It’s crucial to keep abreast of the most recent real estate terms as a Santa Fe rental property owner. The real estate market is facing significant changes; keeping up with these changes can help you grow your portfolio and protect your investments. Furthermore, it can help you make rational choices when negotiating with prospective buyers or renters. In a competitive market, it is important to know the six terms listed below. Let’s observe each of them more closely.
Real estate companies are called “iBuyers” when they use technology to submit immediate offers on properties. These businesses have grown in popularity in recent years due to the convenience and speed with which homes can be sold through them. In many ways, iBuyers have drastically altered how people buy and sell residential properties, as they provide homeowners with significantly more convenience.
“Days on market” is referred to as DOM. This metric determines the length of time a property has been up for sale. The DOM of a property is determined from the day it is put on the MLS (multiple listing service) to the day a seller enters into a contract to sell it. 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). Additionally, by examining the average DOM for a specific region, you can discern which market is strong (low average DOM) or weak (high average DOM). Generally, a weak market favors buyers.
“Real estate owned” is what REO stands for. This term refers to a property that has undergone foreclosure and has come under the ownership of the lender, usually as a result of it not selling at the foreclosure auction. Since many banks and lenders would prefer to sell a property than hold it, REO properties can offer investors the chance to buy 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
Buyers can finance the purchase of a fixer-upper with an FHA 203k rehab loan, which is a government-backed loan. Considering that this kind of loan can be used to pay for renovations and repairs, it appeals to investors looking to buy properties that need work. It can also be used to improve the energy efficiency of older homes. It is not intended for “luxury” extras such as a swimming pool.
DTI is the acronym for “debt-to-income” ratio. This metric is used by lenders to determine how much of a borrower’s income goes toward debt repayment. DTI is calculated by adding your total monthly debt payments and housing costs, dividing that sum by your gross monthly income, and multiplying that result by 100. It is made to determine how much of a mortgage you can afford. It can be hard to qualify for a loan if your DTI is high, so it’s vital to have this number low. Borrowers who pay 28% or less for housing and 36% or less for monthly debt payments are typically preferred by lenders.
EMD is an acronym for “earnest money deposit.” Also known as a “good faith deposit,” this is a deposit that buyers are required to make when making an offer on a property. An EMD can help persuade a seller to accept an offer by showing the buyer’s seriousness and urgency. The percentage of EMD offered varies depending on the circumstance and the level of market competition, but it typically ranges between 1 and 5%. If the deal closes, the EMD is typically kept in escrow and used to reduce the cost of the house.
As is evident, Santa Fe property managers must be knowledgeable about a variety of real estate terms. Knowledge is power in a market that is competitive.
Your greatest asset in an ever-changing market for rental properties are the professionals at your disposal. Contact us online to learn how you can gain access to insider knowledge and the best asset management services available.
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