Thursday, August 13, 2020

Will Healthcare Loans Take Away From Mortgage Loans?

 It was only a matter of time before a money company would figure out how to finance healthcare costs, especially with everything we are all facing at this time in our lives.

In theory, this company (described in the article linked at the conclusion) has an excellent idea in terms of enabling people to be able to pay off exorbitant health care costs over a period of time.

From the standpoint of impact, the guess is that real estate will be the industry to feel the negative impact from this idea. If and when this healthcare financing takes off, it is likely that thousands of people will receive these loans. Chances are the healthcare costs could be well into five figures and perhaps into six figures in come cases. 

Those are loans which will be the equivalent of a mortgage for these thousands of people. Logic tells us that if thousands of people now have healthcare loans which are equal to what a mortgage would be, the likelihood of also carrying a mortgage drops significantly.

Obviously, the need for personal (or family) healthcare financing is not a choice or an option like a mortgage is. Regardless, the odds are that people will concentrate on spreading out healthcare payments takes priority over buying vs. renting or combined living with other family members. 

As a result, this approach could be good for landlords and not good for sellers.

Tuesday, August 11, 2020

The New Second Home Is A Temporary One

 It is an interesting finding that "high end" second home sales are considered to be on the rise. Instead of incorporating this into a market trend, it would be better to consider the impact on the future.

My take is that people are not doing this as a real estate investment or to have a "second home" for the long term. The longer these 'buyers' can work from home (or without having to constantly commute to an office location), the lower the chances of returning to that status.

As soon as they learn they don't have to "return" to their current city home (the 'first' home in this scenario), the next step will be to place the 'first' home on the market. The "second home" will become the primary residence. 

If, for some reason, they need to return to commuting, the "second home" goes back on the market or becomes a rental property.

You heard it here first.

Thursday, August 6, 2020

Think Before Marketing Property Amenities

With all due respect to this listing agent, I'm going to use this example to point out the need to make every single property description as unique as possible while maintaining focus on the overall presentation.

This home (linked below) is promoted as a "custom built dream home", which could very well be the case. However, the property also contains a hangar and an airstrip.

It is true that would be something that is a part of a custom built home and property. However, those features are, if I may venture to guess, not likely to be "dream home" amenities for the majority of buyers.

In addition, one of the first facts provided in the description is that the location is "45 minutes from O'Hare Airport".

First of all, being 45 minutes from anything is not something worth highlighting. But that point is overruled by another question. If this property contains a hangar and airstrip, why does it matter where the nearest full sized airport is?

My point is that further in, you see that this home and property do have many desirable amenities. In order to appeal to a larger pool of potential buyers, those need to be pointed out well ahead of the airplane and airport facts.

It is not always what makes a property unique. It is identifying the most likely selling points before publishing the description.

Unless this was changed since it's 8/6/20 posting, here is the description in question:

Monday, August 3, 2020

A Well Written Case Study - Almost

From having performed several high end case studies myself over the years, I have come to appreciate a well written version from others.

This one, coming from a 1031 Exchange company, does a solid job of telling one side of the story along with showing how and why the exchange came to be.

However, as I see it, there were possibilities from both sides of the exchange to be shared which were not. From a marketing standpoint, a Case Study (or marketing piece, which, in reality this is) becomes even more effective when it shows how both sides "won" instead of just one side.

When you open the (below) link, you will see the story about exchanging out of a Los Angeles apartment complex suffering from below market rents. This is not to say the owner of this property was not suffering headaches because of it. It is not an easy situation.

The point here is that there may have been other options to use in terms of finding a buyer (or to present as a 1031 possibility). Although this may have been done, it was not shown within the Case Study, which is important to its overall effectiveness.

A long term investor faced with current year capital gains (or other tax consequences) might see value in being able to extend current leases now to assure having a certain number or percentage of occupied units three years from now. At the same time, losses could be shown for the process of renovating the available units, which (hopefully) leads to being able to request market value or higher rents going forward.

Showing a tax loss "now" while having a cash flow plan within five years makes the apartment building situation, as described, into an investment (or exchange) with more potential than is shown in this Case Study.

Consequently, the Case Study could show how both sides "win" on the exchange, instead of making a potential client want to make sure they are on the "winning" team.