7 Other Types of Precious Metals to Invest In (Besides Just Gold & Silver)

When you think of precious metals, chances are the first two that come to mind are gold and silver. Most people would be hard-pressed to name five precious metals off the top of their heads.

As you invest, you often hear that precious metals make great safe-haven investments. So, you’ve looked into gold bullion, silver coins, and maybe even some physical platinum, but are these all your choices?

No!

There are several metals that are considered “precious” and act as solid safe-haven investments. So, if you’re not interested in buying silver and gold coins or you want to practice diversification within your safe-haven holdings but don’t want to stray too far away from precious metals, you’re in luck; you have several options.

What Are Precious Metals?

By definition, precious metals are rare, naturally occurring metallic chemicals that hold significant economic value. The vast majority of precious metals will not oxidize (rust) under normal environmental conditions, providing longevity in the value placed on them.

For example, you’re able to wear your gold ring and silver necklace any time you’d like. While they may collect dust and need a good polishing here and there, your ring and necklace will never rust or decay.

Moreover, due to the rarity of gold and silver, these metals maintain a significant value that often grows in times of economic uncertainty.

Why Investors Are Attracted to Precious Metals

Precious metals are a common component of successful investment portfolios, especially during economic downturns. These investments provide protection from market volatility, and often see price growth during economic declines, making precious metals a great store of value when economic and market conditions are uncertain.

Precious metals are attractive during positive economic times as well. Many of these metals are used in the manufacturing of electronics, automobiles, and even batteries, helping to keep the industrial and technology sectors alive.

That value makes precious metals a go-to asset class to include in any well-diversified portfolio.


How to Buy Precious Metals

When most people think about buying precious metals, they usually think of buying silver and gold bars and coins by the troy ounce. Although that is an option, there are several ways to gain exposure to the precious metals market, especially to alternative metals that aren’t typically minted into coins.

1. Buy Physical Precious Metals

One way to go about investing in precious metals is to buy hard assets like ingots and coins or even buy gold bars through Vaulted. Often referred to as bullion, for some precious metals these coins and bars are available at market price from various websites or at your local coin or pawn shop.

2. Buy Precious Metals Exchange-Traded Funds (ETFs) and Mutual Funds

If you’re not interested in having bars and coins made out of high-value metals in your home or safe deposit box, you have the option to invest in precious metals without physically possessing a single coin.

There are several exchange-traded funds (ETFs) and mutual funds that are centered around investments in the precious metals market. These funds use assets pooled by a large group of investors to buy physical precious metals or shares of stock in industrial or mining companies that focus on the production of precious metals.

Taking the ETF and mutual fund approach gives you the ability to step back and let the pros handle your investments for you. Moreover, like most other investment-grade funds, precious metals ETFs and mutual funds generally practice heavy levels of diversification, protecting your investments from any sudden decline in the value of one or more of the fund’s holdings.

3. Buy Mining Stocks

Without mining companies, there would be no precious metals on the market. These companies are rewarded when spot prices for the commodities they mine are high and feel pain when market prices fall.

As a result, the stocks that represent these mining companies ebb and flow with the values of the commodities they’ve centered their business around. Thus, by investing in the mining companies that produce the precious metals you’re interested in, you’re getting indirect exposure to the precious metals market.

Pro tip: You can earn a free share of stock (up to $200 value) when you open a new trading account from Robinhood. With Robinhood, you can customize your portfolio with stocks and ETFs, plus you can invest in fractional shares.


Precious Metals Other Than Gold and Silver

Gold and silver are great safe-haven investments, but if you want to practice diversification within the precious metals asset class, there are several other metals to choose from. Some of the most popular investments include:

1. Copper

Copper is often referred to as a precious metal, although by the strictest definition, it’s not. For one, copper oxidizes under normal environmental conditions. Moreover, the metal is vastly available around the world, missing the rarity threshold.

Nonetheless, due to its extensive uses, the metal is considered by some to be precious, and is an investable asset regardless.

To mine copper, mining companies dig pit mines and collect copper ore, which are materials known to contain copper and, in many cases, iron compounds.

Copper Uses

Copper has a wide variety of commercial and industrial uses. The majority of copper is used in electrical applications because the metal is a great conductor of electricity. Copper is also commonly used in components that keep motors running.

2. Iridium

Iridium is a metal that’s part of the platinum group of metals. It is a hard, brittle metal with a silver look. Iridium is extremely hard, has a very high melting point, and is one of the rarest elements in earth’s crust, making it overwhelmingly valuable.

