first

Apache is functioning normally

Apache is functioning normally

There are plenty of reasons to love living in Louisville, but will the Derby City fit your lifestyle? Let’s see how the cost of living and culture stack up.

Set alongside the Ohio River, Louisville is a great city, full of history. Home to the Kentucky Derby, and a lot of bourbon, Louisville offers up urban amenities, parks, foodie-friendly restaurants and more, all at a relatively affordable cost of living.

All combined, the cost of living in Louisville is 4.9 percent below the national average. This is almost identical to Lexington, the other big Kentucky town, and exactly the same as its close, big-city neighbor, Cincinnati.

This means that all the key factors that contribute to the cost of living in Louisville should be pretty reasonable as well, but sometimes we find surprises. Let’s take a closer look at how a budget could play out.

Housing costs in Louisville

Overall, housing in Louisville is very reasonable. Even with apartment rents rising significantly over the last year, housing costs are 21.7 percent below the national average. This is identical to costs in Lexington and less than a percentage point below costs in Cincinnati.

A one-bedroom apartment in Louisville averages out to $1,128 per month, up 19 percent over last year. A two-bedroom apartment, up a little less with a 24 percent increase, has an average monthly rent of $1,287. To compare, average apartment rent in Lexington is $1,262 for a one-bed, and $1,453 for a two-bed.

Equally affordable are home prices for those who are looking to shift away from renting. The median sale price in Louisville is $239,950, up 8.1 percent over last year.

Apartment hunting around Louisville

Throughout Louisville, you’ll find no shortage of great neighborhoods to call home. Even better, with such a low average rent, you’ll have a large number of locations accessible to almost any housing budget.

At the high end of the rent spectrum, you’ve got The Highlands. This popular neighborhood is considered one of the most unique areas in Louisville, and is also home to “Restaurant Row.” The average one-bedroom rent here is $1,558 per month.

More closely aligned to the city’s rent average, Clifton Heights, has one-bedroom apartments with an average monthly rent of $914. This neighborhood boasts more of an urban feel, with access to everything from a botanical garden to parks, galleries, bars and restaurants.

Other popular neighborhoods include the highly walkable Deer Park, with an average one-bed rent of $1,199. Germantown, whose rent is nearly one third less, on average, still holds an annual Oktoberfest. At $795 in average rent for a one-bed, Tyler Park has a 13-acre green space at its center. Even Clifton, with all its boutiques, local shops and restaurants has an average one-bedroom rent of $695.It’s nice to know you’ll have options when apartment hunting in Louisville.

Food costs in Louisville

With the Kentucky Derby as the biggest event of the year in Louisville, you can’t talk about food without sharing the ingredients for a mint julep. It’s super easy to make. All you need is bourbon, simple syrup, fresh mint and crushed ice. Muddle the first three ingredients, add the ice and you’re good to go.

Another unique food you may encounter while eating out in Louisville is a hot brown. A favorite brunch entree, this is actually a warm, baked, open-faced sandwich consisting of a single slice of bread, turkey, tomato, bacon and Mornay sauce, which turns creamy and bubbly when heated.

When you’ve had your fill of drinking and eating out, though, it’s good to know that the cost of living in Louisville when it comes to groceries is 6.7 percent below the national average. This can make your shopping list pretty affordable, especially with the average price of staple items like a loaf of bread ($3.79) or a pound of ground beef ($5.64) both costing less than they would in nearby Lexington.

Utility costs in Louisville

Louisville has four seasons that are very distinct. You’ll see peak temperatures in the hot and humid summer and extreme colds in winter. This movement up and down the thermometer means there’s a good chance your heater and AC will take turns working pretty hard.

It’s a good explanation for why utility costs are 7.3 percent above the national average, and a typical energy bill can come to $205.56. This average is over $55 more than what you’d pay in Cincinnati, just two hours away.

Transportation costs in Louisville

You definitely need a car to get around Louisville. Even with a bike score of 51, the rating only means some places are accessible by bicycle. The walk score is even lower, at 46, so don’t plan on many walkable spots (though there are some).

Having a car though means having to deal with parking. Louisville has plenty of metered spots with a cost of $2 per hour for the first two hours and $3 an hour for any additional. Meters are free on Sunday though. If you’re headed to the downtown area, you can also park in one of 15 parking garages and two surface lots.

If public transportation is more your thing, and you live close to it, the Transit Authority of River City, or TARC, offers a long list of local, frequency, express and circulator bus routes. A single-way cash fare is $1.75, but most locals use a myTARC card, paying only $1.50 per ride. You can also buy a MyTARC card pass. A seven-day pass costs $15, while a 30-day pass is $50.

Regardless of how you get around, when it comes to the cost of living in Louisville for transportation, you’re paying 18.8 percent above the national average. This is a 7.4 percent increase over last year and almost 20 percent more than people are paying in Lexington.

Healthcare costs in Louisville

Healthcare is a big industry and major employer in Louisville, but when comes to being the patient, the final bill can get a little scary. However, that’s not often the case here, where healthcare costs are 23.9 percent below the national average. This is an 8.2 percent decrease over last year.

How this impacts your personal healthcare costs will vary though based on your insurance coverage, your medical history and your current healthcare needs. Everyone’s costs are different in this category, so it’s always good to budget accordingly.

To help, you can use average costs (without insurance) as a guide. That means in Louisville, a doctor’s visit is $82.20, a dentist visit is $88.33 and an optometrist appointment is $61.67.

Goods and services costs in Louisville

In Louisville, goods and services are 6.4 percent above the national average, so they can get a little pricy. While this total is slightly less than in Lexington, you still may pay more for certain extras than you would elsewhere.

For example, a movie ticket in Louisville is $12.28, while a haircut is $16.65. Grabbing a pizza out will cost you about $12.99, and a bottle of wine averages out to $8.49.

Taxes in Louisville

Kentucky is somewhat of a unique state when it comes to taxes in that it sets tax rates as a whole. Counties don’t add anything when it comes to sales tax, keeping the rate relatively low. In Louisville, and across the state, the sales tax rate is 6 percent. This means that for every $1,000 you spend furnishing your new apartment, $60 will go straight to taxes.

This same statewide approach is also applied to income tax. The entire state’s flat rate is 5 percent.

How much do I need to earn to live in Louisville?

With a lower cost of living in Louisville when it comes to housing, your biggest expense, it’s okay to assume you won’t need that much income to live comfortably. To get exact information on what you can afford when it comes to rent, take advantage of our rent calculator.

For a general estimate of what you’d need to make to afford an average-priced one-bedroom apartment, we’ll take the advice of most experts. They suggest you put about 30 percent of your annual income toward rent. Using this formula, at $1,128 per month, you’d need to earn $45,680 per year.

This is entirely possible given that the median household income in Louisville is $54,929.

