July 2023

Home prices across the U.S. had the highest quarter-to-quarter gain since 2015, as potential homebuyers are getting pushed out of an increasingly expensive market. 

The median single-family home value rose 10.2% from the first to the second quarter of 2023 to $350,000, a report from real estate data firm ATTOM found. It’s the biggest quarterly increase in almost the past decade.

Median home prices in 565 of the 574 counties analyzed in the report (98%) were less affordable than in prior quarters, more than double the number of counties that were unaffordable two years ago before mortgage rates went up. This means only 2% of counties examined were more affordable than their historic averages. 

Buyers Are Feeling the Pinch

It’s unclear if the increase in prices is temporary or signals another extended price surge, but “house hunters are feeling the pinch,” said Rob Barber, CEO of ATTOM.

“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices,” he said. “With that has come another blow to how much house the average worker around the country can afford.” 

Looking at data from publicly recorded sales deeds and average wage data from the U.S. Bureau of Labor Statistics, ATTOM found that affordability among homeowners worsened in the last quarter. The portion of income required to buy a home shot up to 33%, above common lending practices of a 28% debt-to-income ratio. 

Still, wage growth has outpaced housing prices in 74% of the counties analyzed—a reversal of trends during the same quarter in 2022, when prices were growing faster than wages in 91% of counties.

Counties with the Highest Sales Growth

The report found that 91% of counties analyzed had seen an increase in housing prices. They rose at least 5% in two-thirds of markets, hitting a peak in nearly 40% of the counties examined.

Among the 47 counties with a population of at least 1 million, the biggest year-over-year increases in sales prices were in the South, with most counties located in Florida. A housing shortage and surge in population have caused prices to skyrocket in the Sunshine State.  

The Bottom Line

While inflation and mortgage rates have steadied, there is still a bit of uncertainty around the U.S. economy. The Federal Reserve is also poised to raise interest rates in July, which could further increase housing prices. But if the stock market cools down and the economy falls into a recession, housing prices could drop. 

The third quarter of 2023 will be key to knowing if the housing price boom is set to continue or will fade as it did during the same period last year. For now, though, real estate remains a seller’s market.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Black Knight’s Andy Walden and CNBC’s Diana Olick join ‘The Exchange’ to discuss pandemic era migration trends impacting the real estate market, top states for population growth, and how demographics and homebuilding trends are moving home prices.

In recent years, wineries and winemakers have become increasingly conscious of the environmental impact wine production and distribution has on the environment. Many companies are now altering farming practices to be more climate friendly, and considering sustainability in packaging and distribution. However, the weight of wine bottles, which accounts for 29% of wine’s carbon footprint, is still one of the largest issues the industry faces.

I recently spoke with Ron Rubin of Ron Rubin Winery, Sonoma County Vintner and founder of BLUE BIN, to learn more about the launch of the brand’s new 100% recyclable wine bottles, and how others in the wine industry can join this trend.

Ron told me how BLUE BIN is the first premium wine packaged in a 750ml bottle made from 100% recycled polyethylene terephthalate (rPET) plastic and that these bottles are smaller and lighter than conventional bottles, shatterproof, and fully recyclable. As a veteran in the wine industry, Ron also shared his journey and reason behind founding BLUE BIN and the state of the wine industry.

Christopher Marquis: Tell us a bit about the inspiration behind the Blue Bin brand? Where did the name Blue Bin come from?

Ron Rubin: There were a number of inspirations behind the BLUE BIN brand. As a Certified B Corporation one of the impact area pillars is prioritizing and taking care of the planet, which the Ron Rubin Winery is committed to doing.

After some research we learned that just the weight of wine glass bottles (from 420 grams to 850 grams) accounts for 29% of wine’s carbon footprint, so finding a solution to reduce the carbon footprint was a motivating factor – BLUE BIN’s bottle weight is 52 grams.

Additionally, I read a study by Sonoma State University that showed 90% of all wine is consumed within a one week or two week period after purchased, so we felt there must be a better alternative to the traditional glass wine packaging that would be better for the environment and perfect for majority of wine drinkers who consume a bottle within two weeks.

The inspiration behind the name came to me last summer when I was driving to our winery on Route 116 (Gravenstein Highway) outside of Sebastopol, and I noticed all the blue recycling bins out on the road ready for pick up that day. As we were exploring alternative bottles to combat the waste from traditional wine bottles, we discovered that we could make a 100% rPET bottle, and knowing that blue bins are where all the recycled material comes from to produce rPET, BLUE BIN felt like the perfect name.