As is the case with traditional precious metals, iridium doesn’t oxidize under normal environmental conditions. It is among the most corrosion-resistant known metals. Aside from its industrial uses, it is a prized collectible asset due to its rarity and high value.

Iridium is produced in two ways. Most commonly, it is a byproduct of nickel mining, as nickel is found in the same layer of the earth that iridium is. However, there are also mining companies that focus on the mining of platinum ore, which tends to be rich in iridium.

Iridium Uses

Like most precious metals, iridium has many uses. Most importantly, it is used as a hardening agent for a wide range of platinum alloys. These alloys are used for tipping pins and compass bearings.

The precious metal is also used in crucibles and equipment used at high temperatures as well as a source for heavy-duty electrical contacts.

3. Lithium

Lithium is a versatile precious metal. Although it is deposited around the world, found in rocks and brines, it is always found in low concentrations, making it quite rare overall.

Lithium is a relatively soft, silvery metal used in various applications around the world. Lithium salts, the raw material from which lithium is developed, can be found in many areas around the world. These salts are found in underground deposits of clay and mineral ore, in geothermal brines, and even dissolved in ocean water, and there are a wide range of extraction methods.

Lithium Uses

Lithium is used in a wide array of applications. Most notably, the precious metal is used in some batteries, including those used in electric vehicles, solar power systems, and marine applications. Many point to the use of the metal in electric vehicle batteries as the catalyst for the recent gains in value it has experienced.

Lithium is also known as a stabilizer in the world of psychiatric medicine. Lithium compounds are used to treat some serious mood disorders, including bipolar disorder, major depression, and schizophrenia.

4. Osmium

Osmium is another precious metal in the platinum group. The metal is hard and brittle, and has a silvery-blue hue. Osmium is one of the rarest metals found in the earth’s crust and has multiple applications, leading to its high economic value.

Osmium can be found naturally in platinum-bearing river sands in North America, South Africa, and the Ural Mountains of western Russia, but its concentrations are so low and difficult to find that osmium is more efficiently produced as a byproduct of nickel refining operations.

Osmium Uses

Compared to other precious metals, osmium has relatively few industrial uses, but is useful in multiple applications. Osmium is often found as a component of platinum alloys, and has also been used in fountain pen tips, instrument pivots, needles, and electrical contacts.

5. Palladium

Palladium is a prized precious metal among investors. It is highly resistant to corrosion and bears an attractive silvery-white appearance. Palladium is a relatively soft metal and is particularly rare — significantly rarer and more expensive than silver or gold.

Palladium is found in very small concentrations in nickel and copper ore. However, because so much nickel and copper ore are processed, these small concentrations collected as a byproduct can add up to a substantial secondary income stream to mining companies.

Palladium Uses

If you own a vehicle, there’s a strong chance you own a small amount of palladium because the metal is likely present in your catalytic converter, its most common application. However, it’s not the only use of the metal.

Palladium is used in medical applications like blood sugar test strips, surgical instruments, and dentistry. The precious metal can also be found in aircraft spark plugs, electrical contacts, and even jewelry.

6. Platinum

Platinum is a very soft metal with a white-silvery look. The name platinum comes from the Latin “platino,” meaning little silver. Not only is the precious metal highly resistant to corrosion, it has high levels of conductivity and maintains stability at high temperatures.

Platinum occurs naturally deep inside the earth’s crust and is generally mined in deep pit mines found in South Africa.

Platinum Uses

Platinum is recognized as a metal commonly used in jewelry, but bling isn’t this precious metal’s only thing. It also has several applications in the medical industry, including in dental work, medical equipment, and laboratory equipment. You’ll also find platinum used in some of the world’s strongest magnets. Finally, with its high levels of conductivity, platinum is often used in electrical contacts and fine resistance wires.

7. Rhodium

Rhodium is an ultra-rare, silvery-white, hard metal. Like others in the platinum group, rhodium is highly resistant to corrosion under natural environmental conditions.

Rhodium is a very rare metal, naturally occurring only in small concentrations. It is generally mined as a byproduct of other mining activities. This is yet another precious metal commonly found in small concentrations in nickel deposits; it is also found in platinum ore.

