Guest Blog: Adventures in Real Estate By Carlin Felder, Licensed Real Estate Broker

Often when the equity markets get volatile, investors scramble to find ‘safe’ places to park their cash. Remember that for long term advisors, holding a diversified portfolio and sticking to it even when things get tricky has historically resulted in positive returns. The benefit of investing in the equity markets are many: over time, your portfolio value may go up, if you have a taxable (ie non retirement account) you asserts are generally liquid, and if you want to make adjustments to your holdings, add other sectors, trim stocks, you can. But some investors who can do both may also consider investing in real estate. Investing in real estate can be advantageous because while it’s not a liquid asset, it is generally uncorrelated to the equity market.

In this guest blog, I asked my friend and colleague Carlin Felder three common questions about investing in real estate and what to consider when looking for a property. Carlin is the co-leader of The Hudson Upstate Team at eXp Realty and leads a dedicated team of real estate agents serving buyers, sellers, and real estate investors across the Hudson Valley from Westchester to the Catskills.

How should first time homebuyers prepare when starting their home buying journey?

Carlin:

1.   Start by getting clear on your finances. I always recommend speaking with a local lender in the area.  A local lender, like a credit union or local bank, will know the local market and what to expect in your area throughout the buying process.

2.   It's essential to know what your budget is so that you consider a property with your income and expenses in mind, and not what you are approved for at the top end of your budget.

3.   Speak with a trusted mortgage lender early, even before you start shopping, so you understand your options. If you need to save a little more money for a larger down-payment your lender can help you set some financial targets and help you understand how 20% down vs. 5% down will impact you financially.

4.   The lender will advise you on the closing cost estimates and make sure you are able to close on the home of your dreams with the money you have put aside or give you an idea of how much more you'll need to save.

Bottom-line: Ask questions, take your time, and stay grounded in your goals but be flexible. The market favors sellers right now in the Hudson Valley, and it may take some time to close on a home.

In light of today’s real estate market, what should home buyers expect that might be different from other times?

Right now, we’re in a strong seller’s market, and that means heavy competition for home buyers across the board. Homes are getting multiple offers within days, sometimes hours, and it’s not uncommon to see offers well over asking price. Even cash buyers, who used to have the upper hand, are finding themselves outbid.

For first-time buyers, this can feel discouraging, but it’s important to stay patient and try to see a lot of homes and submit a lot of offers. And expect to move quickly when your offer is accepted! A trusted agent can help you strategize and stay focused so you’re not chasing houses as they hit the market, and you’re setting yourself up for a win.

Another tough reality:  Most listing agents are now advising sellers to list homes as is, meaning sellers aren’t making repairs or concessions. That shifts the burden onto buyers who are already stretching their budgets just to compete. It’s a lopsided market and, frankly, not very fair, but knowing what to expect helps you stay empowered and grounded.

What are the top financing options when purchasing a property?

When it comes to financing a home, there’s no one-size-fits-all answer, but a few options tend to be the go-to choices.

1.   The most common is a conventional mortgage, usually a 30-year fixed-rate loan, which offers stability with predictable monthly payments.

2.   For some buyers, especially those planning to stay in their home for a shorter time, adjustable-rate mortgages, or ARMs, can be a good fit with lower initial rates, but the history of ARMs has left a bad taste in most people's mouths. It's important to understand when an ARM may be a good option so speak with your lender about this option.

3.   First-time buyers should explore government-backed loans like FHA, for first time home buyers, and VA if they were in the military, and USDA loans which are designed for more rural areas and have some location restrictions.

And while cash used to be king, these days a hefty down payment well over 20% can still make sellers take notice. Sellers tend to prefer a larger down payment as they think it means the buyer is more qualified and the deal is more secure.  However this isn't always true. Consider that a qualified buyer with 3% down may have better credit and more money in the bank than the buyer with the larger down payment. They may want to let their money work for them in other ways than parking it in their primary residence.

The key to deciding how to finance your home purchase is by working with a knowledgeable lender and real estate agent who can help you figure out the best path for your situation and goals.