Marquis: What was the process like to make a 100% recyclable bottle made from 100% recycled material? What sets the bottle apart?

Rubin: We worked in partnership with Amcor, the global leader in responsible packaging solutions, to create the BLUE BIN bottle – the U.S’ first wine bottle made out of 100% recycled materials. Without the leadership, support, and working in partnership with Amcor, BLUE BIN would not have been launched. This was a most enjoyable collaboration and learning experience for all.

With BLUE BIN’s first-of-its-kind bottle, we hope to inspire more wineries to no longer purchase glass bottles weighing more that 420 grams and to consider using 100% recycled PET wine bottles for wines they produce that are consumed shortly after consumer purchase.

Marquis: How can other wine brands follow in Blue Bin’s footsteps to create a more sustainable + planet-friendly wine industry? Do you have any recommendations for wineries that want to become B Corps?

Rubin: More wineries need to be open to using some type of alternative packaging (rPET, aluminum, lightweight glass) for wine in their businesses. Being cognizant of packaging and which is better for the planet will create a more sustainable and planet-friendly wine industry.

My recommendation for wineries wanting to become B Corp Certified is to JOIN the movement to become part of a global community of businesses that meet the high standards of social and environmental impact while being committed to continuous improvement. Small steps can help our planet and beginning those steps as soon as possible will help create a better future for people and the planet.

But the process was time consuming, difficult, and exciting all at the same time. From start to finish it took us 651 days. I think more wineries haven’t embarked on this journey because of the commitment to transparency and rigid scoring on 5 impact areas in the B Impact Assessment (Workers, Environment, Governance, Customers, Community), which are all pillars Ron Rubin Winery proudly adhere to.

Marquis: The wine industry has been deeply impacted by climate change, whether fires or droughts. What’s the future of wine look like, and why is it important for consumers to take action to drink more sustainably?

Rubin: The future of wine can look positive as long as winemakers and consumers work together to create positive, planet-friendly decisions throughout the wine making and purchasing process. As we know, the wine industry can have huge impacts on the environment, from packaging to farming practices. Along with BLUE BIN, there have been many wineries and advocates that have spoken out about ways to make the industry better for the planet, including packaging, which we know accounts for 29% of the industry’s carbon footprint.

For consumers, a good first step is for them to do their research and seek out and purchase planet-friendly alternative packaging to enjoy the wine they love with less environmental impact to planet Earth.

If you’re a real estate investor that needs help marketing, you’re not alone. A dedicated real estate marketing plan allows real estate professionals to generate additional leads and revenue.

The world of real estate is highly competitive, so having an effective marketing plan to capture the attention of potential clients is important. Many real estate investors are twiddling their thumbs without a marketing plan because they can’t figure out how or where to start.

This article will review the top real estate marketing ideas or strategies investors should use to promote their businesses.

What Is Real Estate Marketing?

Real estate marketing, in a nutshell, involves the strategy and execution of marketing techniques to engage and convert a target audience. Most real estate professionals will do things like upping their social game, sending newsletters, and more.

For real estate investors, building a marketing presence gets their name out there in hopes that it will build credibility and, in turn, a backbone for trust and establishing relationships.

Let’s say that you are a real estate agent; the primary goal of an agent is to find prospective home buyers, sellers, or even tenants for properties. Through various techniques, a marketing plan aims to find, acquire and nurture real estate leads.

What’s Included in a Real Estate Marketing Plan?

A real estate marketing plan outlines a strategy for accomplishing a set amount of the company’s goals. In the real estate industry, these plans often include:

• Competitor research
• Buyer persona
• Budget
• Goals
• Timeline

A real estate marketing plan must be as detailed as possible because it will help set a clear path for you and your team to follow to reach your goals.

Why Real Estate Marketing Is Important for Investors

Now let’s look at it from a real estate investor’s point of view. With any real estate business, an investor needs to market just as much as, let’s say, a broker. As an investor, your primary goal, like many business owners, is to get highly-qualified leads.

In this case, a lead can be a seller actively looking for an investor to purchase their property or a seller who has kicked it around once or twice and is interested in learning more about the process, but not yet ready to sell.

Sometimes, homeowners, unfortunately, find themselves in a foreclosure or tax auction bind, so selling to an investor is a great option to get out of a pickle.

How To Market Your Real Estate Business

The evolution of technology changes the landscape of how to market a real estate business in 2023. Your real estate marketing plan is your answer to gaining more highly-qualified leads and driving real estate sales. Let’s dive into the top ways to market your real estate business.