Free things to do in Louisville

The affordability of Louisville becomes even better when you consider how much fun there is to have throughout the city for free. Louisville offers free activities that connect you to history, culture, the outdoors and more. Some places to consider include:

  • Filson Historical Society Museum: Giving free, guided tours every weekday at 2 p.m. your tour will include Ferguson Mansion and Wood Carriage House. The historical society itself works to preserve the history and culture both of Kentucky and the Ohio Valley.
  • Carnegie Center for Art and History: Free admission to this museum is something special. Here, art and history collide. Exhibits focus on the heritage of Floyd County as well as the visual arts.
  • Louisville Nature Center: Situated across from the zoo, free admission here gives you access to a sensory garden, rain garden, play area, nature library and a bird blind, where you can view birds through one-way tinted glass.
  • Big Four Bridge: A part of Waterfront Park, Big Four Bridge is a footpath that crosses the Ohio River, ending in Jeffersonville, Indiana. Originally a railroad bridge, it’s now the perfect place for a two-mile (per way) stroll.
  • Beechmont Open Air Market: Yes, you may end up tempted to buy some fresh produce or an artisanal candle, but a stroll through the market is totally free and a perfect Saturday morning activity.

You also have the option, when looking for free activities in Louisville, to take advantage of one of the more than 120 public parks throughout the metro area. Some sidle up to the Ohio River, and others are perfect pockets of green space, providing spots for picnics and relaxation.

Living in Louisville

First, you figure out if the cost of living in Louisville will work for you. Then, you start thinking about where you want to live in the city. Next, it’s time to craft a budget and you’re off, transforming yourself into a Louisville local. It’s as simple as that, made easier by the fact that overall, this is a pretty affordable place to call home. So, when are you moving?

The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of November 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.

Source: rent.com

Apache is functioning normally

Apache is functioning normally

As you may have noticed, updates about the ongoing remodel of our San Francisco Victorian have been rather few and far between these days. I’ve come to learn remodels are like molasses – they move at a pace you cannot control! And while progress is in fact being made, there’s not a lot of excitement related to rough-in plumbing, insulation or rewiring. I am getting super excited to share our plans as the designs are coming together! But in the meantime I thought it’d be fun to play what-if with some of my favorite designers. What if they had their hands on this house and could do whatever they wanted! I knew they’d have as much fun dreaming  of what could be done with the space as I have. So for the next few weeks you’re going to be treated so some major design inspiration from a bevy of design studs! I’m thrilled my dear friend and interior stylist extraordinaire Kirsten Grove is kicking things off with some serious kitchen inspiration!

To jog your memory, when it comes to the kitchen we’re basically starting from scratch because this is the house’s current “kitchen”:

 

This is the floor plan for our new kitchen:

While not a terribly big space, we hope to maximize storage with a separate pantry woot!. I’ve toyed with the idea of a kitchen island too. And I’m still debating what the cabinets should look like. And lighting?? Oh the lighting dilemmas. I am excited the kitchen will be directly connected to our living room via a breakfast bar. Obviously, it’s a very blank slate at the moment as we’re still in our demolition phase, so I’m excited to see what Kirsten thinks we might do with this design!

Kirsten’s Designer Take: Hi everyone! My name is Kirsten Grove and I am an interior Stylist/Blogger from Boise Idaho. I am a huge fan of Apartment 34 and I think the world of Erin and the team! She definitely has her work cut out for her with this renovation. But it’s something that I know she will successfully complete.

We all know that the kitchen is the heart of the home. Whether we cook or not, we all want the perfect kitchen. Of course they are the biggest money takers, but it’s well worth it at the end.

I have always been a fan of modern, minimal kitchens. Especially in older homes. The juxtaposition is always stunning! Right now cabinet slabs are on point. No molding, no panels. Just clean slabs. Paired with hardware or just kept plain, these doors are simple yet beautiful.

Here’s a kitchen with simple hardware that doesn’t take away from the doors. I also love the style of hood that mirrors the cabinets. It’s a nice, clean look. This same thing can be assigned with the refrigerator.

Another trend is two toned cabinets. Above we have a dark paint on the top and natural wood on the bottom. You could also do one color on top and another color on the bottom. It breaks the kitchen up and adds stylish personality!

Here’s another example of two-toned cabinets. This kitchen also has another favorite trend of mine. Square tiles! It’s a refreshing change from the classic subway tiles. White grout keeps it more traditional while dark grout keeps it modern.

Kitchens can be a lot of fun to design! Good luck, Erin! We can’t wait to see what you come up with!

I love that Kirsten named a few of my favorite kitchen trends – and a couple that just might make their way into my final kitchen design. But you’ll have to wait a little longer before I can reveal all of that. For now, follow more of Kirsten’s design savviness on her blog, Simply Grove!

Image 1 via Simply Grove  // 2 via 30 Collins // 3 via The D Pages // 4 via Emma’s Design Blog

%%youtubomatic_0_0%%

Source: apartment34.com

Apache is functioning normally

Apache is functioning normally

Sustainable living has become an increasingly important focus in today’s world, with individuals and communities alike seeking ways to reduce their carbon footprints. When it comes to building or renovating homes, sustainable practices and energy-efficient design have taken center stage. In response to this growth, several organizations offer certification programs to measure sustainability and push people to achieve more. But with numerous certifications and standards available, navigating the realm of sustainable building can be overwhelming.

Luckily, this Redfin article has everything you need to know. Learn what these programs are all about, and which one is right for your home. Whether you live in a house in Wilmington, NC, or are building a new home in Tampa, FL, read on to learn about the different certifications and requirements, so you can make informed decisions and choose the right path towards a greener home. 

LEED (Leadership in Energy and Environmental Design)

  • Focus areas: Whole building efficiency, including water, energy, materials, and air quality.
  • Property types: Commercial, residential, and public properties, and communities and cities. 
  • Benefits for homeowners: Pairs well with other certification programs and has a wide range of certification levels. 
  • Downsides: May not go far enough to reduce your carbon footprint.
  • Cost: $225 + additional fees. Pricing is reduced for members.

Established by the U.S. Green Building Council (USGBC) in 1993, LEED is arguably the most widely recognized green building certification system. LEED provides a framework for healthy, highly efficient, and cost-saving green buildings. It offers certification across a spectrum of building types and focuses on several key areas: sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, innovation, and regional priority. 

The four LEED certification levels include Certified, Silver, Gold, and Platinum, which correspond to the number of points a project earns across these categories. Buildings receive annual audits to ensure they continue meeting necessary standards.

For more details, read our definitive guide: What Is LEED Certification? Tips for Homeowners

ENERGY STAR

  • Focus areas: Energy efficiency.
  • Property types: Products; commercial, residential, and public properties. 
  • Benefits for homeowners: ENERGY STAR buildings require 15% less energy than standard buildings, meaning you’ll save money over the long run. 
  • Downsides: ENERGY STAR is a fairly basic certification that only applies to energy use. This is best paired with other certifications.
  • Cost: $0-$1,500

The ENERGY STAR certification is a joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy. It aims to help businesses and individuals save money and protect the environment through superior energy efficiency. Most people associate ENERGY STAR with efficient appliances, but it also applies to buildings and houses.

Buildings that earn the ENERGY STAR label have to meet strict guidelines for energy efficiency, typically making them at least 15% more energy-efficient than standard buildings. Apart from energy efficiency, ENERGY STAR also provides tools and resources for improving water efficiency. 

