What is Residential Real Estate?
Residential Real Estate is the first step in the path to homeownership, wealth creation, and leaving a legacy, and is comprised of single family homes, multifamily 2-4 unit properties, mobile home parks. Here are some examples:
Single Family Homes: A structure built on a single lot that has one unit. Homebuyers may choose to rent out the property to a Tenant. This is a great way to start investing and benefiting from the appreciation of the property over time so a Buyer can purchase their own home.
Multifamily Homes: A structure built on a single family lot that has 2-4 units. Homebuyers who live in one unit are Owner-Occupants. They can rent out the other units, which is another great start to investing in real estate.
Condominiums: Multiple units in one building, each unit is privately owned and the building is managed by an association. The owners pay association fees to cover the cost of managing the common areas and grounds of the building.
Townhomes: A cross between single family and condominiums, a townhome is a single structure on a shared lot or complex. Some townhomes are stand-alone while others may share a wall with an adjacent townhome. These are usually 2-3 stories and can be a lower cost than a single family home and may be part of an association.
Mobile Homes: A home that can easily be moved from one location to another, these single family structures are mostly found in mobile home parks. The Buyer may or may not have to rent the lot space the mobile home sits on. A mobile home is one of the most inexpensive homes on the path to homeownership and creating wealth.
The Buyers and Tenants of Residential Real Estate are one or more individuals and families, with the majority of single family homes being purchased or leased by new or established families.
To purchase a residential property, most Buyers will work with a Lender through a Mortgage Loan Originator (MLO) to obtain residential purchase loan. Once the purchase is complete, the lender places a Lien on the property, commonly known as a Mortgage. This is how the loan is securitized. The two biggest challenge most Buyers face in qualifying for a loan is Debt-to-Income Ratio (DTI), which cannot be more than 43% of their total income, and the down-payment. There are many down-payment assistance programs available to Buyers who meet the maximum household income requirements. If a Buyer is still not able to produce the minimum allowable down-payment of 3.5% for most of these programs, they will have to wait to purchase until they save the down-payment. One solution for both of these challenges is the Lease Option Purchase.
To find out more about Residential purchasing, visit my Blog category, Residential. If you are a new Buyer and are seeking representation, guidance, and support with your purchase and would like to create an Investing Plan & Strategy, contact me today at 310-383-7393 or firstname.lastname@example.org.
Residential Real Estate Tip
- Consider a Lease Option Purchase. A Lease Option Purchase is ideal for the Buyer who does not qualify for a loan, or who does not have enough for a down-payment even if they do qualify. Buyers can potentially pay substantially less in an option fee vs a traditional loan down payment. Sellers can lease their property and earn cash flow to cover the cost of their mortgage and receive an Option Fee from the Buyer as assurance that they will purchase the property after the lease term. Learn more about the Lease Options Purchase here…