1. Direct mail

Yes, this is the old-school method that even today’s most successful real estate professionals swear by. A direct mail campaign gives real estate investors, agents, other local businesses, brokers, or anyone else in the space, an opportunity to get their name out there without picking up the phone or sending out an email.

To this day, despite being in a whirlwind of technology, sending something via direct mail like a postcard is one of the most popular marketing methods to use. Other real estate marketing materials include business cards and flyers.

2. Billboards

Yes, this is still a thing. Just like a property, it’s important to keep in mind location, location, location. As an investor, it’s essential to find a billboard placement that is in a spot where hundreds, if not thousands, of people can see it every day.

Remember, the three things to avoid when creating a billboard ad are clutter, hard-to-read fonts, and too many numbers.

3. Email marketing

There are many email marketing systems out there. From MailChimp to ActiveCampaign to Hubspot, investors use email marketing campaigns to effectively keep in touch with a target audience, whether they’re actively seeking to sell or purchase a property.

An example of an email marketing campaign is a newsletter. Personally, I have multiple real estate agents from my area that send out email newsletters to remind me that they are there and ready and able to help if I ever want to sell or purchase a property.

4. Bandit signs

This is a perfect real estate marketing idea for a starter investor. Have you ever been at a traffic light and seen a sign that says something like “Jim buys houses,” hanging on the telephone pole? 

Perhaps you don’t think of it as anything at that moment, but every day for the next six years, you see the same sign day in and day out. Years later, when you go to sell your home, you remember, “Jim buys houses.”

For those with a small budget and not enough time in the day, bandit signs are cost-effective for promoting brand awareness. Just ensure you check local regulations to see where these signs are allowed.

5. Cold calling

It’s funny how much word gets around. As an investor, I’ll drive around and ask neighbors about an abandoned home, a term coined as driving for dollars, to get the inside scoop on the property.

I’ll then skip trace to find the homeowner’s contact information to cold call them. Skip tracing is a term used in real estate to describe the process of obtaining information about a homeowner or property in hopes of finding useful information to make a potential investment.

6. Website

Do you have a real estate website? If the answer is no, you should get one. Why? More than 70% of businesses have a website in 2023. There are a variety of website builders out there, from WordPress to Squarespace, and plenty of tutorials if you have never built a website.

One of the most fundamental things to consider when building real estate websites is SEO. Sure, 44% of buyers start looking online for properties, but the chances of them finding your website just because it exists are slim to none. SEO is a huge component of marketing, especially in today’s world.

7. Networking

There are a ton of real estate networking events out there. From conferences to local meet-ups, the ability to meet with other real estate agents, investors, brokers, you name it, is readily available wherever you go.

A real estate investor goes to the events to get a conversation going, whether with potential buyers, sellers, agents, brokers, or more. Relationship building is an important part of any marketing plan because you never know when it could lead to a real estate investment deal.

8. Social media

Social media helps get your business name out there. But, this is two-fold. Some enjoy being on social media platforms, and some do not.

If you’re open to it, start posting on social platforms, sharing tips on investing in real estate or a day in an investor’s life.

For those who don’t enjoy being on socials, you can pre-schedule posts using software like Hootsuite or Sprout Social without logging into the platform. Pre-scheduling helps eliminate time spent on an app.

9. Advertising

Advertising your real estate business through local search ads or on the sidebar of the top real estate sites is a great idea for those investors looking to build their brand through online marketing.

As someone involved in real estate and marketing, advertising helps jumpstart your branding and marketing efforts and establish a solid flow of lead traffic.

10. Reviews

Social proof means so much to this world. Why? We thrive on technology. If you have not built up customer testimonials, now is the time. Remember, 95% of customers read online reviews before buying a product.

As an investor, the goal is to be trusted by buyers and sellers in the real estate market. If a client leaves a glowing review about your service on Google, it’s likely to help establish trust and credibility with a potential client.

You can also ask past clients to record video testimonials that you can use for your real estate website to help build credibility.

11. Content marketing

There’s this thing called thought leadership, and it’s a big deal. In the space, we’ve got Grant Cardone, Barbara Corcoran, and a ton of other big names that thrive on thought leadership. So, how do you compete with those people? Be yourself.

You are your own brand, so building credibility and trust with clients starts with you. Many real estate professionals produce thought leadership articles to help connect with their audience.

Related: Here are five tips for creating a content marketing plan for your real estate business.

12. Local SEO

If you’re a real estate professional, people interested in your services will likely google a local service near them. Investors need to build up their Google My Business profile to stand out locally.