Rhodium Uses

Rhodium is a versatile metal with several commercial applications. Rhodium is used in jewelry and catalytic converters. However, the metal is most commonly used as an alloying material in platinum and palladium alloys that are found in airplane spark plugs and medical and laboratory equipment.

8. Ruthenium

Finally, ruthenium is yet another member of the platinum family of metals. The silvery-white metal is hard and brittle, yet incredibly shiny, and will not tarnish.

Ruthenium is primarily collected as a byproduct of nickel mining. The metal is extracted through a series of chemical processes that separate it from other platinum group metals like platinum, palladium, and osmium.

Ruthenium Uses

Ruthenium has multiple commercial uses. It is commonly used as an alloying agent in platinum jewelry. It’s also used as a hardening agent in platinum and palladium alloys, which are found in electrical contacts designed for severe wear resistance.

Interestingly, ruthenium is an important component of various solar panels. The metal is used to convert solar energy into usable electrical energy.


Pros and Cons of Investing in Precious Metals

Precious metals are hot commodities that are just about always in high demand, so it makes sense that many people want to invest in them. However, as with any investment vehicle, investments in precious metals come with advantages and disadvantages.

Pros of Precious Metals Investing

Some of the most significant benefits to investing in precious metals include:

  • Stability. Precious metals aren’t known for volatility. Investments in this category are generally stable, and these investments can provide a shelter against economic hardship as safe havens.
  • Predictability. With the exception of those used largely as industrial materials, like copper, precious metals have an inverse correlation with the economy. When economic conditions are negative, investors ditch stocks and squirrel their money away in safe havens like precious metals. Conversely, when economic conditions are booming, investors ditch precious metals to dive into the stock market. Therefore, by following economic trends, you’ll be able to correctly predict the direction of most precious metal prices.
  • No Credit Risk. When you own precious metals, you own that metal. When it’s time to sell, you can turn that metal into cash. When investing in a company through stocks — or even in a municipality through bonds — you’re accepting the risk that the organization may default and you may lose a significant portion or all of your principal investment. That’s not the case with precious metals — at least in terms of owning the hard assets. You own a real, physical asset and aren’t dependent on any particular company or government succeeding in order for your investment to hold its value.

Cons of Precious Metals Investing

Although there are plenty of reasons to be excited about investing in precious metals, there’s always a downside. The most significant cons to investing in this category include:

  • Slow Growth. Investing is all about growth, but precious metals are stable. These commodities tend to experience slow, steady price growth, whereas the right stock picks can result in significant gains over a short period of time.
  • Numismatic Markup. Precious metals bullion comes with a numismatic markup. Essentially, creating coins and bars takes work, which costs money. As a result, you’ll pay more per ounce for coins and bars than the spot price of the precious metal you’re investing in.
  • Liquidity. If you hold physical precious metals, it may take time to find a buyer who’s willing to pay a reasonable price. As a result, certain precious metals investments come with liquidity risks.

Should You Invest in Precious Metals?

Precious metals have a place in just about every investment portfolio out there today. Due to their rarity and the generally high level of demand for these metals, they provide a level of stability that few assets on the market have the ability to provide, making them a perfect asset class for the safe-haven allocation within your portfolio.

So, it’s not necessarily a matter of if you should invest in precious metals, but a matter of when.

As a result of the relationship between precious metals and the global economy, when economic conditions are positive and markets are bullish, it’s best to keep your precious metals holdings to a minimum. On the other hand, when economic conditions falter and markets fall into bear territory, it’s time to rebalance your portfolio, putting an emphasis on precious metals and other safe-haven investments.


Final Word

Precious metals investing is about much more than investing in gold and silver bullion. There are several different types of precious metals and multiple ways to invest in them without even holding a piece of the metal in your hand.

Like any investment, it’s important to do your research and get an understanding for what makes precious metals move in value before risking your first dollar.

Nonetheless, with the price stability and shield from inflation offered by this rare class of metals, investments in precious metals are an important part of most well-balanced investing portfolios.

Source: moneycrashers.com

6 Warning Signs That You Need a New Job

Data show that a good economy is helping workers leave their jobs for more money.

According to The Wall Street Journal, career experts used to tell people to stick to one job as long as possible, even if there was a down economy. The idea was that if you were planning on finding a new job at some point and had a history of job hopping, employers might have considered you unreliable.

