Investor • April 14, 2023

BRRR Method: A Guide to Real Estate Investing

by Aaron Clough

BRRR method real estate renovation - Before and after comparison

Real estate investors often look for strategies that can help mitigate risk and maximize profits. One such strategy is the BRRR method, which stands for Buy, Rehab, Rent, Refinance. BRRR involves purchasing a distressed or undervalued property, renovating it, renting it out for cash flow, and then refinancing the property to pull out the equity and use it for further investments.

The BRRR strategy starts with identifying a property with potential for value-add. This could be a property that needs significant repairs or renovations, or it could be a property that is undervalued for other reasons, such as location or condition. Once you identify a potential property, the next step is to purchase it. This often involves securing financing from either traditional lenders or private investors.

After purchasing the property, it’s time to get to work. You’ll need to rehab the property to increase its value. This could involve anything from cosmetic upgrades like fresh paint and new fixtures to more substantial repairs like replacing the roof or updating the electrical system. The goal is to improve the property to a point where it can be rented out for a profit.

Once the property is rent-ready, you can start generating cash flow by renting it out to tenants. This rental income can be used to cover your mortgage payments and other expenses, while also generating a profit. It’s important to keep track of your finances and ensure that you’re maximizing your cash flow.

Finally, once the property has been rented out for a period of time and has increased in value, it’s time to refinance it to pull out the equity. This allows you to recoup your initial investment and use the funds for further investments. Refinancing can be a powerful tool for real estate investors, as it allows them to recycle their capital and continue building their portfolio.

In conclusion, the BRRR method is a powerful tool for real estate investors looking to mitigate risk and maximize profits. By following the buy, rehab, rent, refinance strategy, investors can identify undervalued properties, increase their value through renovations, generate cash flow through rental income, and pull out equity to continue investing. If you’re interested in real estate investing, consider incorporating the BRRR method into your investment approach.

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Market Update • April 8, 2023

Rockwall County Housing Market Update – March 2023

by Aaron Clough

The housing market in Rockwall County, as of March 2023, continues to be strong and shows positive signs of growth. According to recent data, the average sales price for a home in the county was $490,000, which is an increase of 1% from the previous month. Additionally, the sales to list price ratio remained high at 97.83%, indicating a competitive market where homes are selling for close to their asking price.

Another indicator of the county’s healthy housing market is the price per square foot, which increased by 1% to $187. This means that homebuyers are willing to pay more for homes in the county due to its desirable location, good schools, and quality of life.

Furthermore, the months of supply of inventory in Rockwall County decreased by 46% to 2.37 months, indicating a shortage of available homes for sale. This trend is likely to continue, and it is an excellent time for homeowners who are considering selling their homes to take advantage of the high demand and limited inventory.

The strong housing market in Rockwall County can be attributed to several factors, including the county’s location, its growing economy, and the increasing demand for homes in the area. The county’s proximity to Dallas, which is a major economic hub, makes it an attractive location for people who want to live in a suburban area with easy access to big-city amenities.

Additionally, the county’s economy has been thriving in recent years, thanks to its diverse industries such as healthcare, retail, and finance. The county also offers several job opportunities in the technology and manufacturing sectors, which are rapidly growing and providing a stable income for its residents.

Overall, the current state of the housing market in Rockwall County is favorable for both buyers and sellers. Buyers can benefit from the low-interest rates and the high demand for homes, while sellers can take advantage of the limited inventory and the strong competition among buyers.

In conclusion, the housing market in Rockwall County remains robust, and the positive trends are expected to continue in the coming months. As the county’s economy and population continue to grow, the demand for homes will also increase, making it an ideal time for buyers and sellers to make their move in the real estate market. #closedbyclough

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Inflation Protection: How Residential Real Estate Can Help

by Aaron Clough

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As inflation continues to rise, many people are looking for ways to protect their investments. One often overlooked option is residential real estate. While stocks and other assets may lose value in the face of inflation, owning a home can be a powerful hedge against rising prices.

How Inflation Affects Investments

Before we dive into how residential real estate can protect against inflation, it’s important to understand why inflation can be so damaging to investments. When the overall price level of goods and services in an economy rises, the purchasing power of currency declines. This means that if you hold an asset that’s denominated in that currency, its real value may decrease as inflation rises. For example, if you hold $10,000 in cash and inflation is running at 5% per year, after one year you’ll only be able to purchase the equivalent of $9,500 worth of goods and services.

