Hey guys, did you know that the average rental price for a two bedroom home across the country, believe it or not drum roll is...
Can you imagine that? It's incredible!
But at that level, how much house could you buy? That's an interesting question. And it's a question that we can all answer.
So the $1,700, if you had 20% down with an average mortgage today would buy you a home priced at about $455,000, which is a shocking high number.
You know why that's so high? Because interest rates have dropped again to a 60-year low.
So instead of renting, somebody can actually go out and buy a house for $455,000. Now that's assuming they had 20% down, but let's assume they don't.
Let's assume they only have 3.5% percent down, which is a typical FHA loan. That might cut that number down by another a hundred thousand so maybe they could afford $355,000.
But wouldn't that be far superior to renting?
These are the kinds of conversations we...
The Wall Street Journal just put out an interesting article about a company called Invesco putting $5 billion into a hedge fund that's purchasing single family homes.
And they're not alone. There's another $6.5 billion dollars targeted with other hedge funds doing exactly the same thing.
Now, why are these hedge funds going after single family homes?
Well, they've identified that they can get a cap rate of as much as 6.8%. That's the target rate that they're comparing to apartment buildings and commercial — which is like the low sixes.
So what they're saying is: we're going to make money on this. And we're going to rent these houses to millennials that are choosing not to become homeowners.
What we need to do as an industry, number one is to recognize that we should be investing in single family homes as well. But also we need to encourage everybody that's not a homeowner today to get into the real estate arena and buy their...
Are a ton of foreclosures about to hit the market?
The answer is absolutely not. Let me tell you why:
This is a myth that's happening among a lot of renters. People that don't own homes yet are all waiting for the shoe to drop and a bunch of foreclosures to hit the market. Let me tell you why it's not going to happen:
There is something called forbearance. And a lot of people did tap into it at the beginning of the pandemic. The experts thought that about 30% of mortgage holders would need to tap into it at the beginning of the pandemic. In other words, forbearance is where a lender gives you some level of grace.
They say, "Hey, you can stop making your payments for a while, or you can make a minimum payment or we'll tack on your payments to the end of the loan." There are a lot of different variations to it.
But the government said they want everybody to have a six-month opportunity if they've been struck by COVID or...
In a recent study conducted by the National Association of REALTORS - The Aspiring Home Buyer Survey - it was found that 84% of non-owners would like to purchase a home in the future.
How many opportunities does this create in your market? Check out this quick video to see how with a little research you can discover just how many potential aspiring home buyers are sitting in your market today.
Considering the fact that 32% of all real estate transactions occur with a first time home buyer. The potential market size even in a relatively small market can be absolutely massive.
What's stops renters from moving forward with their goal of being a homeowner?
Often they need a REALTOR to give them a road map for success. This includes partnering with a strong local lender, conducting home buying webinars and seminars, creating a powerful buyer presentation, and incubating buyers as they put themselves into position to purchase a home.
To get started check...
You know someone that is a renter...why aren't they a homeowner?
Demographically most renters are young adults, Millennial's who have not yet crossed the threshold into becoming a homeowner. Why? Many believe (49% in a recent study) that they need a 20% down payment. Wrong! The average down payment on all homes last year was only 5%!
But here is the good news 72% of Millennial's have set home ownership as a priority in their life - above marriage, having kids, and even traveling. What they need is a real estate professional who can help guide them through the process and steps of achieving one of their key life goals.
Watch this quick video to learn the top 5 Reasons Millennial's Should Stop Renting and Buy a Home!
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