The Journal reported this in 2004. Fast forward to the present, and more recent data suggest the opposite may be true. The 2017 Q3 Workforce Vitality Report from ADP, a payroll processor, found that among full-time workers, job switchers saw an earnings increase by an average of 4.9 percent. Job holders lagged behind at 4.3 percent. A similar ADP report from the first quarter of 2017 found that a better economy is giving workers more leverage, meaning they feel more comfortable leaving a job and negotiating a salary increase.

A better economy is giving workers more leverage, meaning they feel more comfortable accepting the signs it's time to change jobs.

This significantly changes the career game. Now that switching jobs won’t necessarily hurt you, it’s crucial to discuss ways you know it’s time to quit your job.

Here are six warning signs you need a new job:

1. You haven’t seen a raise in two years

According to another ADP survey, there is a sweet spot for trading in your current gig for a new opportunity. The survey found that individuals who leave a company after at least two years, but before five years, get the highest salary increases at a new job.

Individuals who try to switch jobs after working five years at the same company won’t see as much of an increase as those who leave between the three- to five-year mark (this, the survey found, is when employees get the greatest salary bump). The longer you stay past five years, the less of an increase you’ll see, the ADP survey found. More experience often means you’ll have higher pay at your current job, so you’re less likely to see as much of a pay bump if you leave.

2. The company is having money problems

One surefire warning sign that you need a new job? “If your paycheck suddenly starts becoming irregular,” says Sandy Smith, a senior certified human resources professional with seven years of experience working in corporate human resources. It’s a clear indication of cash flow issues within the company, she adds.

Not seeing a raise in two years or if your company is having money trouble may be warning signs you need a new job.

Smith, who is also the founder of the personal finance blog Yes, I Am Cheap, says this is one of the major signs it’s time to change jobs.

“Saving money by not paying employees is the death knell of a company on its last legs,” she says, “and you should immediately jump ship.”

If your employer is starting to cut benefits or lay people off, Smith suggests that it might be a warning sign you need a new job and time to financially prepare for a job transition. While one layoff or cut may not be definite signs it’s time to change jobs just yet, Smith says to keep an eye on it.

“Layoff after layoff indicates a serious issue, and you should never take for granted that your job is safe,” she says.

“Saving money by not paying employees is the death knell of a company on its last legs, and you should immediately jump ship.”

– Sandy Smith, founder of Yes, I Am Cheap personal finance blog

3. You’re stagnant

Going as far as you can go with a company is one of the ways you know it’s time to quit your job.

“If you are upwardly mobile but you have no opportunity for advancement within the company, it might just be time to move,” Smith says.

And because you alone are in charge of your career, it’s essential to be proactive, Smith says. That means you can’t wait for your manager to give you a promotion or tell you when there’s no promotion anywhere in the foreseeable future.

So, if you find yourself lacking mobility, it may be a warning sign you need a new job, and finding a new employer could be the best way to advance. Smith also points out that taking a new job in this scenario will likely allow you to increase your earning potential as well.

According to a 2016 global report by LinkedIn, 74 percent of job candidates want a job where they feel like their work has a sense of purpose. If that need for fulfillment isn’t being met, it may be one of the ways you know it’s time to quit your job.

While there were several factors that contributed to Tara Falcone’s decision to leave her well-paying job, a lack of purpose was one of them. When she started her own investment firm in 2016, ReisUP LLC, she was seeking more personal and professional satisfaction.

Before going out on her own, Falcone spent four years working as an investment analyst on Wall Street. She enjoyed what she did, but she wasn’t exactly feeling fulfilled by it. She spent her days helping people who were already wealthy manage their money. Instead, she wanted to help people who came from backgrounds similar to her own attain more wealth.

74 percent of job candidates want a job where they feel like their work has a sense of purpose.

– 2016 global report by LinkedIn

“Coming from a humble, blue-collar background, I yearned to find a way to use the skill set I had acquired on Wall Street to help people like my friends and family.”

Even if you identify a lack of fulfillment as a sign it’s time to change jobs, leaving a secure paycheck is a difficult decision for anyone, especially when, like Falcone, you’re making a pretty hefty sum. Yet, money was not the biggest factor in her decision to leave her job. Ultimately, she valued other things more—like helping an underserved community and having more personal time.

“The money was good, but not good enough to tie me down, nor more than I thought I could ever make doing something else,” she explains. “I grew up without money, so I wasn’t chasing it. And I knew that a big shiny paycheck would never fulfill me on its own.”