A Google Business Profile is basically a second website displaying business reviews, ratings, contact information, business address, and hours.

What’s Your Go-To Real Estate Marketing Strategy?

Generating real estate marketing ideas is daunting for investors just starting out. Whether your goal is to become the next Grant Cardone or the go-to investor in your city, creating a real estate marketing strategy is essential to success.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Ward Fitzgerald, EQT Exeter CEO, joins ‘Closing Bell Overtime’ to discuss the Industrial sector, comments from Amazon CEO Andy Jassy, and real estate supply and demand.

I was in Las Vegas recently for Pegaworld iNspire 2023, Pega’s annual customer event. It’s the first time it’s been held in person for four years, and it was great to connect again with a lot of familiar faces, meet some new ones and catch up on all things Pega.

I’ve always liked Pega as a company. I like their people, what they stand for, their vision for customer engagement and service, their technology and how they always seem to be ahead of the curve when it comes to emerging customer and technology issues like next-best-action strategies, how to make the customer experience more empathetic and the responsible deployment of AI.

Here’s four things that stood out for me at the event:

1. Autonomous Enterprise

In his opening keynote, Alan Trefler, Pega’s Founder and CEO, introduced the concept of the autonomous enterprise, a business which applies AI and automation to decisioning, operations, and servicing across the organization to help it become more self-optimizing in order to drive maximum efficiency, effectiveness and better customer outcomes.

This announcement felt like a realisation of something that Pega has been alluding to and working towards for some time. Rob Walker, Pega’s GM 1:1 Customer Engagement, described a similar vision to me back in 2016, on my podcast, when he said, “they (Pega) will ultimately be able to use their data, analytics, AI and machine learning capabilities that spring from their ‘always on brain’ (the Customer Decision Hub) to help companies better understand all of the different actions, interactions and responses that occur between each customer and themselves such that they will be able to optimise their operations and customer experience in real time. This will mean that, eventually, their technology will be able to ‘run’ a small area of the company.”

Moreover, when asked if the emergence of generative AI had changed their vision or had just accelerated it, the response was unanimous: It had only accelerated it.

2. Generative AI Developments

Like many other technology firms, the team at Pega have been hard at work over the last few months building out an initial set of 20 new generative AI-powered applications, what they call ‘boosters’, that will be applied across the Pega Infinity™ platform.

These will cover things like helping marketers produce more engaging marketing messaging by providing text and image suggestions, understanding how AI decisions are made (particularly useful for those brands operating in regulated industries), helping kick-start and speed up the low-code application development process, automatic call or interaction summaries for both salespeople and customer agents, faster access to knowledge and easier access to operational insights.

While many other tech companies in the customer experience and engagerment space are developing their capabilities along similar lines, it was some of the little things amongst their feature sets and demos that stood out for me.

For example, the integration of Cialdini’s principles of persuasion that marketers can engage to help drive suggestions about how they can change their text and messaging to improve impact and engagement felt considered, innovative and transparent.

Moreover, an innovative head-to-head live demo where setting up a new loan application workflow in Turkish was completed in less time than it took to make a Western omelette showcased how easy it is to leverage their new Gen AI capabilities in real-time.

3. Process Mining

Enabled by Pega’s acquisition of Everflow last year, another big announcement was the launch of Process Mining. This will use AI and dedicated algorithms to model and analyse existing processes based on event log data. Doing so will allow it to pinpoint bottlenecks and other pain points that impact either customers or employees and then suggest and prioritize more efficient ways for staff to refine their processes.

As brands automate more and more of the simpler tasks that customers and employees face, I think the release of Process Mining is really interesting as it will allow brands to take aim at the “messy middle” of customer service.

It’s important to remember that a company’s ability to deliver a great customer experience does not just exist at the externally facing edges of an organization. It also lies in its heart and deepest recesses and, in particular, its ability to connect and enable all of the teams, systems and resources that it will take to deliver that stand-out experience. Process Mining will help identify all of the blockers and snags that prevent that, and that is good news.

4. The Underlying Hum

Overall, I continue to be impressed by Pega, their people, technology and vision and what Pegaworld showed is that the possibilities with their platform are endless.

However, the underlying ‘hum’ coming out of the conference is that it’s not the technology that is slowing brands down.

Technology offers more than enough possibilities, and its implementation is pretty much known and well-understood.

The biggest blocker seems to be the business transformation piece: Understanding the problem, getting clear on the vision, articulating the why, achieving alignment, taking people with you, developing the business case and doing the work of making the changes required to drive the improved outcomes that organizations desire.