The Benefits of Owning Real Estate

Residential real estate can be a powerful hedge against inflation because its value is often tied to the overall price level of the economy. As inflation rises, so do the prices of homes. This means that if you own a home, its value is likely to rise in line with inflation. In addition, if you have a fixed-rate mortgage, your mortgage payment will remain the same even as the overall price level rises. This means that as inflation eats away at the value of your currency, you’ll be paying off your mortgage with increasingly less valuable dollars.

Example: The Power of a Fixed-Rate Mortgage

Let’s say you purchase a home for $250,000 with a fixed-rate mortgage of 4% over 30 years. Your monthly mortgage payment will be $1,193.54. If inflation is running at 5% per year, after one year your home may be worth $262,500. However, your mortgage payment will still be $1,193.54. This means that even though the value of your home has increased, your mortgage payment has remained the same. Over time, as inflation continues to rise, the real value of your mortgage payment will decline. This can be a powerful way to protect your wealth against inflation.

Conclusion

While there’s no guaranteed way to protect against inflation, owning residential real estate can be a powerful hedge against rising prices. By tying its value to the overall price level of the economy and providing a fixed-rate mortgage option, owning a home can be a smart way to protect your wealth over the long term. As always, it’s important to consult with a financial advisor to determine what’s best for your individual situation. #closedbyclough

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Home Owner/Seller • April 3, 2023

Protesting Property Tax Valuation in Texas: How it Works

by Aaron Clough

Are you a Texas property owner who has received a property tax valuation notice that seems too high? Don’t worry, you have the right to protest your property tax valuation. Here’s how protesting property tax valuation works.

Review Your Property Tax Valuation Notice

The first step is to review your property tax valuation notice. Make sure that the description of your property is accurate and that you agree with the assessed value. If you believe there is an error, gather evidence to support your claim.

Gather Evidence

To support your protest, gather evidence such as recent sales of comparable properties, recent appraisals, or repair estimates. This will help you make a strong case for the appraisal review board (ARB).

File a Protest with the ARB

File a protest with the ARB by the deadline indicated on your property tax valuation notice. You can do this online, by mail, or in person. Make sure to include evidence to support your claim.

Attend the Hearing

The ARB will schedule a hearing to review your protest. Attend the hearing and present your evidence to support your claim. Be respectful and professional throughout the process.

Receive the Decision

The ARB will issue a decision after the hearing. If you are not satisfied with the decision, you can appeal to the State Office of Administrative Hearings (SOAH) or to the district court.

Conclusion

Protesting your property tax valuation in Texas can be a daunting process, but it’s worth it if you believe your property has been overvalued. Make sure to review your property tax valuation notice, gather evidence, file a protest with the ARB, attend the hearing, and receive the decision. If you need help with the process, don’t hesitate to reach out to a professional. By protesting your property tax valuation, you may be able to lower your property tax bill and save money. #closedbyclough

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New Home Buyer • March 27, 2023

The Risks of Timing the Housing Market as a Homebuyer

by Aaron Clough

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As a homebuyer, it can be tempting to try to time the housing market in hopes of snagging the perfect deal. However, buyers attempts at perfectly timing the housing market has lead to a lot of stress and disappointment. Here are a few reasons why it’s generally not a good idea to try to time the housing market.

Market Timing is Hard to Predict

The housing market is influenced by a variety of factors, including economic conditions, interest rates, and government policies. Trying to predict how all these factors will interact to affect home prices is nearly impossible. Even the most seasoned experts can’t accurately predict what will happen in the housing market, so as a homebuyer, you’re better off focusing on what you can control.

You Might Miss Out on Opportunities

If you’re waiting for the perfect time to buy a home, you might end up missing out on great opportunities. For example, you might pass up on a home that meets all your needs and is within your budget because you’re waiting for prices to drop even further. However, those price drops might never come, and you’ll be left regretting your decision.

Time is Against You

If you’re trying to time the market, you’re also competing against time. Every month you spend waiting for the perfect moment to buy a home is a month you’re not building equity in your own property. Additionally, if you’re renting while you wait, you’re essentially throwing away money that could be going towards a mortgage payment.

Emotional Roller Coaster

Trying to time the housing market can also be an emotional roller coaster. You might spend months or even years waiting for prices to drop, only to watch them rise even further. This can be a frustrating and stressful experience that can take a toll on your mental health.