6. Your job is negatively affecting you

A final way you know it’s time to quit your job: It’s negatively affecting your life. Of course, this may look differently to different people. For some, health problems are the warning signs you need a new job. For others, like Falcone, it’s when your job starts getting in the way of your personal life.

“My work started negatively affecting the limited time I spent with family,” she says. “As an investment analyst, you don’t really get true vacation time when the market is open.”

Falcone recalled going home for Christmas and still needing to be available for work via phone and email. Eventually, she felt like it became too intrusive.

It’s time to find a new job

If you're not fulfilled with the work you do, it could be a sign it's time to change jobs.

If you see yourself in any of these six scenarios, take them as signs it’s time to change jobs. Dust off that resume, get on LinkedIn and start reaching out to your contacts. Now that the job-hopping stigma seems to be a thing of the past, you have far less to worry about should you decide to quit your job and find a new one.

Source: discover.com

Why Sales Presentation Skills Matter

One positive impact of the pandemic is that originators have been forced to connect with customers via video conferencing. Before Covid-19 restrictions, some originators incorporated video into their sales process but many producers had not.

With the rise of remote working, video conferencing has become a primary tool for personal interaction. Even sales leaders are using video to connect with employees. While many originators are hoping that in-person meetings will eventually return, I believe video is here to stay!

Sherlock: not having an accurate view of sales performance is a recipe for disaster
Pat Sherlock

In my view, the old ways of selling are on life support. This will significantly affect how mortgage sales organizations reach out to customers and referral sources in the future. Video presentation skills will be mandatory for originators moving forward.

While face-to-face meetings have long been the standard for sales organizations around the world, how salespeople connect and generate trust has been fundamentally redefined. To understand the growing influence of online interaction, consider that 40% of couples met their partners online versus through mutual friends, according to a Stanford University 2019 study.

If finding a partner in today’s world can happen through online interaction, why can’t the same techniques apply when making the investment of a lifetime, purchasing a home?

The power of video as a sales tool is undeniable. In the past few years, demand for video content has increased exponentially. According to Nielsen’s 2018 Total Audience Report, the average U.S. adult spends nearly six hours per day watching video across a variety of devices including televisions, laptops, smartphones, and tablets. There is no question that video is a normal aspect of daily life, especially for younger generations.

While some originators may be uncomfortable with online presentations, mastering this format will be critical if producers want to connect with prospects and referral sources. When you think about it, the idea of selling online is not that unusual. If movie actors can cultivate a strong following, why shouldn’t originators be able to do the same and develop their own followers or “tribes.”

The bottom-line? Selling is moving to video whether lenders and their originators are ready or not. Sales leaders should be hiring individuals who are skilled in this medium and are willing to use it. The pandemic has only accelerated the need for originators who can deliver excellent sales presentations—both in-person and online.

Has your company embraced video sales culture? Don’t wait!

Pat Sherlock is the founder of QFS Sales Solutions, an organization that helps organizations improve their sales talent management and performance. For more information, visit https://patsherlock.com.

Source: themortgageleader.com

To Spend, or to Cut? 4 Questions to Help You Avoid Unnecessary Expenses

Consider your material and emotional values to decide which expenses belong in your budget.

It’s a universal truth: For most people, budgets only have room for so much. Juggling the cost of that summer vacation you’ve been taking for 10 years with the pressing need to help pay your child’s college tuition, actually use your pricey gym membership or fix your faulty water heater is no easy feat. Sometimes, something’s got to give. But how do you decide which expenditures are worth making and which ones you should cut?

Eliminating unnecessary expenses may depend on your personal priorities.

Figuring out when to spend and when to cut—and how to avoid unnecessary expenses—depends on your personal priorities. But the following four questions will help you weigh each spending decision and choose the best option for you:

1. Is it more than you need?

During a recent family budget meeting at Rosemarie Groner’s house, the hot topic was … wait for it … paper towels. Every week the personal finance blogger’s family sits down to review how they can reduce unnecessary expenses. When their giant pile of paper towels came under scrutiny, Groner, whose blog is called The Busy Budgeter, admits they were skeptical of the wisdom and sanitation of reducing their use of paper towels. They worried about the risk of spreading salmonella and other germs, for one thing.

cut back in other areas to reduce unnecessary expenses. Travel provides the opportunity to explore different places and cultures, experience personal growth and reflection and create long-lasting memories with loved ones—all worthy outcomes.

