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Welcome Back,

Hello everyone,

Welcome back to another wealth wagon post. Today we will discussing another real estate market and as well as the biggest pros and cons of this market. Enjoy!

Daily News Updates:

In the business sector, Merck's shares declined over 11% after the company provided 2025 revenue guidance below analyst expectations and announced the suspension of Gardasil vaccine shipments to China.

Merck anticipates 2025 sales between $64.1 billion and $65.5 billion, with adjusted earnings of $8.88 to $9.03 per share, both underperforming analyst predictions.

Challenges in China, including economic issues and government anti-corruption efforts, have impacted Gardasil sales.

On the financial front, U.S. stock futures remained stable as investors considered recent trade policy changes and anticipated corporate earnings.

China imposed retaliatory tariffs on U.S. goods and initiated an antitrust probe into Google.

Alphabet and AMD are set to report their earnings after the market closes, with both companies' shares rising in premarket trading.

Palantir's stock surged over 20% due to strong earnings driven by high AI product demand.

Conversely, PepsiCo shares dipped as their Q4 results largely missed expectations, with declines in North American sales volumes.

In the sports world, Cristiano Ronaldo made pointed comments about a former manager, suggesting that not all of his coaches have understood football.

Fans speculated he was referring to Erik ten Hag, with whom he had a well-known fallout during his second stint at Manchester United.

In the United States, President Donald Trump has imposed a 10% tariff on all Chinese imports, effective February 4, 2025.

In response, China announced retaliatory tariffs, including a 15% tariff on coal and liquefied natural gas products, as well as a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the U.S., effective February 10.

Market Snapshot:

Knoxville, Tennessee's real estate market has been experiencing notable growth. As of December 2024, the median home price reached $320,000, marking an 8.8% increase year-over-year. Homes are selling after an average of 52 days on the market, indicating a somewhat competitive environment. The median sale price per square foot stands at $227, up 6.3% from the previous year.

Market Snapshot:

• Median Home Price: $320,000

• Year-over-Year Price Growth: 8.8%

• Median Days on Market: 52

Deal Of The Day:

Charming Single-Family Home in North Knoxville

• Price: $260,000

• Units: 3-Bed, 1-Bath)

• Monthly Rental Income: $2,000

• Cap Rate: Approximately 7.5%

This well-maintained home offers a solid investment opportunity with a 7.5% cap rate. The home renting for $2,000 per month, totaling an annual income of $24,000. Located near local amenities and the University of Tennessee, it promises consistent tenant demand.

Investment Strategy:

Seller Financing

In a seller financing arrangement, the seller acts as the lender, allowing the buyer to make payments directly to them over time.

This can be beneficial in tight credit markets or for buyers seeking flexible terms.

For example, purchasing a property for $400,000 with a 10% down payment and negotiating a 5% interest rate over 20 years can result in favorable monthly payments compared to traditional financing.

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Current Interest Rates:

Knoxville, Tennessee

• 30-Year Fixed Residential: 6.5%

• 15-Year Fixed Residential: 5.75%

• Commercial Rates: Starting at 6.2%

Mortgage rates in Knoxville are currently around 6.5% for a 30-year fixed loan, which is slightly higher than the national average. These rates can influence purchasing power and investment returns, so staying updated is crucial.

Real Estate Tip:

Navigating Knoxville's Rental Market

Knoxville's rental market presents lucrative opportunities for investors.

With a growing population and a significant student demographic, demand for rental properties remains high.

Investors should consider the following factors:

1. Location: Proximity to the University of Tennessee and downtown areas can command higher rents.

2. Property Type: Single-family homes and multifamily units are both in demand, but multifamily properties often offer better cash flow.

3. Market Trends: Stay informed about local developments, such as new businesses or infrastructure projects, which can influence property values and rental demand.

By conducting thorough market research and understanding tenant needs, investors can maximize returns in Knoxville's dynamic rental landscape.

Economic Conditions

Economic Conditions: Knoxville boasts a diverse economy, with strengths in education, manufacturing, and healthcare.

The presence of the University of Tennessee contributes to a stable job market and a low unemployment rate of 3.8%.

However, rising construction costs, up 5% over the past year, may impact new housing developments and property renovations.

Key Takeaways:

• Market Growth: Knoxville's median home price has increased by 8.8% year-over-year, reaching $320,000.

• Investment Opportunity: A duplex in North Knoxville offers a 7.5% cap rate with a monthly rental income of $3,600.

• Strategic Insight: Understanding local zoning laws is crucial for real estate investors to ensure compliance and maximize property use.

• Financing Approach: Seller financing can provide flexible purchasing options, especially in tight credit markets.

• Economic Overview: Knoxville's diverse economy and low unemployment rate contribute to a stable real estate market, though rising construction costs may pose challenges.

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