Buy for the Long-Term

Rather than trying to time the housing market, focus on buying a home that meets your current and future needs. Buying a home is a long-term investment, so it’s important to choose a property that you’ll be happy with for years to come. If you’re planning to live in the home for a long time, fluctuations in the housing market will matter less over the long term.

In conclusion, trying to time the housing market can be a risky move for homebuyers. Instead, focus on buying a home that meets your current and future needs, and that you can afford. Over the long-term, buying a home is still a smart investment, regardless of market conditions. #closedbyclough

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Home Owner/Seller • New Home Buyer • March 25, 2023

6 Tips for Organizing Your Kids’ Toys and Belongings

by Aaron Clough

Keeping kids’ toys and belongings organized can be a challenging task, especially when you are a busy parent and homeowner. But, with a few simple tips and tricks, you can easily keep your home neat and tidy. In this article, we will share some practical tips for keeping your kids’ toys and belongings organized.

Create designated storage spaces The first step in keeping your kids’ toys and belongings organized is to create designated storage spaces for them. This can be in the form of shelves, toy chests, baskets, or cubbies. Assign each belonging a specific storage space, and make sure that your kids know where to put them after they are finished.
Use labels Using labels is a great way to keep things organized and ensure that everything has a designated place. Label the storage containers and shelves with the name of the toy or belonging that goes in them. You can also use picture labels for younger children who cannot read yet.
Involve your kids Involving your kids in the process can make it more fun and engaging for them. Encourage them to help you sort their toys and belongings and decide where they should go. This will also teach them valuable organizational skills that they can use later in life.
Rotate toys One effective way to keep your kids interested in their toys and belongings is to rotate them. Store some of their toys in a box or bin and swap them out every few weeks. This will not only keep things fresh and exciting but also help prevent clutter and excess toys.
Donate or sell unused toys As your kids grow, their interests and preferences may change, and they may outgrow some of their toys. Instead of letting toys up valuable space, consider donating or selling them. This will not only help declutter your home but also benefit someone else who could use them.
Regularly declutter Make it a habit to regularly declutter your kids’ toys and belongings. Every few months, go through their toys and get rid of broken or unused items. This will help keep their storage spaces organized and prevent clutter from building up.

In conclusion, keeping your kids’ toys and belongings organized requires a bit of effort and planning, but it is worth it in the end. By utilizing the tips above, you can ensure that your home stays tidy and your kids’ toys and belongings are always in order. #closedbyclough

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Home Owner/Seller • March 20, 2023

Downsizing: The Perfect Next Step for Parents of Graduates

by Aaron Clough

As your high school-aged child graduates, you might find yourself with an empty nest and a desire to downsize. Whether you’re looking to save money or just simplify your life, downsizing can be a great choice. Here are some tips to help you prepare for the move, shop for a new home, and evaluate the equity in your current home.

Prepping For A Move

Preparing for the move can be overwhelming, but it doesn’t have to be. First, declutter and get rid of any items that you no longer need or want. Consider donating or selling these items to make some extra cash. Then, create a list of what you’ll need in your new home and what can be left behind. This will help you stay organized and make the moving process smoother.

Setting Up Your Search

When shopping for a new home, consider your lifestyle and needs. Do you want a smaller home or a condo? Do you need a yard or a garage? Think about the amenities that are important to you, such as proximity to shops and restaurants or access to public transportation. Don’t forget to factor in the cost of utilities and maintenance when evaluating your options.

Know Your Equity, Know Your Budget

Evaluating the equity in your current home is crucial before downsizing. This will help you determine how much you can afford to spend on your new home. To calculate your equity, subtract the balance on your mortgage from the current value of your home. If your home has appreciated in value, you may have more equity than you think. This can be a great source of funds to help pay for your new home.

Overall, downsizing can be a great way to simplify your life and save money. By preparing for the move, shopping for a new home that fits your lifestyle and needs, and understanding your existing equity you set yourself up for a smooth transition. Congrats on this exciting new chapter in life! #closedbyclough

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New Home Buyer • March 8, 2023

Mortgage Rate Buy Downs: Does it Move the Needle?

by Aaron Clough

Understand How Residential Real Estate fairs during recessions

If you’re considering buying a house, then you’ll likely be looking for ways to make the purchase more affordable. One strategy that many buyers use is a mortgage rate buydown. This means paying additional points upfront to lower the interest rate on their loan. Let’s take a look at the impact of buying down your mortgage rate by 1%.

Let’s Look at an Example…

Example, let’s assume you’re buying a $500,000 home with a 5% down payment and a starting interest rate of 7.1%. If you were to buy down your rate by one full percentage point to 6.1%, you’d pay an additional 1% of the loan amount upfront. In this case, that would be $4,500.