Let’s say it’s not travel you’re pondering in your quest to avoid unnecessary expenses, but the generous line item in your budget for events like concerts, plays or museum visits. Can these things get expensive? Sure. But you may decide that the enrichment of the arts is valuable enough to continue this spending.

Investing in your education can pay off in the long run, so don't assume it's a cost you can cut to avoid unnecessary expenses.

Likewise, an investment in your education—earning a degree or taking a few classes to boost your credentials and increase your earning potential—might also be a worthwhile expenditure. In 2016, for example, the median weekly earnings for workers with a master’s degree were $1,380, compared to $1,156 for those whose education topped out with a bachelor’s degree, according to the U.S. Bureau of Labor Statistics—a difference of more than 19 percent. Professional degree earners had a nearly 51 percent pay advantage over those at the bachelor’s level.

3. When’s the last time you used it?

While some experiences are special enough that you wouldn’t want to miss out on them, there might be others you rarely use even though you’re continuing to pay for them. When eliminating unnecessary expenses, watch out for automatically renewable charges on gym memberships, magazine subscriptions and retail subscription services (including for fashion, cosmetics and food preparation kits) that continue even when you no longer want them.

Ditching a gym membership you don't use is one way to reduce unnecessary expenses.

That’s a favorite hack for eliminating unnecessary expenses from Sami Cone, a Nashville-based speaker, author and finance blogger. Cone, who discusses money-saving tips on her website and hosts a radio show called Family Money Minute, recommends putting a reminder on your calendar at either the beginning or end of each month to check your statements for expendable services and subscriptions.

Similar to those subscriptions you haven’t used in ages, are there items you purchase by habit that you or your family no longer want or need? A useful way to avoid unnecessary expenses is to take your spending off autopilot. Possible signs you need to do this stat include: You’re paying for music and dance lessons your children skip more often than they attend; you buy extra phone and data services you never use or premium cable channels you never watch; you’re frequently replacing dietary supplements and cooking spices that have lingered on the shelves past their expiration dates.

4. Will you save later by spending now?

Sometimes the best way to reduce unnecessary expenses in the long run is to invest in what seems like a big expenditure now. Upgrading your home’s heating, ventilation and air conditioning system to a more energy-efficient model, for example, might be a smart way to splurge because it can save you money on your utility bills. According to the U.S. Department of Energy’s Energy Star program, replacing a central AC unit that is more than 12 years old with an Energy Star-certified AC unit could trim your cooling bill by 30 percent.

Another example of a major expenditure that can pay off later is investing in quality home furnishings instead of choosing bargain goods. The higher-end products may save you more in the long run because they are often more durable so you won’t have to replace them as soon. Making healthier, if more expensive, food choices now can also potentially help you avoid medical costs related to illnesses like diabetes, high blood pressure and heart disease.

Stay motivated to reduce unnecessary expenses

Having a specific financial goal in mind when you set your spending priorities is an important source of motivation when you’re trying to avoid unnecessary expenses. Groner says her family is now out of debt after paying off more than $30,000 from credit cards and car loans with the help of their frugal spending habits.

Stay motivated by keeping track of how far you've come since you first started eliminating unnecessary expenses.

“In the beginning, when we were first trying to reduce our expenses, the reward was the relief to sleep at night without worrying about living paycheck to paycheck,” Groner says. “We kept going even after we left the paycheck-to-paycheck cycle because then budgeting became fun. It wasn’t about deprivation anymore. It was about laying out a path to get whatever we want in life.”

Cone, whose family used plans for a Disney vacation as an incentive to reduce unnecessary expenses, says it’s important to choose an objective that everyone in the family can get excited about. That way, when eliminating unnecessary expenses starts to pinch, you can remind them: “We’re saying ‘no’ now, so we can say ‘yes’ later,” she says.

Source: discover.com

5 Reasons Why You Should Still Buy an Investment Property

If owning an investment property was on your bucket list prior to COVID-19, don’t scratch it off the list just yet. In fact, buying an investment property is still a good idea. From wealth building to tax incentives, investment properties can still offer a lot of perks. In particular, there are five reasons why you should still buy an investment property.

Read: Investing in a College Town Rental: Is Now a Good Time?

Charleston, South Carolina, USA homes along The Battery.Charleston, South Carolina, USA homes along The Battery.