It doesn’t have to be fancy. It just needs to be pragmatic and focused on delivering results and value.

So, brands have the tools. Now, they need to pay attention to the hum.

Choosing between a HELOC vs. home equity loan is a big decision. HELOCs have variable interest rates and home equity loans have fixed rates, but that’s not the only difference.

Check out how they compare to see which makes the most sense for your real estate business.

What Is a HELOC?

A HELOC or home equity line of credit is a second lien on your property. It’s separate from any first mortgage liens you have on it.

A HELOC works much like a credit card. You receive a credit line that you can access as you need. There isn’t a limit to how much you can withdraw, up to the credit line’s limit. HELOCs have a draw period and a repayment period.

Draw period

The draw period determines how long you can withdraw funds using a linked debit card or by writing checks. You can make interest payments or repay the borrowed principal, plus interest, during this time.

If you repay what you borrowed, you can draw funds from the credit line again until the draw period ends.

The repayment period

The repayment period begins when the draw period ends. During the repayment period, you make principal and interest payments monthly.

HELOCs have a variable interest rate, so you won’t know your payment amount from month to month as it depends on how the market performs.

What Is a Home Equity Loan

A home equity loan is also a second mortgage on the property. However, unlike a HELOC, you receive the funds in one lump sum instead of a credit line. You can use the funds however you want, even creating your own credit line by putting the funds in a savings or money market account to draw from as needed.

Fixed interest rate

Home equity loans have a fixed interest rate, unlike HELOCs. So you know from the time you sign the loan documents what interest rate you’re paying. It never changes, and neither do your monthly payments. You pay the same amount each month.

When monthly payments start

You start making monthly payments, usually on the first of the month following the loan closing. For example, if you close on May 15, your first payment will likely be due June 1. Sometimes, there may be a longer delay, and your first payment would be July 1. It depends on the lender.

Similarities and Differences Between HELOCs and Home Equity Loans

When comparing a HELOC and a home equity loan, consider the similarities and differences to determine which works best.

Similarities between home equity loan vs. home equity line of credit

There are many similarities between a home equity loan and a home equity line of credit, including the following.

• They are both second mortgages: Both are secured loans requiring collateral. The property is the collateral for both home equity loans. If you miss too many payments, you put the property at risk of foreclosure.
• Make monthly payments: You are obligated to make monthly payments to both loans unless you didn’t draw money from the HELOC. The monthly payments will differ, but if you borrow money, you must repay it.
• Potential for a fixed interest rate: Home equity loans automatically have fixed monthly payments, but some lenders allow borrowers to lock a rate on a portion of their HELOC. If you choose this option, you may freeze that part of the loan proceeds, meaning you can’t reaccess them, but you get predictability in the loan payment.
• You’ll incur closing costs: Most mortgage loans typically have closing costs. They won’t be as high as when you closed on the first mortgage, but there are closing costs you will pay.

Differences between home equity loan vs. home equity line of credit

Just as there are similarities, there are also many differences when comparing home equity loans and HELOCs, including the following:

• Interest rates aren’t the same: Home equity loans typically have a fixed interest rate, and HELOCs have a variable interest rate. As discussed above, there are circumstances where you might have a fixed monthly payment on a part of your credit line, but then you freeze it.
• Receiving funds: Home equity loans pay out funds at the closing on an investment property or after the three-day right of recission on an owner-occupied property. You can use them or save the funds in your own account, whatever you choose. Home equity lines of credit provide access to a credit line where you can draw money as needed or request a lump sum at the closing if you need cash immediately.
• Monthly payments: The home equity loan monthly payment is fixed. The interest rate never changes, and neither does your payment. Home equity lines of credit payments depend on how much money you withdrew and whether you’re making interest-only payments or paying back some of the principal during the draw period.

An example comparing the difference between a home equity loan and a line of credit

Here’s a quick example of how the payments would differ for a home equity loan vs. a line of credit.

• Loan amount: $25,000
• HELOC rate: 11.9%
• Home equity loan rate: 9.75%

A HELOC with a 30-year term (10-year draw and 20-year repayment) will have a payment of $253 per month, but that could change based on the variable interest rates.

A home equity loan for the same loan amount with a 30-year term will have a monthly payment of $214.79.

This comparison assumes you’d withdraw the entire loan principal at the closing. If you don’t use the whole credit line, your payment will be lower on the HELOC, but it can change monthly based on market rates.

Pros and Cons of HELOCs

When using home equity, a home equity line of credit has pros and cons. Here’s what to consider.