For more details, read our definitive guide: ENERGY STAR Certification: What Homeowners Need to Know

Living Building Challenge

  • Focus areas: Complete building and property sustainability and regeneration. 
  • Property types: Commercial, residential, and public buildings and properties, and neighborhoods and cities. 
  • Benefits for homeowners: The LBC provides the most comprehensive certification, so you can be confident your home is actively restoring the environment. Living Building Certification also applies to an entire property, while most others only apply to just the building. 
  • Downsides: It is extremely difficult and time-consuming to fulfill every requirement, and can be expensive. 
  • Cost: $50-$250

The Living Building Challenge (LBC), administered by the International Living Future Institute, is likely the most rigorous and comprehensive green building certification in the world. It uses a regenerative design framework that requires projects to operate positively instead of just passively. 

The LBC comprises seven performance categories, or “Petals”: Place, Water, Energy, Health & Happiness, Materials, Equity, and Beauty. To be certified, a project must meet a series of ambitious performance requirements over a minimum of twelve months of continuous occupancy. Because of its difficulty, only four residential properties have received full certification. However, the LBC offers other certifications, including Petal certification and net-zero building certification.

For more details, read our definitive guide: Living Building Challenge Certification for Homeowners: Pros and Cons

BREEAM (Building Research Establishment Environmental Assessment Method)

  • Focus areas: Whole property sustainability, including where materials come from and how much your home contributes to pollution. 
  • Property types: Commercial, residential, and public buildings and properties. 
  • Benefits for homeowners: Accessible worldwide.
  • Downsides: Not as comprehensive or flexible as some other programs.
  • Cost: Depends on the size and scope of the project. Assessors are also paid separately. 

Established in the UK in 1990, BREEAM is the world’s longest-running method of assessing, rating, and certifying buildings. BREEAM encourages designers, clients, and others to think about low-carbon and low-impact design, minimizing the energy demands created by a building before considering energy efficiency and low carbon technologies. BREEAM is comprehensive and also focuses on where products come from and who makes them.

Earth Advantage

  • Focus areas: Residential and low-income homes, and providing green home data for the general public through the Green Building Registry. 
  • Property types: Residential buildings. 
  • Benefits for homeowners: Extremely affordable and promotes sustainability in low-income developments. 
  • Downsides: Not as comprehensive as other certifications.
  • Cost: $0

The Earth Advantage Certification focuses on promoting sustainable building practices that improve the environment and society by creating better model codes, building standards, and certification systems. It certifies residential buildings, including single-family and multifamily, using different rating systems for both. Earth Advantage can also certify projects for LEED.

In general, Earth Advantage buildings are healthier, more energy-efficient, and offer a lower cost of ownership over the lifetime of the building. To receive certification, a home must meet stringent criteria across five categories: energy, health, land, materials, and water. 

SITES (The Sustainable Sites Initiative)

  • Focus areas: Planning, design, construction, and management of landscapes and other outdoor spaces. SITES does not verify buildings except in specific circumstances.
  • Property types: Commercial, residential, and public outdoor spaces. 
  • Benefits for homeowners: Promotes sustainable landscaping and healthy outdoor living. 
  • Downsides: Expensive and only applies to landscaping and outdoor areas. Best for large properties or paired with other certifications. 
  • Cost: $6,500-$9,500 (less expensive for members).

SITES is a sustainability-focused framework that ushers landscape architects, engineers, and others toward practices that protect ecosystems and enhance the benefits of ecosystem services. Landscape architects, designers, engineers, architects, developers, policy-makers, and others use SITES to align land development and management with innovative sustainable design.

SITES also partners with LEED to create complementary rating systems that you can use independently or in tandem. LEED applies to your project building and the site it is located on, and SITES applies to everything on your site, except your building (with a few exceptions). 

WELL Building Standard

  • Focus areas: Relationship between sustainability and human health, primarily in new construction.
  • Property types: Primarily commercial new construction, but offers residential as well.
  • Benefits for homeowners: WELL buildings are healthier for you and your family than many other certifications.
  • Downsides: It can be time-consuming or prohibitively expensive to incorporate WELL standards into an older building. 
  • Cost: $2,500 for registration + $0.16 per square foot of property.

The WELL Building Standard, founded by the International WELL Building Institute, focuses on building features that affect people’s health and well-being. Areas of concern include air, water, nourishment, light, movement, thermal comfort, sound, materials, mind, community, and innovation. The WELL Building Standard is the first standard to integrate human health and wellness into building certification.

WELL also partners with LEED to create a streamlined process for getting dual certification. 

Passive House (Passivhaus)

  • Focus areas: Reducing energy use in buildings.
  • Property types: Commercial, residential, and public.
  • Benefits for homeowners: Significantly reduced energy bills and comfortable indoor temperatures year-round. 
  • Downsides: Focuses entirely on energy use and is extremely rigid.
  • Cost: Determined by the examiner and varies widely depending on the square footage of the building. 

The Passive House Institute (PHI) based in Germany developed this certification system. Buildings that are certified as a Passive House must meet strict energy usage requirements, focusing on high-level thermal insulation, stringent airtightness, and maximum energy gains from the sun. The result is a building that uses significantly less energy for heating and cooling than traditional buildings, often reducing the energy needed by up to 90%.

Final thoughts

There are hundreds of other certification programs that focus on specific aspects of a building, such as water management and light pollution. Some are also catered to specific regions. If you’re looking to certify your home, do your research and establish a budget for membership, applications, and certifications, as well as design, planning, and maintenance. Additionally, you can hire a 3rd-party to certify your home, although that may cost more. 

Working towards a certified sustainable home is important and beneficial, but it can be cost-prohibitive. If you don’t have the budget for certification, read about a program’s requirements and try to incorporate them into your project; you don’t need to certify your home to make it more sustainable or even regenerative. No matter what you choose, incorporating sustainable practices into your lifestyle can help reduce your carbon footprint and contribute to a greener future.

Source: redfin.com

Apache is functioning normally

Apache is functioning normally

Have you ever been captivated by the ins and outs of real estate investing, declaring, “I could do that,” or even, “I want to do that,” but couldn’t pinpoint where to start? If so, you’re in luck because this Redfin article is tailor-made just for you. 

Buying your first investment property has the potential to be an exhilarating and profitable adventure. However, let’s face it: the complex landscape of real estate investing can be intimidating without the right knowledge and guidance. But fear not. In this all-encompassing guide, we will unveil a treasure trove of expert tips and invaluable insights that will empower you to fearlessly navigate the process. From relationship building to conducting due diligence, you’ll be equipped with the knowledge and strategies to enter the world of real estate investing and buy your first investment property with ease. Let’s get started!

1. Learn from experienced investors

When it comes to real estate investing, there’s no better way to learn than from those already doing it. Learning from experienced investors can vastly build your understanding of how it works, beginning with market research and ending with either the sale or signing a tenant in your new rental. You can even learn from other investor professionals by identifying if there is a way you can help them. 

