When you’re a Hampton rental property owner, it is essential to be familiar with the newest real estate terms. The real estate market is facing significant changes; keeping up with these changes can help you grow your portfolio and protect your investments. You can use it to your advantage when haggling with prospective tenants or buyers. It’s essential to understand the following six terms in a market that is competitive. Let’s examine each of them.
iBuyer
A real estate firm that uses technology to make instant offers on homes is called an iBuyer. These businesses have grown in popularity in recent years due to the convenience and speed with which homes can be sold through them. Given how much more convenience iBuyers provide to homeowners, they have in many ways fundamentally altered how people buy and sell residential properties.
D.O.M.
DOM means “days on market.” This metric measures the length of time a property has been on the market. The DOM of a property is calculated from the day it is put on the MLS (multiple listing service) to the day someone who wants to sell signs a contract. A high DOM may be a warning sign, but it may also be the result of seasonal market fluctuations (homes typically sell faster in the spring than in the winter). By checking the average DOM for a given region, you can determine whether the market is weak (high average DOM) or strong (low average DOM). Generally, a weak market favors buyers.
R.E.O.
REO stands for “real estate owned.” This term refers to a property that has been foreclosed and is now in the lender’s possession, typically because it did not sell at the auction. Given the fact that many banks and lenders would prefer to sell a property than hold it, REO properties can offer investors the option to purchase below market value. It is critical to mention that financing can be challenging because these sales are frequently made “as-is.”
FHA 203k Rehab Loan
The FHA 203k rehab loan is a government-backed loan that enables buyers to finance the acquisition of a home in need of repair. This kind of loan can be used to finance renovations and repairs, making it a desirable option for investors seeking to acquire properties in need of repair. Additionally, it can be applied to update older homes’ energy systems. However, the addition of a swimming pool or other “luxury” upgrades are not intended for this loan.
D.T.I.
DTI pertains to “debt-to-income” ratio. This metric is used by lenders to calculate the percentage of your income that is allocated to paying off debt. The DTI is computed by adding your monthly housing payment and your overall debt expenses, dividing by your monthly gross income, and multiplying by 100. It is made to determine how much of a mortgage you can afford. A high DTI can make it hard to qualify for a loan, so it is essential to keep this number low. A lender favors borrowers who spend 36% or less on monthly debt payments and 28% or less of their monthly income on housing.
E.M.D.
“Earnest Money Deposit,” or EMD, is another term you’ll also frequently come across. This deposit is required from buyers when submitting an offer to purchase a property and is occasionally referred to as a “good faith deposit.” An EMD can convince a seller to accept an offer by demonstrating the buyer’s seriousness and eagerness. In most situations, the amount of EMD supplied is between 1 and 5%, although this amount can vary depending on the situation and the competitiveness of the market. The EMD is typically kept in escrow and used, if the deal closes, to reduce the cost of the house.
Clearly, Hampton property managers must be familiar with a variety of real estate-related terms. Knowledge is power in a market that is competitive.
Your greatest asset in a dynamic rental property market are the professionals by your side. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.
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