So, what impact would this have on your monthly mortgage payment? Well, if you didn’t buy down your rate, your monthly payment (including mortgage insurance) would be around $3,504. However, if you did buy down your rate, your monthly payment would be around $3,176. That’s a savings of over $320 per month!

Long-Term Impact of Rate Buy Down

But that’s not the only benefit. Over the life of a 30-year loan, the total interest you’d pay with a 7.1% interest rate would be around $966,000. However, with a 6.1% interest rate, you’d pay around $812,000 in interest. That’s a savings of over $154,000!

Of course, buying down your mortgage rate isn’t right for everyone. It depends on your financial situation and long-term goals. If you plan to live in your home for only a few years, then it may not make sense to pay upfront for a lower interest rate. On the other hand, if you plan to stay in your home for the long haul, then buying down your rate could save you a significant amount of money over time.

In summary, buying down your mortgage rate by 1% can have a big impact on your monthly payment and the total interest you’ll pay over the life of your loan, even with a smaller down payment. If you’re considering this strategy, be sure to crunch the numbers and make sure it aligns with your financial goals. #closedbyclough

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Investor • March 2, 2023

Maximizing Returns: The Advantages of DSCR Loans

by Aaron Clough

Investors are always on the lookout for ways to finance their projects, and one such option is the debt service coverage ratio (DSCR) loan. DSCR loans are popular among investors as they offer flexible terms and lower interest rates, making them an excellent lending product for investors.

DSCR loans are unique because they consider the borrower’s ability to generate cash flow to pay back the loan, rather than just their credit score. This means that investors can secure financing based on the cash flow they expect their investment to generate. The lender will analyze the cash flow generated by the investment and determine the maximum amount of debt that can be serviced.

DSCR loans are ideal for investors looking to finance projects that generate consistent cash flow. For instance, rental properties, commercial real estate, or businesses with a steady income stream. The loan terms are usually flexible, and the interest rates are lower than traditional loans. This makes them an attractive option for investors who want to maximize their returns while keeping their expenses low.

Another advantage of DSCR loans is that they typically have a longer repayment term than other types of loans. This means that the investor has more time to generate cash flow from their investment and pay back the loan. Longer repayment terms also result in lower monthly payments, which can free up cash flow to be used for other investments or expenses.

DSCR loans also have a higher loan-to-value (LTV) ratio, which means that investors can borrow a larger percentage of the investment’s value. This is especially beneficial for investors who may not have enough capital to cover the entire cost of the investment. The higher LTV ratio reduces the amount of capital the investor needs to contribute and increases the potential return on investment.

In conclusion, DSCR loans are an excellent lending product for investors who are looking to finance projects that generate consistent cash flow. The loan terms are flexible, and the interest rates are lower than traditional loans. Additionally, the longer repayment terms, higher LTV ratio, and consideration of cash flow make them an attractive option for investors looking to maximize their returns while keeping their expenses low. If you’re an investor looking to finance your next project, consider a DSCR loan as a financing option.

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Uncategorized • February 28, 2023

Understanding Months’ Supply of Inventory in Real Estate

by Aaron Clough

Are you buying or selling a home and confused about the term “months’ supply of inventory”? Simply put, it’s a metric that measures the number of months it would take to sell all homes on the market, given the current pace of sales. Let’s delve into why it’s important.

Months’ supply of inventory indicates the state of the housing market. A low supply (less than six months) is a seller’s market, meaning there are more buyers than homes available. This can lead to bidding wars and higher prices. Conversely, a high supply (more than six months) is a buyer’s market, giving buyers more negotiating power and lower prices. And while we are up to around 3 months of inventory (up from 1.2 months of inventory in 2022) we still see a shortage of available homes.

Knowing the months’ supply of inventory can help you make informed decisions when buying or selling a home. As a buyer, you may need to offer above asking price or compete with other buyers in a seller’s market. In a buyer’s market, you can ask for more concessions from the seller. As a seller, you can price your home higher in a seller’s market, but may need to be more competitive in a buyer’s market.

Remember market conditions and stats can vary wildly from market to market, state to state. Making decisions based off national averages could set you up for failure. While market specifics vary, months’ supply of inventory gives you a general idea of whether you’re in a buyer’s or seller’s market. Understanding the state of the market can help you make informed decisions that align with your real estate goals. #closedbyclough

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