“I hear many new investors say that they don’t feel they have anything to offer, but that is untrue,” says Kathie Russell, a board member of the North Carolina Real Estate Investors Association. “Everyone has something to offer. I guarantee that something you do in your day job or as a hobby will be helpful to somebody.” She adds that to begin building your relationships with investors is to find your local REIA. “These groups are an absolute must for new or aspiring investors. There you will meet your lenders, your mentors, your friends, and your advisors.”

2. Assemble your team

Building a reliable team of professionals who specialize in real estate investment can provide invaluable guidance and support throughout the process. Eric Feldman, SVP of Sales and Marketing at Longhorn Investments stresses the importance of knowing who your decision makers are regarding your investment strategy and process. Within the world of real estate investing, everyone is trying to secure the best deal, thus meaning properties move quickly – so having a team of trusted individuals in place is essential. 

You should identify a knowledgeable real estate agent who understands the local market and can help you identify promising investment opportunities. Additionally, having a competent real estate attorney can ensure that your legal interests are protected during negotiations and contract signings. An appraiser will help identify the actual value of a property, which can help you avoid overpaying. Collaborating with an experienced property inspector can help identify potential issues and prevent costly surprises down the line. Lastly, establishing relationships with reputable contractors and property managers can streamline property renovations and day-to-day operations.

3. Rely on market data

When it comes to real estate investing, Doug Van Soest, founder of SoCal Home Buyers, wisely emphasizes the potential risks involved in buying an investment property. However, these risks can be mitigated by leveraging available data. Van Soest suggests conducting a thorough comparative market analysis (CMA) using the wealth of data at your disposal to understand the current state of the marketplace. By examining factors such as property prices, rental rates, vacancy rates, and historical trends, you can make informed decisions and alleviate some of the risks associated with real estate investments. 

4. Consider area potential and long-term equity gains

Buying your first investment property doesn’t necessarily mean it will be where you reside. When considering where to purchase, you’ll want to think about a location’s potential and the possible long-term equity gains associated with the area. 

Scott Jones, the economic development director for the city of Manor, Texas, proudly showcases his community as a shining example of a location’s potential. “Manor either has or is working to have it all as we speak,” says Jones. “Manor is only minutes away from everything Central Texas offers. This includes abundant, relatively inexpensive land for development, a high-quality education system, first-class public safety and utilities, mass transit to Downtown Austin, and much more.” 

Manor, Texas, has seen significant housing growth year over year. In May 2020, the median sales price was $234,000; as of May 2023, the median sales price equals $350,000 (nearly a 50% increase YOY). Consulting with local experts and real estate agents can help identify up-and-coming areas that can play a pivotal role in creating high ROI opportunities.

5. Explore your loan options

When buying your first investment property, it’s essential to explore the available loan options. Understanding and comparing mortgages, government-backed loans, and private financing can greatly impact your financial success. Research and consult experts to make an informed decision that aligns with your investment goals and long-term stability.

Lender, HomeAbroad has a tip about Debt-Service Coverage Ratio (DSCR) loans “While conventional loans may require income and debt to income, DSCR loans evaluate the property’s income potential and cash flow to determine loan eligibility. DSCR loans do not consider investors’ income, making them ideal for investors seeking cash flow-driven investments.”

6. Perform your legal due diligence

Joshua Holt, the founder of Big Law Investors, urges real estate investors to understand the importance of conducting comprehensive legal due diligence before purchasing a property. Holt expands on this by saying, “check the title deeds to ensure there are no hidden encumbrances or disputes, review zoning laws and local ordinances to ensure that the property can be used as intended, and double check that all taxes are clear.”

“The last thing you want is to find out that local laws prevent short-term lease arrangements after you’ve purchased the property for that specific purpose,” says Holt. “Conducting legal due diligence before purchasing the property is important to ensure you protect your investment and avoid costly legal issues later on.”

7. Never buy a property without having an inspection

A home inspection is pivotal in identifying potential flaws within a property. Home inspections can also help determine an investor’s renovation budget and help alleviate newfound stressors throughout the rehab process. 

Ronnie Jackson, general contractor of Austin Home Renovations, urges buyers to “never purchase a property without an inspection provided by a licensed real estate inspector.” Additionally, Jackson adds that you shouldn’t “complete your option period without having that inspection evaluated by a professional contractor.”

8. Don’t forget about taxes

Yes, taxes are a significant component of real estate investing. First, there are property taxes. Tony Trahan, a property tax consultant of KE Andrews, shares that “when buying a real estate investment property, one of the most critical factors during your due diligence or underwriting process is correctly modeling the property taxes owed going forward. In many states, this valuation determines your taxes and is highly negotiated.” 

Capital gains tax is another tax to consider (and budget for), especially if you intend to sell your investment property. There are two forms of capital gains taxes, short-term and long-term. Short-term capital gains tax refers to the tax paid on profits from the sale of assets that have been held for one year or less. It is generally subject to ordinary income tax rates, which vary depending on an individual’s tax bracket. On the other hand, long-term capital gains tax applies to profits from the sale of assets held for more than one year. Long-term capital gains tax rates are typically lower than ordinary income tax rates, offering potential tax advantages for investors who hold their assets for an extended period. The specific long-term capital gains tax rates depend on the individual’s income level and the type of asset being sold.

9. Submit a competitive offer

When making an offer on your first investment property, you should be prepared to act swiftly and present a strong offer with attractive terms, such as a pre-approval letter, a substantial earnest money deposit, and flexibility on closing timelines. While it’s important to be competitive, it’s equally crucial to ensure that your offer aligns with your financial goals and allows for a profitable investment.

10. Get insurance coverage

Whether you’re in the rehabilitation stage of your home flip or are holding a property as a rental, you’ll want to be sure you’re adequately insured. Comprehensive property insurance should protect the structure, renovations, and fixtures, guarding against perils like fire, theft, and natural disasters. Liability insurance is crucial to cover potential lawsuits or claims by others for injuries or property damage. Builder’s risk insurance can safeguard against losses during construction or renovation, while rental property insurance is specifically designed for landlords, covering structures, liability, and rental income loss.

Pegram Insurance Agency elaborates on landlord policies, “which can help protect you financially in case of damage to your property or liability claims.” Understanding which coverage works best for your situation is critical; Pegram Insurance Agency adds that “there’s a big difference between renting to long-term tenants and renting on Airbnb/VRBO. Airbnb and short-term rentals require specific endorsements for additional coverage, so check with your insurance provider.”

11. Renting your property

If your investment strategy includes renting your property, Jordan Davey, digital marketing director of Victory Property Management, offers insights from mitigating rental risks to maximizing received applications. Davey highlights performing screenings on all applicants, reminding landlords to “not take rental applications for face value. Get income verification and be on the lookout for anything that may appear suspicious.” 

Additionally, Davey recommends working with your real estate agent to price the property accurately. It’s important not to overprice a rental home, but equally important to not underprice. Do your due diligence and review accurate CMA data to determine a price best suited to your market’s demands.