Pros

• You only pay interest on the money you withdraw. So you could have a $10,000 HELOC, but if you only have a $1,000 outstanding balance, you’d only pay interest on the $1,000.
• You can make interest-only payments. Some borrowers see this as a benefit, especially if they’re experiencing a financial situation they didn’t anticipate, such as tenants that destroyed the house or a natural disaster that requires expensive work to repair.
• You may get a fixed rate for a short period. Some lenders offer a fixed interest rate for an introductory period, much like credit card companies do to get you to take the loan. You may also be able to convert a portion of the loan balance to a fixed-rate loan if you no longer need to use it.
• You may be eligible for lower interest rates. Most credit lines secured by a property have much lower interest rates than personal loans or credit cards.

Cons

• You risk losing your home. If you miss too many payments, the lender could start foreclosure proceedings on the property.
• You could easily overspend. Having a credit line available is the equivalent of creating credit card debt. Knowing you can use the funds whenever you want can be dangerous if you aren’t financially responsible.
• You’ll have unpredictable payments. The variable interest rate makes it hard to predict your payments and budget. If the payment increases your operating expenses too much, it could decrease your profits.
• The full loan becomes due when you sell the property. If you decide to utilize your exit strategy and sell the property, the proceeds must go to the primary mortgage and second loan lender before you receive any funds.

Pros and Cons of Home Equity Loans

Home equity loans also have pros and cons. Understanding the good and bad can help determine if a home equity loan suits you.

Pros

• You’ll have fixed payments. The fixed interest rate means fixed payments for the loan term. You never have to worry about the payment changing and ruining your budget.
• You can use the funds for anything. Most lenders don’t ask why you need the funds; if they do, it usually doesn’t affect your loan approval.
• You may get better terms than other loan options. If you compare a home equity loan to credit cards or personal loans, you’ll see that you may get better terms because you receive the funds as one lump sum.

Cons

• You must make principal and interest payments immediately. Unlike HELOCs, you must make full monthly payments immediately and for the duration of the loan.
• Home equity loans often have higher closing costs. HELOCs usually cost less to close than home equity loans, which means you must have more money at closing.

How To Get a HELOC or Home Equity Loan

Fortunately, securing a home equity loan or HELOC is pretty straightforward. Once you decide which is right for your financial needs, get quotes from two to three lenders.

How to apply

Most lenders have an online application process. You’ll complete a loan application stating how much you need to borrow, how much equity you have in your home, and information about your income, assets, and home’s market value.

Qualifying for home equity loans and HELOCs

Understanding how to qualify for home equity loans and HELOCs is important. Fortunately, the guidelines are simpler than a first mortgage.

• Decent credit scores: Each lender requires different credit scores, but on average, you’ll likely need a 680+ to get the best rates and terms.
• Average debt-to-income ratio: Many lenders require a 45% or lower DTI. This means the new home equity loan or line of credit payment plus any other consumer loan payments you have don’t exceed more than 45% of your monthly income.
• Enough equity in your home: Whether you want to borrow money from your primary residence or a rental property you own, you’ll need enough equity to borrow from and leave at least 20% untouched. Many lenders will lend up to 80% to 85% of the appraised value.

Provide documentation and get a home appraisal

After applying for a home equity loan or line of credit, you must provide the lender with the necessary documentation, including:

• Pay stubs and W-2s to prove your income
• Tax returns if you’re self-employed or are using your rental income to qualify
• Bank statements to prove you have reserves
• Employer information to validate your employment
• Pay the appraisal fees to have an appraiser evaluate your home’s market value

The appraiser will compare your home to other recently sold homes, using their property values to determine the market value of the property you’re trying to borrow a home equity loan or line of credit.

Close the loan

After final approval, you close the loan and pay closing costs, as you did with your first mortgage. You’ll sign documents stating you understand your monthly payment and the obligation you’re accepting.

If you borrow a home equity loan, you’ll receive the funds at the table on any non-primary residences, and if it’s an equity line of credit, you’ll receive instructions on how to access your funds.

HELOC vs. Home Equity Loan: Which Is Best for You?

The difference between choosing a HELOC or a home equity loan is personal preference.

Choose a home equity loan if you want fixed monthly payments and need funds for one-time use. For example, if you’re paying for an emergency, medical bill, or a dream vacation, you don’t need access to the funds again. Take advantage of the fixed interest charges to pay the loan in full.

However, an equity line is better if you need a revolving loan to access the loan proceeds continually or need interest-only payments during the draw period. Just be sure you can manage the line of credit without spending needlessly. It’s also best to pay more than just the monthly interest charges.