Low Mortgage Rates Continue

Taking advantage of historically low mortgage rates is a major incentive to buyers— and investors. While investment loans do typically have increased rates over owner-occupied homes, the investment rates are still relatively low. One of the important aspects in successful real estate investing is to minimize holding costs and keeping the monthly payment as low as possible to insure cash flow.  With overall reduced interest, investors can see more cash flow and less overhead in their investment.

Read: Should You Use a Home Equity Line to Buy an Investment Property?

House-Hacking Has Grown In Popularity

Not all investment properties have to be entirely rented out to tenants. Instead, the house-hacking model offers the best of both worlds: real estate investing with the benefits of owner-occupant. As thousands of Americans are furloughed or unemployed, many are looking to reduce their living expenses— including cheaper rent. Owner-occupants are benefitting from this change by renting out spare bedrooms, guest houses, or even occupying a multi-family property and renting out the additional units. If house-hacking is a desirable option for you, there are a few things to consider:

  • Know what rent you can reasonably expect from the spare bedroom/guest house/additional unit
  • Make sure you can afford the property without renting out any portion
  • Consult a CPA for any tax incentives or consequences from house-hacking

Young couple buying new investment rental propertyYoung couple buying new investment rental property

Vacation Rental Demand Has Increased

As most of us have been quarantined at home for months on end, the desire to break out of our four walls has grown. However, people are looking for safer alternatives than hopping on a plane to a tropical destination. Instead, many are opting for road trips and vacation homes to enjoy a change of scenery while still social distancing. Purchasing an investment property in a high-demand vacation area has long proven to be a good investment, and that still rings true today. In fact, data shows vacation areas are recovering faster than urban areas as far as vacation rental demand. As the demand surges, investments like Airbnb can still offer a lot of benefits. Airbnb investing is also a model that can be combined with the house-hacking model.

Read: Questions to Ask Yourself Before Buying a Home in a Hurricane-prone Area

Unique Point In History

Unlike the last several years, we are in a unique point in history regarding housing. Cambron Elsey, Realtor with The Boulevard Company in Charleston, South Carolina describes this unique housing need, “We have three generations looking to buy or rent: Generation Z, Millennials, and Baby Boomers. Because of this, we have a housing shortage.” With such a demand for affordable housing—whether you’re investing to sell or investing to rent, there is a steady flow of demand from three generations! In fact, both millennials and baby boomers are looking for a “hands free lifestyle” that is found through rentals, according to CNBC. Over the next five years, over 40,000 housing units must be delivered to the market per year just to meet the demand of baby boomers; however, new supply growth hasn’t met the demand. This is a prime, often overlooked, area prime for real estate investing. One of the keys to success in real estate investing is to identify a major demand and meet that demand— meeting the “hands free” demand is one of many opportunities currently available to investors.

Row houses in Spring Garden, Philadelphia, PennsylvaniaRow houses in Spring Garden, Philadelphia, Pennsylvania

Wealth Building

One of the long-term proven methods to wealth building is through real estate investing. By investing early in real estate, people can enjoy passive income, tax benefits, and appreciation in value. Real estate investing can offer cash flow now but also a payday later. According to Forbes, “Appreciation, or the rising of home prices over time, is how the majority of wealth is built in real estate.” While the real estate market may fluctuate, similar to the stock market, a long-term hold mentality shows that it consistently offers a return on the investment that many utilize for retirement.

While 2020 is proving to be a unique year on all fronts, it doesn’t mean it’s a bad time to begin (or grow!) your real estate investing career. Ask any successful real estate investor, and they’ll tell you: you make your money on the buy. Buy right, even in the midst of a pandemic, and real estate investing can be a smart choice!


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

Documents You Need to Apply for a Mortgage

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Any application for credit should be taken as a serious matter. Simply applying and allowing the lender to pull your credit report has an impact on your credit score, so it’s not a good idea to apply for things on a whim. But mortgage applications tend to be more serious than most other apps because they’re for such large amounts of money and longer terms.

When you’re borrowing hundreds of thousands of dollars for 15 to 30 years, the lender wants to ensure you’re a sound investment. They actually have an obligation to their shareholders, employees and other customers to try to take on mortgage accounts that are likely to result in a return instead of a loss.

For these reasons, you usually have to show up to the mortgage application process with a lot of documentation. Here’s a rundown of the documents needed for a mortgage application.

Mortgage Application

The first document is the mortgage application itself. Whether you complete it online or as a physical piece of paper at a broker’s office or bank, this is the document that launches the process.