A final note on buying your first investment property 

In conclusion, purchasing your first investment property can be an exciting and potentially lucrative endeavor. By considering key factors such as market research, financial analysis, and seeking guidance from professionals, you can set yourself up for success. Remember to approach the process with careful planning, a long-term perspective, and a willingness to adapt as needed. So, take the leap, embrace the opportunities, and embark on your journey as a real estate investor.

Source: redfin.com

Apache is functioning normally

Apache is functioning normally

Mortgage rates have finally dipped, after three panic-inducing weeks of climbing upward.

For the week ending June 8, the average 30-year fixed mortgage rate sank to 6.71%, down from the previous week’s 6.79%, according to Freddie Mac.

And that’s not where the good news ends.

Home price growth, which has been spiraling skyward since the COVID-19 pandemic, has also “slowed to a halt,” according to Danielle Hale, chief economist for Realtor.com® in her recent analysis of the latest housing data.

Indeed, median listing prices came in a mere 0.2% higher for the week ending June 3 compared with this same week last year. That’s the lowest level in the history of Realtor.com data, which goes back to 2016.

Yet despite this double dose of good news, Hale points out that “homebuying costs haven’t come down.” In fact, today’s buyers who make a 20% down payment will still pay about $280 more per month than they would have last year.

Here’s what these statistics mean for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

How high mortgage rates have changed homebuyer priorities

Although home prices seem to be finally leveling off a bit, the median listing price is still high, coming in for May at a median of $441,000.

High home prices combined with high mortgage rates have pressured many homebuyers to adjust their home-shopping priorities. For many now, their only priority seems to be finding a bargain.

“Affordability has evolved into an increasingly important factor that influences people’s decision-making processes when searching for homes,” says Hale. “In order to attain homeownership, a higher share of online shoppers were drawn toward more affordable markets compared to a year ago.”

Affordability explains why markets in the relatively budget-friendly Northeast have been heating up of late, while markets in the South and West have cooled. Yet hot markets tend to drive home prices higher, so it may be only a matter of time before the balance shifts.

Last month, median home prices in the Northeast shot up by double digits compared with one year ago, while prices in the South and West showed low single-digit growth.

Although many buyers are finding success by scrounging for deals, other buyers are simply pausing their search until interest rates subside.

“Worries about high inflation, rising interest rates, and escalating home prices have caused many prospective buyers, especially more first-time buyers, to postpone their plans to purchase a home,” said Hale.

How high mortgages affect home sellers

Homebuyers aren’t the only ones feeling deflated. Home sellers have also been pulling back from the market, as the number of new listings has declined for 48 straight weeks. For the week ending June 3, new listings are down by 25% compared with a year ago.

“Many remain skittish about listing since it would mean trading in their low mortgage rate for something much higher,” says Hale.

Although new listings are down, overall housing stock (which includes listings both new and old that have been lingering on the market) is 13% higher for the week ending June 3 than the same week last year. But unless more new listings hit the market soon, even overall inventory will soon suffer.

“The ongoing decrease in new listings has restrained the growth of active inventory,” says Hale. “And there is a possibility of further deceleration in the upcoming weeks.”

The pace of home sales slows further

The homes that are still for sale continue to linger—and linger. For the week ending June 3, homes spent 14 more days on the market compared with the same time last year. This marks a 46-week streak of homes taking longer to sell compared with the same week the previous year.

Yet although things are slowing, homes remained for sale for about 43 days in May, which is still faster than the average May from 2017 to 2019.

“Homes are still selling faster than the pre-frenzy norm, emphasizing the persistent supply-demand imbalance,” says Hale.

And this means that those homeowners who do decide to sell at an affordable price will likely be greeted by plenty of buyers looking to make an offer.

Meanwhile, all those homebuyers searching high and low for bargains might want to give those stale listings a second look, and gamble that lowballing might actually work.

Source: realtor.com

Apache is functioning normally

Apache is functioning normally

Rising summer temperatures herald the beginning of hurricane season. Luckily, the 2023 Atlantic hurricane season is predicted to be relatively mild, with 1-4 major hurricanes (category 3-5) and 5-9 mild hurricanes (category 1-2). Even with a milder season ahead, it’s essential to be prepared. 

So, how do you prepare your house for a hurricane? Luckily, this Redfin guide has everything you need to know. Whether you live in a house in Tampa, FL, or a rental home in Wilmington, NC, read on for hurricane preparedness tips and tricks to help keep you and your family safe. 

What is a hurricane?

A hurricane, also known as a cyclone or typhoon in other parts of the world, is a large and powerful tropical cyclone characterized by a low-pressure center surrounded by a spiral arrangement of thunderstorms that produce strong winds and heavy rain. They form over warm ocean waters near the equator. Key elements of a hurricane include the eye, eyewall, and rainbands. 

Hurricanes can be mild to catastrophic, and can cause damage through storm surges (rising sea levels), high winds, and heavy rains, which can lead to flooding and landslides. They are especially bad if you live in a flood zone.

We measure hurricane severity based on wind speeds using the Saffir-Simpson scale. Here’s a quick breakdown:

  • Category 1: 74-95 mph (minor damage)
  • Category 2: 96-110 mph (moderate damage)
  • Category 3: 111-129 mph (major damage)
  • Category 4: 130-156 mph (severe damage)
  • Category 5: 157 mph and higher (catastrophic damage)

How to prepare your house for a hurricane

Before the hurricane hits, there are ten important steps you should take to prepare your home, secure your valuables, and ensure your family remains safe. Let’s break them down. 

1. Create a hurricane emergency kit

The first step of preparing for any disaster is to ensure you have a well-stocked, waterproof emergency supply kit, which can be a large tote, box, or carryable kit. Here’s a list of items to include:

  1. Water: Have at least one gallon of water per person per day for at least three days.
  2. Food: Include at least a three-day supply of non-perishable food items that don’t require cooking, such as canned goods, protein bars, peanut butter, dried fruits, and nuts.
  3. Manual can opener: Keep a manual one on hand to open canned food.
  4. Medications: If possible, pack a seven-day supply of prescription medications and other essential medicines.
  5. First aid kit: Include bandages, antiseptic wipes, tweezers, medical tape, gloves, and over-the-counter pain relievers.
  6. Hygiene supplies: Pack items like hand sanitizer, wet wipes, toothpaste, soap, menstrual products, and toilet paper.
  7. Flashlights and batteries: Keep a flashlight and a healthy supply of extra batteries on hand.
  8. Portable charger: A portable battery charger can keep your phone and other necessary electronics running if the power is out for a while.
  9. Cash and important documents: Keep some cash, as well as copies of your important documents (like passports, driver’s licenses, and insurance policies) in an accessible waterproof container
  10. Radio: A battery-powered or hand-crank radio can keep you updated on the storm’s progress and other important information if the power goes out.
  11. Clothing and bedding: Pack a complete change of clothes and sturdy shoes for each family member, and include warm bedding. 
  12. Tools and supplies: Include items like a multi-tool, duct tape, a whistle to signal for help, and local maps. It’s also essential to keep plastic sheeting and zip ties to shelter in place. 
  13. Other supplies: If you have pets, infants, or elderly household members, remember to pack pet food, infant formula, diapers, and any necessary medical equipment and backup power. 

