Investment/2nd Home

In the market for a new home in southwest Montana?

Let’s talk. My goal is to ease your real estate journey, and the best place to start is by understanding your wants, needs, preferences, and desires. I want to hear your story and assist you with the next step in finding your place in Montana that best suits you and your lifestyle. Having a clear sense of your reasons for buying will help you choose the right property.

Let’s get curious together. I will ask you a lot of questions, so I can learn as much as possible about what you’re looking for; and you can ask me as many questions as you like about the area, real estate market, local resources, the buying process, etc. I will do my best to inform you about the local/regional market and get you as much information as possible, so you can make an informed decision about your home selection and purchase. I’ll locate the properties that best fit your needs via MLS data, county records, and personal preview information.

Timing. This is yours to define. If you are in a rush, we work quickly! If you are just starting your search, and not under a time-crunch, that is great too. We work together to meet your timing needs and stay connected through the entire process.

Buying in a Tight Market. Sometimes urgency is prudent to increase the chances of getting your desired property in a competitive housing market. Once we define your parameters, I will be on the lookout for the newest listings that meet your criteria. It is advantageous for you as the buyer, to be poised and ready to make a decision, as some homes go quickly. Our upfront work and preparation will put you in position to bid competitively and yet not get caught up in a buying frenzy unnecessarily.

The Paperwork. Granted it’s almost always completed digitally, however, there are still forms, reports, disclosures, and other technical documents required to complete a real estate transaction. As your real estate professional, I guide you through the process step by step and serve as the concerned, but objective third party to help you stay focused on the issues most important to you and your goals. We have an online transaction system that makes the signing process efficient and secure.

Types of Mortgages & Best Rates. While I keep up with lending practices and general guidelines, I will recommend that you get specific mortgage product and price information directly from a mortgage lender. Rates can change daily, and Individual finance scenarios are as unique as the snowflakes falling from the sky. Your lender is in the best position to review your financial portfolio and help you find the best product that meets your needs. They provide a wealth of information and can match you with a mortgage product that best fits you. If you do not have a local banking or mortgage broker relationship, I can provide you with contact information.

Shopping. We will work together to develop a list of prospective homes that meet your criteria. I will provide property detail on all the homes we plan to tour in person. View all online tours and videos in advance. This is an efficient way to familiarize yourself with a property, experience its flow through the home as you do a virtual walkthrough, and identify those areas where you might have questions. View the property on an online mapping program and explore neighborhood features and amenities in the surrounding area. Once we have narrowed the selections, I will handle the logistics of scheduling and coordinating our visits (in person or virtually) to properties within your busy schedule.

‘First Time’ or ‘It’s Been a Long Time’ Buyers: If this is your first time buying, or it’s been many years since your last home purchase, no worries – I will guide you every step of the way. There is no question that is considered unimportant. A home purchase is a big investment, and I want you to be as informed as possible throughout the entire process. I have noted a few steps below that are recommended to save you time:

• Pre-Qualification: Contact a mortgage broker and find out how much you can afford to pay for a home. This can usually be completed in 48-72 hours.

• Pre-Approval: While knowing how much you can afford is the first step, sellers will be much more receptive to potential buyers who have been pre-approved. You’ll also avoid being disappointed when going after homes that are out of your price range, or competing with other pre-approved buyer offers. With Pre-Approval, the buyer actually applies for a mortgage and receives a commitment in writing from a lender. This way, assuming the home you’re interested in is at or under the amount you are pre-qualified for, the seller knows immediately that you are a serious buyer for that property.

• In a competitive market, an offer from a buyer with a pre-qualification letter could lose out to a person who is pre-approved.

• Proof of Income/Funds: If you are a cash buyer, obtain verification of available funds; if you are self-employed your lender will work with you to obtain the required information to document your income.

• Organize Documents: It is helpful to organize all financial documents required by the lender and keep in a folder on your computer where they are readily available. Regardless of the loan type, lenders will need information about you – total assets and debts, cash available, financial statements, bank accounts, investments, credit cards, auto loans, recent pay stubs, two years’ tax returns, credit score, etc. This might be a good time to check your credit report to make sure it is accurate. Also, keep any receipts and reports as the transaction progresses – from inspections, title commitment, etc.

• Accumulate funds: In addition to the required down payment funds, there will be added expenses such as inspection fees, escrow fees, appraisals, HOA transfer fees, etc. Some will be paid in advance and some at closing, however, anticipate some out of pocket expenses.

• No Sudden Movements: Now is not a good time to change careers, move your money around, buy/lease a new car, or buy big ticket items. Lenders like stability, so if you anticipate any major life changes, talk with your lender first and discuss how best to proceed.

• Be Responsive: When you make an offer on a property and it is accepted, the Buy-Sell Agreement has several performance dates which must be met. Work closely with your lender and realtor and respond to requests for information in a timely manner to keep the process moving forward.

Moving In. After you get the keys to your new place, I am still available to you as a local resource if you have questions when things pop up. So don’t hesitate to call. I will provide you with a list of useful numbers for the activation of utilities and home services to go into effect after the closing occurs.

Buying a home can be a complex process, and it is important to have a skilled real estate agent with the experience and market knowledge and negotiation skills to navigate you through the process. Having a Buyer’s Agent representing you is an important part of the process, working toward securing a transaction in the best interest of you, the buyer.

Adding Real Estate to your Investment Portfolio

Real estate investing by purchasing, owning, or leasing residential or commercial properties or land can diversify your portfolio and yield business or personal rewards as well. I work primarily with residential investment buyers/sellers – single family homes, townhomes, condos, multi-family up to 4 units, second homes and vacation rental homes, and land. For commercial investors I partner with the commercial real estate agents with NAI Landmark Nailandmark..

