spend vacations or weekends at the same place. A 2nd home can give you the flexibility of always having a place to stay and still enjoy the benefits of owing real estate. These homes can be purchased by people looking for their retirement home. They can be bought by families for a getaway spot. 2nd homes can even be rented out as an income property until you plan to go there. These homes usually give people their first taste of real estate investing and the many benefits of not trying to book a hotel.

RENTAL

The rental is a powerful piece in real estate. Residential rentals give us our independence. Commercial rentals give us financial freedom. By signing a rental agreement, you start in hopes of buying the house or shopping center later. Setting the stage for future goals, renting is the stepping stone to owning real estate.

Leasing Renting

LEASING

Commercial units are good for businesses looking for tax benefits and easy management from leasing. Costs are usually less to lease versus buy for small businesses. Monthly costs of rent are less, as well as building maintenance in some cases. There isn’t the headache of managing if you are in a shopping center. Many of these units are not publicly advertised so using an agent can help tremendously in finding good locations and high traffic.

FIRST TIME RENTERS

Renting residential units lead you to home ownership. Learning to live with neighbors, taking care of your own chores and expenses, and the independence of being on your own are all important to a healthy life. Using an agent to find a rental property guarantees you find the right neighborhood, location, and save time searching for properties. We also help examine the lease for liability, make sure you negotiate a good price, and assure you get everything stated in the lease.

NEW CONSTRUCTION

Many commercial complexes are build-to-suit. This usually entails a long term lease written for the benefit of the owner and the tenant. The tenant gets a custom building for their business, while the owner gets an extended lease period. New construction commercial can become tricky. Loans need to be secured for the land, the construction, and the post-construction building. All this financing must follow strict timelines and sometimes quick financing. Bridge loans and hard-money lenders may play big roles in a build-to-suit commercial complex.

Constructing New House

HOME VALUES

There is no exact value on a property. The value system for residential real estate is market value, the price someone is willing to pay for a property. Obviously, that price will differ from person to person. We see that in how our neighbors sell their homes. One will sell for less even though it is in better condition. They just couldn’t find a buyer to give them more. So how much is my property worth? Most banks and lenders will state a range of value. All appraisals, broker BPOs, and agent CMAs are opinions of value. They state a specific value number, but state the number is an estimate. As long as this value estimate is within the range, the price is good with the banks and lenders. The valuation process is complicated to say the least.

RESIDENTIAL

Types of residential units include single family homes, 2-4 unit apartments, condominiums, townhomes, co-ops, and PUDs, planned unit developments. These are all properties in which the owner usually lives in the home. Residential property is usually the first real estate investment people make. Residential property provides a good tax shelter and is a good long term investment. Home ownership should be a life long goal for everyone.

RESIDENTIAL UNITS

A residential unit is any multi-unit complex consisting of 2 to 4 units. These are considered by banks as residential and are given favorable interest rates compared to commercial units. These are great for those looking to begin investing in real estate. Owners can start by living in a unit, as rents increase the owners move out and keep the building as a rental property. As a rental property, positive cash flow can generate passive income as well as provide you with more and different tax benefits. Consult your CPA on the benefits of owning real estate.

CONDOS & TOWNHOMES

Let’s start with the definitions. A townhome usually refers to an attached unit with no neighbors above. These units may have yards, but the biggest benefit of townhomes is the lack of noise from the upstairs neighbor. Condominiums are all other attached homes. They include high rise towers, row and garden style complexes, and usually some amenities such as pools, gyms, and BBQ areas.

When trying to purchase any of these properties, the first thing you should know is ownership consists of buying only the airspace. All these properties consist of the space between the inner walls of the unit. The roof, plumbing, and common areas belong to the HOA and are maintained by the HOA. That is not to say these items should be overlooked. Make sure to inspect not only the unit itself, but all areas covered by the HOA. A leaky roof, though covered by the HOA, may damage your personal items later. In addition to the physical items, try to contact the HOA. Ask if any units are late on payments, how long they have been late, and assess the HOA. An HOA that communicates well when buying will also communicate when there are problems. Finally, make sure any restrictions imposed by the HOA will be lifestyle changes. Do they allow pets? Which pets and what size? Are there noise restrictions? All these are important items to add to a checklist when looking for a property governed by an HOA.

APARTMENTS

Multifamily apartments are complexes with 5+ units. They are all residential units with no retail space. Income is generated from rents and on-site facilities. Owners can install laundry rooms, vending machines, gyms, additional parking, storage spaces, pools, and spas for additional income. Apartments are usually steady income as the large number of units offsets the vacancies. Optimal apartment units are approximately 25-50 units. They provide maximum income versus expense from our experience. Loans for apartments are redily available as this is one of the most common types of commercial real estate.

COMMERCIAL

Commercial real estate encompasses all real estate that is used solely for business. From factories to warehouses to apartments, the list of commercial types is extremely long. KKW Financial, Inc. focuses on Tier I and Tier II properties. These include multifamily apartments, mixed-use, office, retail, self-storage, light industrial, bed & breakfast, warehouse, mobile home parks, and automotive. We can service other properties and take on these clients on a case by case basis. We can broker transactions nationwide, with specialties in California, Oregon, and Texas.

 

MIXED USE

The mixed use building consists of residential units and commercial units. The most common type we see today are retail type commercial on the first floor with residential, condo type units on the floors above. Much of the new construction in urban areas consist of mixed use buildings. Many of the mixed use buildings are found closer to urban centers where land is at a premium. These units give residents the ability to live closer to work, have retail amenities at their doorstep, and live in a newer building. These units give the commercial stores regular customers and exposure in the urban environment.

SHOPPING CENTERS

Shopping centers include units in which all are used solely for business. Strip malls, plazas, and mini-malls are all examples of shopping centers. Smaller centers usually have independent businesses renting out space. Larger centers usually have “anchor stores,” larger franchises, to pull in customers for the smaller businesses. This genre can range from one unit to large centers with a Walmart or Home Depot anchor. Leases for these properties are usually written for numerous years, turn-around is usually low.