2. Secure doors and windows

Make sure all your doors and windows are secure and in good repair to prevent water from getting inside. Consider installing storm shutters or pre-cutting plywood to board up your windows. Additionally, reinforce your garage door with braces or strong plywood. You can go a step further and invest in a wind- or impact-resistant garage door or storm door, which can greatly reduce the risk of damage to your home. 

3. Install a backup power source

Consider installing a generator or heavy-duty battery in case the power goes out for a long period of time. Remember to use gas-powered generators safely by keeping them dry and outdoors to prevent carbon monoxide poisoning. 

If you have the budget and time before a storm hits, it can be a good idea to install solar panels or another renewable energy source, so you can power your home independent of the power grid. Keep in mind that you need batteries to store the power your solar panels generate.

4. Review your insurance coverage

Review your homeowner’s insurance policy to ensure you have coverage in case of hurricane damage, especially because many standard plans don’t cover disaster or flood damage.  If your current homeowner’s insurance doesn’t cover your home, you can get insurance through Floods Smart, which is a national program managed by the Federal Emergency Management Agency (FEMA). 

“Don’t wait until it’s too late to obtain flood insurance,” implores Jennifer Jones, Marketing Manager with FloodPrice. “Most flood insurance carriers have a waiting period of up to 30 days, so act now before the storm comes.” Even if your home is in a low- or moderate-risk flooding area, flood insurance is still a good idea.

5. Establish a safe room

If your house doesn’t have a dedicated safe room, identify a small, windowless, first-floor room where you and your family can shelter during the hurricane. This is where you should keep your emergency supply kit and anything else you may need if you must shelter in place. 

If your home doesn’t have a space where you can shelter safely, go to a friend’s or relative’s home or an open disaster shelter. Importantly, never use your basement to shelter during a hurricane, as flooding is common. 

As always, follow evacuation recommendations and orders from authorities.

6. Inspect and repair your roof

Inspect your roof for loose tiles or shingles and other vulnerabilities. You can consider hurricane straps to ensure your roof is bolted to the rest of your house. In hurricane-prone regions, reinforcing the roof of your home can significantly decrease potential damage.

Many southern US states have recently passed hurricane-specific building codes for new buildings, which ensures that homes can withstand winds up to 130 miles per hour. Buildings in the High Velocity Hurricane Zone in Florida have even higher wind speed requirements.

Some states haven’t updated their building codes, however, so do your research and plan on installing your own protection. 

7. Clean gutters and downspouts

Clear your gutters and downspouts of debris to ensure water can drain away from your house properly. This helps to prevent water damage and reduce the risk of roof collapse from excess rainwater weight. You can also have a professional to examine your home for potential risks 

8. Trim trees and shrubs 

Well-maintained trees and shrubs are less likely to become projectiles during high winds. To help, cut tree branches down to no more than four or five feet long and to remove any dead or dying branches or plants. Also, dispose of any trimmings and debris, so they don’t blow into the street or build up on your property.

9. Secure outdoor objects

Secure or bring indoors all outdoor furniture, decorations, garbage cans, and anything else not tied down. “These items can become dangerous projectiles during high winds,” notes Levi Kastner, owner of Kastner Insurance Group. “Additionally, take a detailed inventory of your valuables, including photos or videos of possessions, in case you make an insurance claim after the storm.”

10. Prepare an evacuation plan

Lastly, always have an evacuation plan in place for you and your family. Know the local hurricane evacuation routes and where the nearest shelters are. Remember to plan for your pets and elderly family members as well. 

How to file an insurance claim after a hurricane 

Insurance companies can be difficult to deal with following a hurricane. Luckily, we have expert guidance from April Weismann, Executive Vice President of HPM Insurance, to help guide you through the process. Here are seven steps:

  1. Assess any property damaged following the storm, make a list of damaged property and belongings, and take photos and video of damage for proof.
  2. Contact your insurance agent or carrier directly to file a claim.
  3. Prevent further damage by boarding windows or tarping the roof if necessary. If you can’t do it yourself, contact a restoration company to do it for you. 
  4. Do not throw anything out until a company adjuster has assessed the damage and authorized you to do so.
  5. Lastly, be patient. After a large hurricane, companies work overtime to assist thousands of people filing claims. Unfortunately, it will likely take time for them to get to yours. 

Final thoughts on how to prepare your house for a hurricane

When the hurricane does hit, you must be prepared. By following these ten steps, you can help reduce damage to your property and keep your family safe.

Source: redfin.com

Apache is functioning normally

Apache is functioning normally

The Friday “Ask the Readers” column generally follows a set format: I introduce the topic, share a reader e-mail, give my best advice, and then ask for your feedback. Today’s column is a little different. Sarah sent me a 1000-word question, and rather than write any sort of response, I’m just going to let her have the entire space. Everything that follows is from Sarah.

I have a question for other GRS readers. It’s a simple question: Should I sell my car? It actually seems to have a very simple answer: Yes.

I keep writing lists and outlining the reasons why I should sell my car (and why I shouldn’t), and the balance lies very clearly in favor of selling my car. And yet I’m having the hardest time selling my car.

Why? I’m a practical, logical, pragmatic person. Why is this so hard to do? Why is selling my car so difficult? Even with the facts laid out, staring me in the face, I’m having the hardest time selling my car.

Why I Bought a Car in the First Place

I used to live completely car-free. I lived in different cities and only walked, bused, or biked to get around — occasionally living the high life and taking a taxi when I felt like being luxurious. And then I moved to California.

I bought a car last year. I purchased a 2010 Toyota Matrix from a dealer, priced at $17,490, with a $1000 rebate for being a recent college grad. The Kelly Blue Book value of the car, at new, was $20,049. My purchase price was $16,490. With taxes, registration, and fees, I forked over $19,009. As a somewhat-savvy consumer, I secured a three-year financing plan with 0% interest.

I bought the car because I lived 40 miles from my job, commuting an hour each way (through San Francisco, across the Golden Gate Bridge), and there wasn’t sufficient public transportation to get me to and from my job.

I’ve now owned (and paid for) the car for 12 months, spending $6800 on car payments. I have $12,200 left to pay on the car over a two-year period.

The cost of the car has been unbelievable. In one year, these are the costs:

  • Car payments — $529 per month
  • 20,000 miles total
    • 25 mpg average
    • gas price is $3.15 in California
    • $2520 for gas, or
    • $210 per month in gasoline
  • Maintenance for one year (four tune-ups at $109 each) — $436 ($36 per month for maintenance)
  • Insurance — $109 per month for insurance (AAA)
  • Bridge Tolls (crossing the Golden Gate Bridge every day costs $5) — $80 per month
  • Parking. I’m lucky to have free parking, mostly, unless I drive downtown — $50 per month is my average for parking

Every month, I spend about $1014 on driving and owning the car. $1014! This is roughly one third of my take-home income. What would I do with $1014 per month?!?

In addition, I have a substantial amount of debt from undergraduate and graduate student loans (in the realm of $80,000) that I’m currently working hard to pay off. The student loan payments are $679 per month. I struggle to make the car payment and the student loan payment each month.