HELOC vs. Home Equity Loan FAQs

What is the difference between a HELOC and a home equity loan?

A HELOC is a line of credit you can draw on like a credit card. You can use up to the maximum amount of the line of credit and pay interest only during the draw period if you choose. If you repay the borrowed amount, you can reuse the funds.

A home equity loan is a fixed-rate second mortgage. You receive the loan proceeds once at the closing and can use them however you want. Your payments never change on a home equity loan, and you don’t have access to reuse the funds.

Is there a downside to having a HELOC?

The largest disadvantage of a HELOC is the variable interest rate. You can’t predict your monthly payments. They can increase or decrease monthly, and you’re expected to keep up with your debts.

Is a HELOC a good or bad idea?

A HELOC can be a good idea when you need continual access to funds. For example, if you’re making home improvements, you may not know the full cost or what you’ll run into during the work. Having access to a credit line can make it easier.

Can you pay off a HELOC early?

Yes! You can pay your HELOC in full at any time. This is a good way to minimize interest charges and save money.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Ward Fitzgerald, EQT Exeter CEO, joins ‘Closing Bell Overtime’ to discuss the Industrial sector, comments from Amazon CEO Andy Jassy, and real estate supply and demand.

Business grants are an excellent way for startups and small businesses to secure much-needed funding. They are offered by governments and private organizations, but securing the capital is challenging. Application processes are complex; some funders set strict terms and conditions around how the money can be used, and the time and effort to apply for them can be demanding.

Jeroo Doodhmal founded her U.K.-based children’s shoe business, Pip & Henry, in 2020. Driven by a passion for the environment, the shoes are responsibly produced and made from sustainable materials such as organic cotton, pineapple leaf fiber and recycled rubber.

Like many entrepreneurs, she completely self-funded the startup. However, in the last couple of years, alongside business loans and equity funding, she has secured more than £350,000 in grant funding from organizations such as Innovate UK, eBay Circular Fashion Fund, John Lewis Circular Future Fund, and LSE Generate. Here she shares her secrets of success in the grant funding stakes.

Alison Coleman: What’s the best way to track which business grants are available?

Jeroo Doodhmal: Several grants are available to small businesses, each with different criteria related to a specific business problem, sector or location, as well as the size or maturity of the company. You have to do the legwork yourself, for example, connecting with individuals who work at funding agencies on LinkedIn and subscribing to newsletters from industry bodies and grant writing consultancies to get notifications about the larger grants from bodies such as Innovate UK. Setting up Google Alerts for relevant topics keeps you updated in real-time. Where possible, it’s also worth checking out the directories of current and upcoming grants from funding organizations.

Coleman: What was your first grant funding success, who was it from, and what did you use it for?

Doodhmal: Early in our startup journey, we won a few small grants, between £5,000 and £10,000, from MSDUK and LSE Generate. While I was bootstrapping the business, this helped to fund the development and design of our product range and the manufacture of our first few prototypes to test and soft launch with consumers.

Some grants offer a wide range for you to choose from, for example, between £150,000 and £500,000. It’s tempting to go high, but be realistic about your needs, given your business’s stage and plans. You will be asked to provide detailed forecasts and breakdowns of how you plan to use the funds and what milestones you hope to achieve each quarter. Prepare accordingly. Be authentic to yourself and your startup goals.

Coleman: Last year, you won the John Lewis Circular Future Fund award, which granted you £250,000 in grant funding. How challenging was that process, and what did you use the money for?

Doodhmal: It was a fairly lengthy process. I had to submit a written proposal outlining what I wanted the funding for, including video explainers. Shortlisted candidates were asked to provide further information, including detailed budget forecasts, timelines, risk mitigation plans etc. Finally, we were invited into the John Lewis offices to present in front of a panel of experts, some from within John Lewis and others working in the field of sustainability. From there, the winners were selected.

We are designing shoes that can disassemble more cleanly and grow with a child’s foot. This reduces the frequency with which kids’ shoes need to be sized up and allows for true end-of-life circularity. This grant helped kick-start that R&D journey, enabling us to work with specialist labs, designers, materials specialists and manufacturers to develop these much-needed solutions, something that startups of our size couldn’t fund themselves.

Coleman: How much funding have you had in total, and how much impact has it had on your business – what has it enabled you to do?

Doodhmal: We’ve won almost £400,000 in grant funding, and around 90% of it has been invested in our R&D work. While we’re still a distance away from releasing the outputs of this, we’ve made significant progress and feel confident of creating a genuinely game-changing solution for the children’s footwear market that will have a lasting impact on reducing the amount of waste generated by the footwear industry.