There are two primary ways to generate income from real estate investments: rent income and realized appreciation. Whether you are an active or passive investor is a discussion to be had with your legal and tax professionals.

• Rent: An investor who holds equity ownership of a property can earn income by leasing that property full time or part time. Rental income can provide a regular income stream. Depending on how a property owner manages their real estate (whether independently or through a hired property manager), they may keep all of their earnings or share earnings with a property management company.Each real estate investment carries its own set of risks and rewards.

• Appreciation: As with the ownership of any equity, real estate ownership gives an investor the ability to earn money from the sale of that equity. The appreciation, or increase in the value of a property over time, represents the potential profit available to an investor when that property is sold.

How do you plan on deploying your real estate investment?

This is an important discussion to have with your real estate agent at the outset of your property search. Your intended use of the property will be a valuable part of the discussion with your realtor, so we can best help you identify properties that will meet your needs.

Second Home – Southwest Montana is a lovely place to own a second home. It is the perfect getaway location for any time of the yearand may serve as a favorite family gathering spot through the years and for generations to come. Always be sure to consult your tax professional if you ever decide to convert your second home to a rental investment property.

Student Housing Option – Many MSU parents opt for purchasing a condo, townhouse, or single family home for their adult children who are attending the local university. This can not only provide housing for the student, but may also generate income from roommates which helps to offset operating expenses. Upon graduation, the home is an asset which has typically appreciated in value and can be sold or converted into a rental investment property, or other preferred options.

Long Term Rental Properties– Rental property owners earn regular cash flow usually on a monthly basis in the form of rental payments from tenants with long term rentals (more than 30-day leases). This can provide a steady, reliable income stream for investors, but it also requires investment of the owners’ time or delegation of responsibilities to a property manager to ensure that operations run smoothly.

Short Term Rental Properties – A short term rental is a property that is rented on an overnight basis rather than a 30-dayperiod or longer lease. It can be self-managed or professionally managed by a vacation rental company.

Tips on Buying Vacation Rental Property in Southwest Montana

• First – tell your real estate agent that you intend your real estate purchase to be used as a short term rental (STR) property

  • This is important! Even if you are not yet certain that you will use the property for STR, it is important to have the conversation early so you can be informed of all the factors that may impact this decision and the property you choose.

  • You want to make informed decisions about property options and focus your search on real estate that will meet your needs.

• Second – be sure your realtor isexperienced and understands the short term rental market and regulations to help you through the process of acquiring your short term rental investment

  • Zoning, municipality regulations, inspection requirements, etc. all impact the intended use of your property.

  • I have conducted extensive hours of research and share all information with my clients when they intend to utilize a property for short term rental. While you, the Buyer are ultimately responsible to be knowledgeable about any use restrictions for property you intend to purchase, it saves time when we work together, as I can guide you to those neighborhoods and zoning areas where short terms rentals are permitted.

  • Also, HOA restrictions are an important element in this due diligence. HOA’s can impose use restrictions within their scope of governance, so thorough review of all documents is an important part of your decision-making process.

• Third – have a confirmed realistic budget

  • The purchase price of the real estate is the first component of your budget

  • Factor in costs of inspections, closing costs, mortgage fees if you are using a lender

  • Do some research to determine actual operating costs for the property: utilities, taxes, insurance, HOA fees, hot tub maintenance, and any renovation or updating costs that might be needed

  • Management fees are often for full service packages; but if you are self-managing you will want to be aware of all marketing, advertising, lodging taxes, permits& operational fees for a STR

  • If the property is an existing STR, it may come turnkey with all FF&E (furnishings, fixtures, and equipment). This is important to confirm when you are comparing properties

  • If it is a new property or one that has not been used for STR purposes, there will be additional investment costs for FF&E to set it up as a turnkey rental property. Don’t skimp here – or guess!–you want to create a vacation environment that you would be willing to pay market price for – so invest wisely in fitting out your vacation rental.

  • Be conservative with your revenue projections for Year 1. A newly promoted property will most likely take a year or so to develop an optimized occupancy rate, pricing strategy, and seasonal rental schedule.

Tips on Selling Vacation Rental Property

• I have a lot of experience working with vacation homeowners who are selling their investment property. I first meet with you to clarify your goals for divesting the property. We, of course do a comparative market analysis, and review the performance of the property. We gather all the necessary documents for prospective buyer review in advance of the listing to be sure we have a complete presentation package ready to go.

• Together we develop a plan for positioning and marketing the property. A vacation rental property has unique challenges that must be incorporated into the overall marketing plan. For example, a high performing property may not be available for showings due to the rental occupancy schedule. We work with your property management team to collaborate with us on creative ways to maximize sales opportunities.

• Addressing any deferred maintenance is an important step. Making small investments in your property over time to keep it in tip top shape will keep it market ready. Plan for the off-season and schedule ongoing maintenance and upkeep. If there has been deferred maintenance you might want to get a pre-inspection so you are sure to address the most important things prior to putting your property on the market for sale.

• Many Buyer investors are shopping from afar. Virtual tours are now becoming standard for so many reasons, and they are invaluable when marketing a vacation rental property.

• Work with your listing agent to present the property in its best possible way to maximize your sales potential.

There are many ways to invest in real estate with varying amounts of money, and varying degrees of time commitment, capital, investment horizons, risk, and return potential. Some earn income and appreciation, and some only earn income. Some are deployed as rental properties for an interim time period until the owner can move here permanently. Even if your vacation property doesn’t always ‘pencil’, earned income still makes a significant contribution to annual operating costs of your beautiful new vacation property in Southwest Montana.