Today: The Current Situation

In November, I moved back to San Francisco, because I couldn’t stand the long commute. Commuting through city traffic is tiring and psychologically draining; I quickly remembered why I dislike driving so much. In contrast, San Francisco is a hub of public transportation options — sometimes better or worse, depending on the neighborhood that you live in.

I now live eight miles from my job in Sausalito. The drive takes about 15-20 minutes, depending on traffic. Parking at my job is easy, but parking in San Francisco is a nightmare — it can take up to 40 minutes to find a parking spot. I have the option of purchasing a parking spot, but those cost upwards of $300 in a city like San Francisco, and I can’t stomach how much I’m already spending on the car alone.

I now have alterative means for getting to work. For example, I can bike to work a few days per week, depending on the day and the weather. There’s also a bus line that goes to and from my work on the hour, and takes about 30-40 minutes to get to work (it doubles my commute time, but I don’t have to worry about parking, driving, or concentrating on the road).

The (Easy) Conclusions

I worry that it’s a mistake to sell my car after owning it for one year. My parents tell me that I should wait it out for the next two years, buckle down, and just finish making the payments — because I need a car and can’t possibly live without one. People suggest that it’s foolish to buy a brand new car and sell a car within the first year of ownership.

However, I also think that sunk costs are sunk costs. What I’ve already spent on the car is gone; it’s what I spend in the future that’s still up for determination. I think it makes sense for me to sell my car.

Here are some reasons I think I should sell my car:

  • Living in a city — with ample public transportation, alternative car-sharing options, bicycle riding, and walking — makes having a car a luxury, not a necessity.
  • Getting rid of $12,200 of unpaid debt is a good thing.
  • There are additional costs to car ownership — insurance, gas, parking, maintenance — that will continue to add up over time. (To the tune of about $450 per month.)
  • The current value of my car ($14,000) is more than I owe on my payments ($12,200)

But wait! There’s more!

  • A car is a depreciating asset, and will not add any value over time. Struggling to make these payments does not help me reduce or eliminate debt in other areas of my life.
  • Public transportation to work costs $4 each way, or approximately $160 per month.
  • If I also choose to use a car-sharing program on the weekends, I would spend between $50 and $75 for a weekend use — but the cost would be elective, and not fixed.
  • If I don’t spend the money on the car, I can spend the money on other things that are more important.

It seems painfully clear, on paper, that I should sell my car. And yet I get in and drive it every single day — to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions. I am afraid of selling my car. Psychologically and emotionally, I’m attached to it. I also stubbornly don’t want to admit I made a mistake in buying the car in the first place.

So tell me, fellow GRS readers, what should I do? Can I afford to sell my car? Can I afford not to?

J.D.’s note: Though I don’t have room for my traditional long reply, I’ll just chime in to say I’m glad that Sarah mentioned sunk costs. That’s a very important thing to remember in making these sorts of decisions. (What you’ve spent already is irrelevant; it’s what you spend going forward that matters.) And I think her situation highlights why it’s often best to buy a cheap used car than a brand-new one. I think a $2,000 beater would be perfect for her.

Source: getrichslowly.org

Apache is functioning normally

Apache is functioning normally

Here we go with another week. The Federal Reserve announcement on Wednesday is the big even over the next few days so it’s important to keep an eye out for that. Overall, we think that mortgage rates will move slightly higher, so borrowers should take action soon. Read on for more details.

Where are mortgage rates going?                              

Fed Meeting in Focus

It’s a slow start to the week today with no significant economic data out of release. We will see the news-feed pick up as we move through the week, though, as the Federal Open Market Committee will convene for a two-day meeting starting on Tuesday.

The event will wrap up on Wednesday with a written statement at 2:00pm and a press conference with Fed Chair Jerome Powell at approximately 2:30pm.

Financial market participants are largely anticipating a quarter-point increase to the nation’s benchmark interest rate, the federal funds rate, bringing the target range up to 1.75%-2.00%.

Given this expectation, market participants have already priced in the change, so we aren’t expecting any major market reactions on Wednesday when the formal decision gets announced. In general, the Fed is projected to signal a calming message of gradual rate hikes.

It’s really a matter of what actually happens at this point. If the Fed comes out and does exactly what everyone thinks they will do, then we should get a fairly smooth day with rates making a little push higher, but no major swings.

However, all it takes is one word in the written statement or a slightly provocative remark from Fed Chair Powell during his Q & A to stir up some fuss in the markets.

If I had to bet on it, I would say that things will go as planned, but that certainly won’t stop me from tuning in to find out if there are any surprises.

Rate/Float Recommendation            

Lock before rates rise        

Mortgage rates have been fairly flat over the past couple of weeks, but we do anticipate that they will finish out the year higher than where they are now. For this reason, we strongly recommend that anyone looking to purchase a new home or refinance their current mortgage does so sooner rather than later.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:         

Notable events this week:     

Monday:   

Tuesday:   

  • FOMC Meeting Begins
  • NFIB Small Business Optimism Index
  • Consumer Price Index

Wednesday:         

  • PPI-FD
  • EIA Petroleum Status Report
  • FOMC Meeting Announcement

Thursday:     

  • Jobless Claims
  • Retail Sales Import and Export Prices
  • Business Inventories

Friday:          

  • Empire State Mfg Survey
  • Industrial Production
  • Consumer Sentiment

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

Apache is functioning normally

Add this to the list: control costs while growing and use an off-the-shelf tech system when you are small. 

“The focus for me is: I want to grow in a very sustainable, methodical way,” Shoemaker said. 

TLS will focus on the wholesale channel but not compete with United Wholesale Mortgage (UWM), Shoemaker said. The core business will be conventional government lending, though TLS will create value-added products and services. Despite inheriting more than 9,000 brokers from Homepoint, TLS will only do business with the “right brokers,” Shoemaker said. 

“That capacity allows us to take about $400 million a month, which is a very small number relative to what we were generating at Homepoint. The people we’ve hired allow us to take it from $20 million to $400 million a month. We’re about halfway there, and we’re in month two and a half [since the transaction]. Once we get there, we’re going to focus on optimizing things.” 

Shoemaker answered a range of questions in an interview with HousingWire in mid-June. 

This interview has been condensed and edited for clarity.

Flávia Nunes: Why did Homepoint choose to sell its origination business to TLS?

Phil Shoemaker: There were a few things important to me as well as to Willie [Newman, Home Point Capital CEO and president] and the team at Homepoint that put this deal together. We wanted to make sure that we set the origination team up for success. The best way to do that, based on everything I’ve learned the last 28 years, is to accomplish a couple of things. 

We wanted to find a platform where the capital, the ownership structure, was long term, meaning we were looking for a group of individuals that owned a mortgage entity to operate in perpetuity, and there was no strategy to build it up to a certain level and then sell it. To that extent, the owners of TLS, two of them are close friends of mine, are looking to build a successful mortgage bank that is sustainable and profitable with time. That means doing things methodically, sustainable across the market cycles, and maybe not growing as fast. 