Coleman: What have been the most significant lessons learned in becoming successful at securing grant funding?

Doodhmal: Since winning the John Lewis Circular Future Fund, we’ve won several other significant grant awards, including from Innovate UK, eBay Circular Fashion Innovators Fund etc., and there are four essential learnings:

• Winning grant funding is not easy. We were one of four winners of the John Lewis grant out of around 250 applicants. The odds are often significantly lower with some of the popular Innovate UK grants. But don’t give up! I made three unsuccessful applications to Innovate UK before I was successful on my fourth, so listen to the feedback that you get, iterate your answers and apply again. In other words, keep learning.
• Set aside a reasonable amount of time to write your application. Each fund will emphasize different nuances of your business, i.e., commercials, your R&D journey, ethos and mission. Read through the goals and criteria carefully and directly answer questions around these, always providing data and stats to back up your assertions and claims. And never ‘copy and paste’ answers between different application forms. Be clear about your and your team’s experience and achievements. Leverage social proof; what other awards have you won? What do your customers or industry experts say about your business? If there is an option to submit a video, do it.
• You might be tempted to get a grant writer to help with some of the bigger awards. While they’re great for advising on formats and requirements, which can be helpful, if you’re new to grant writing, take the time to write the application yourself. No one can explain your business or convey your passion better than you.

Coleman: Seeking grant funding is challenging. What’s your advice to other founders just starting on their business journey?

Doodhmal: Applying for grant funding can sometimes feel like a dark art. It’s hard to discover what’s out there, read through the eligibility criteria, and then go through the laborious process of applying with low odds of success. Because the day-to-day running of your business can be so all-consuming, it is easy to be put off from investigating the space. I would advise identifying the niche where funding will impact your business most and focusing on finding and applying for the awards most relevant to those goals.

If you’re planning on buying or selling an investment property, having a handle on market conditions is critical. Can you expect a bidding war? Do you need to pay in all cash to win? What concessions might you need to make for buyers?

There’s no way to answer all these questions with certainty, but a new survey from Opendoor does offer some insights.

Here’s what to keep in mind as you prepare for buying or selling a property in the current market.

Buyers are Prepared to be Competitive

The vast majority of buyers expect to see a bidding war when they go to purchase a home. Millennials and Gen Z, in particular, see bidding wars in their future at rates of 76% and 73%, respectively. Baby Boomers are the least likely to expect big competition when buying a home.

Still, that doesn’t mean you can price your property extravagantly. Nearly 70% of buyers say homes are currently unreasonably priced, and 72% say affordability is their biggest concern when buying a house. So much so that a whopping 73% of buyers intend to bid below asking price. Intent to under-bid is highest with Baby Boomers and Gen Xers. 

“Baby Boomer buyers are hunting for deals,” wrote Amita Amora, Opendoor’s vice president of investments. “Some 80% say they intend to make an offer on a home at or below the asking price, and only 14% are willing to make an offer above.”

Speed and Certainty Matters Most to Sellers

If you’re buying a property, offering speed and certainty to the seller can give you the upper hand. Nearly nine in 10 sellers say the certainty of an offer not falling through is “extremely” important to them, and another 58% say cash offers are important. 

“With many buyers facing financing challenges and searching for a better deal, the rate of contract cancellations has increased significantly,” Amora wrote. “Today, 18% of home sales fall through—the second-highest percentage since 2014.”

About three in four sellers are looking to sell their home as quickly as possible, so getting preapproved for your mortgage, having your documentation ready, and being quick with inspections and repair requests can help (cash offers can help even more, though). 

Finally, be choosy about any demands in negotiation. Sellers are most willing to negotiate on their closing date and asking price, and 42% are willing to cover inspection fees. They’re not as amenable to paying for home warranties, helping with closing costs, or offering repair credits. 

A Disconnect

Buyers and sellers aren’t exactly aligned in today’s market, and that can make it challenging on both sides of the transaction. If you’re on the selling side, be reasonable about your list price and be willing to negotiate. Don’t expect tons of over-asking bids, and with older buyers, be prepared to play hardball. Baby Boomers aren’t nearly as likely to expect a bidding war or bid over asking price.

If you’re in the market to buy a new property, make sure your offers are as clean as possible. Have your ducks in a row financially (or come with a cash offer), and be careful what you ask for in negotiations. Some concessions are more likely than others.

As Amora wrote, “The good news is that both prospective sellers (76%) and buyers (80%) indicate a willingness to make concessions to expedite their process.”

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.