Typically, mortgage applications require the same type of information. That includes:

  • What type of loan you want. You may need to check or click boxes to indicate whether you want a conventional loan, VA loan, FHA loan or other type of loan.
  • Why you need the loan. Is it a refinance or new purchase, and are you purchasing a single-unit home you plan to live in, a rental property or a business property?
  • The property itself. You must fill in the address and some other basic information about the property you want to buy.
  • Demographic information about the person or people borrowing the money, including name, address, phone number and Social Security number.
  • Employment history for all borrowers.
  • Income and assets for all borrowers.
  • Debts and other liabilities for all borrowers.

You’ll also need to sign various agreements and disclosures. That includes whether you have a bankruptcy or other issue in your financial history and an agreement that the creditor can pull your reports.

Assets

You can’t just list items like assets on your mortgage application, though. You also have to prove your statements with documents. Documents that prove your assets can include bank statements showing current cash balances, investment statements showing current values and life insurance policies. If you’re including gift funds in your assets, you’ll need letters or other documents demonstrating where the money came from.

Debts and Expenses

Most of the time, the mortgage company can see evidence of your debts and expenses on your credit report. If the underwriter has any questions or concerns during the approval process, they may reach out for additional information such as copies of credit card statements. This is especially true if you’ve recently paid down debt and that isn’t yet reflected on your credit report.

When it comes to debts, one of the major concerns is your debt-to-income ratio. If it’s too high, the lender is less likely to approve you. Calculate this ratio by adding up all your monthly debt payments along with the estimated mortgage payment and dividing it by your total monthly income.

For example, if you have a car payment of $400, credit card bills with monthly minimums of $200 and student loans of $500 a month, that’s $1,100 in debt. Add a $1,500 mortgage and you would have $2,600 in debt. If you make $7,000 a month, your debt-to-income ratio is 37 percent.

The Consumer Financial Protection Bureau notes that the preferred debt-to-income ratio for mortgage approval is 43 percent or less. This is because you can’t use all your income up on debt—you still need money for utilities, food, fuel, savings and other critical expenditures.

Income and Employment Verification

You do have to prove the income amounts you put on a mortgage application. Common ways of doing so are summarized below.

Tax Returns

Tax returns from the past few years can demonstrate that you make a certain amount per year and have done so consistently. If you’re planning to apply for a mortgage soon and don’t have copies of your tax returns, consider proactively ordering a free transcript from the IRS.

W-2s and Pay Stubs

Copies of W-2 forms or a handful of pay stubs from your employer are also good ways to demonstrate your income. Start saving your paycheck stubs if you think you’ll apply for a mortgage soon.

Additional Information (Self-Employed)

If you’re self-employed or have forms of income that aren’t from an employer, you’ll need documentation. Some options can include statements from checking accounts or payment systems that show money you received. You could also provide a profit and loss statement if you’re self-employed.

Credit History

While the lender can get most of what they need from your credit report, you may need to be available to answer questions. Specifically, be ready to explain any negative items on the report. It’s a good idea to get a copy of your credit report for yourself before you apply for a mortgage so you know what might come up.

Other Documents

  • Photo IDs, such as a driver’s license or passport
  • Your rental history if you don’t already own a home, especially if you want to use it as demonstration of your payment history
  • Divorce records to prove that certain debts are no longer yours or that you don’t have access to funds from a previous spouse
  • Foreclosure or bankruptcy records, if applicable
  • Documentation of residency status if you’re applying as a noncitizen

Who Do You Give These Documents to?

You give the documents as requested to a mortgage broker you’re working with or to an underwriter with the mortgage company. You might be asked more than once for some documents, especially if you go through a preapproval process.

During preapproval, the mortgage company evaluates you as a borrower in general and lets you know what amount, terms and interest you can qualify for. Once you move to buy a home, the mortgage must go through a final approval process, and someone may need to look at your documents again or request additional documents.

Start Preparing for a Mortgage Early

A lender might ask for documents and require that you respond in a certain amount of time or it will deny the application automatically. So, you don’t want to get caught searching for documents during the process. Prepare for a mortgage app early by gathering everything that you anticipate that you might need. Another way to boost your chances for mortgage approval is to check your credit and resolve any negative items you can.

You might also be able to take actions to positively impact your credit before you apply for a mortgage—especially if your report has mistakes on it. If you want to repair your credit before making a big financial move, contact Lexington Law to find out how we can help.


Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com