Nunes: Will TLS only operate in the wholesale channel?

Shoemaker: I do think the model is mattering more and more. Despite the competitive dynamic of wholesale, I still think wholesale is the right model to access the purchase market, the primary market. And the reason why I think that’s the case is because I think it’s the best for the borrower. Anytime you’re aligned with the consumer, overtime you’ll win. 

Now, the competitive dynamic in wholesale is fairly unique, and I don’t think that’s gonna change because the main incumbent is good at what they do. We’re all gonna need to keep stepping up and doing it better. The whole nature of wholesale is optionality; brokers want choices. We’re not looking to do business with every broker out there; we’re looking to do business with the people that are aligned with us culturally.  

Nunes: How has the transition of employees from Homepoint to TLS been so far? How has their compensation changed? 

Shoemaker: We’re still going through that process, we’ve gotten most people over. When the last person joins TLS, it’s gonna be just around 100 or so people. In total, by the time we’re done, there’s probably gonna be upwards of 140. It was our goal to make sure that everyone transitioned without seeing an impact at least to their base compensation. 

The market overall is seeing salaries, and probably more variable compensation, start to normalize because there was a bit of a run-up in 2020. We’re seeing salaries start to come back to a more normal level across the board. Within that, I think you’ll have two types of strategies: companies trying to bring new people in, train them and pay them at a lower level, and then you have people – and this is more the strategy where we’re – going more towards the highly experienced people. We want to pay them fair compensation, and we want to give them an upside based on the performance of the company.

Nunes: The cost structure was a problem at Homepoint. How will you control expenses at TLS? 

Shoemaker: The important piece is making sure every dollar we spend needs to go towards making a good loan. The experience I had at Homepoint was great. Of course, we all wish we could have worked out differently. That’s a given. But I really don’t regret it. It was a great experience. The people I met. The private equity investors – very good people. But you learn things, right? To some extent, the bigger you get, and the faster you do that, you start to get infected with a lot of costs that maybe are not necessarily directly attributable to making the loan. The focus for me is I want to grow in a very sustainable, methodical way. 

The biggest lesson is skill matters in a big way. So, when you get larger, your fixed costs get diluted over a larger slice of production. That said, you still have to be efficient. The problem is the bigger you get, the harder it is to change things. Literally, it’s like turning the Titanic. You can’t build it and then come back and try to make it more efficient. It’s something you have to do on the way up. Maybe some people can, but that’s not what I intend to do. To be clear, I’m not trying to compete against UWM. That’s not my goal. And anyone out there that thinks they can; they’re crazy. Again, it’s a big market. I know it’s a challenging market. Wholesale will continue to expand. I’m just going to focus on what I can do well and the things I can control.  

Nunes: Another problem at Homepoint was the technology. Tell us about TLS’s tech stack. 

Shoemaker: I do believe that is part of the secret sauce. My first time actually dealing with a vendor was when I came to Homepoint. And here’s where I’ve got with that: I actually don’t believe there’s any strategic advantage in having and building your tech in-house. The more you try to customize and build things on your own, the more cost you create. If you’re doing a ton of volume, then sure it makes sense. But that’s not most of the world. 

When you customize an out-of-the-box system, you actually end up with a scenario where you’re not only maintaining the cost structure of running your own proprietary system, but you’re also having to pay the vendor. We’re going to go all in on an off-the-shelf system. We’re currently using Ellie Mae, they’ve agreed to align with us on our roadmap, what we need. The expectation is we’re going to build a platform that is competitive, that doesn’t have any gaps, that performs well, and they’re going to bear that cost. My hope would be they then take that and they give that to other lenders and wholesalers and they’re able to take advantage of that, because we need more wholesale lenders, not less.

Nunes: TLS is a small lender. How big can the company be in the short term? 

Shoemaker: Before Homepoint, TSL was doing maybe $20 million or $30 million a month — a very small company. That attracted me because I didn’t want to come into something where there was a whole lot of volume, and then you had to change things. It’s a lot easier to change things when you’re small. It also was all pure wholesale, so it wasn’t business channels that needed to be changed or shut down. The other benefit is the way it’s been set up is very scalable. 

TLS was formed in 2019. Since then, it hasn’t scaled much. They grew about $350 million per month in 2020, when the refi boom was there. But they never really got big, so their emphasis is really just getting things right.  As a result of that, their quality track record has been outstanding. At the time that we joined, they originated like 7,600 loans, and there were only seven loans out of that 7,600 that were bought back. It was a platform ready to take on some scale but didn’t have the people, experience or structure to do that. We are taking the best of salespeople, we’ve transitioned over to TLS. That capacity allows us to take about $400 million a month, which is a very small number relative to what we’re generating at Homepoint. The people we’ve hired allow us to take it from $20 million to $400 million a month. We’re about halfway there, and we’re in month two-and-a-half [since the transaction]. Once we get there, we’re going to focus on optimizing things. 

Nunes: What will be TLS strategy in terms of products? 

Shoemaker: We’re about to do a big marketing push on something called ‘buy before you sell.’ This is a partnership with a company called HomeLight, where we’re able to create liquidity for borrowers in their current homes and make it easier for them to get out of their homes and into a new one. It’s addressing the inventory issues. We’re going to focus on things like that. Our core business needs to be conventional government wholesale lending. But what we’re going to do is, rather than focusing on scale, we’re going to focus on creating value-added products and services around that, which will further diversify the business, make it more sustainable, and then will grow as the market conditions allow us to grow or it makes sense to grow.  

Nunes: How will TSL compete in terms of price? 

Shoemaker: TLS was doing about $20 million a month; we’ll be somewhere in the $130 million range this month, and next month we should be upwards of $200 million. We’re growing the business very quickly. And the reasons why we’re able to do that are: 1) We have control, and our cost structure is allowing us to price at a level that is in line with the market. 2) We do spend money on people, and so the service is ultimately where we’re going to win; 3) Our goal is to not do business with every broker–to be clear, we want to do business with the right brokers. 

Nunes: Who is the right broker for TLS? 

Shoemaker: It’s probably more of a cultural piece. We had 9,500 brokers or so at Homepoint and we have access to those brokers now at TSL, that’s basically what was acquired. But if we were to go to do business with all of them now, we would blow ourselves up. We can’t support them. We’re strategically deciding based on the products we offer; based on, for example, it being a purchase market. We’re focusing our energy on brokers that we think are best suited for this market as sequencing it in a way where we can ensure the service levels that we want to support. Rather than going for scale and getting vague, we’re going to focus on service, and we’re gonna define ourselves around being really best in class when it comes to purchase. Based on the size of TLS, I would not be surprised if we’re supporting LOs somewhere in the range of 1,500 or so. 

Nunes: Home Point Capital bought a share at TLS, but now it has been sold to Mr. Cooper. What will happen to this investment? 

Shoemaker: Home Point, as part of the transaction with TLS, they did get 9.99% of the TLS that was the consideration that was given for the assets that were purchased. But the majority of TLS is owned, is in control, and the company’s isolated, with a group of individuals aligned to build this business for long-term sustainability.  

Source: housingwire.com