The Cost of Waiting Analysis in Today’s Market

Posted on July 24, 2011 by Tim

$30,000 is NOT chump change!  However, that is what you could be giving up if you wait ONE YEAR to buy a piece of property.  That’s right $30,000!  Here’s the math…

If interest rates go up 1% and property values increase by 5% the homes you are looking at this year for $210,000 will be a thing of the past.  Next year you will be looking at $180,000 homes for the same payment!

The principle and interest payment on an average priced home of $210,000 at 4.5% interest for 30 years with a 4% downpayment is $1021 per month.  If we bump the interest rate just 1%, which is entirely likely, the payment jumps to $1145 per month.  So to compare apples to apples we must find the loan amount that matches that payment.  That number is $187,500.00.  If we take a 4% appreciation into account then today’s house that is on the market for $180,000 will be worth $187,500 next year.

Are you renting right now and thinking “maybe if i wait a year I can save up more money and afford a larger home”?  If you are, you are among the tens of thousands of people that are making the same mistake.

Beat the system and get out of your comfort zone!  Join millions of people who are homeowners and begin to realize the amazing benefits, financially and intrinsically, who have taken the first steps towards true wealth, home ownership!

 

Posted in Investing, Local, Real Estate | Tagged advice, buy now, Buy Real Estate, buyer, buyer's market, dont' wait, investing, investor, mortgage broker, pre-qualified, real estate, realtor, seller | Leave a comment

5 Ways to Protect Yourself in a Seller Financed Deal

Posted on July 23, 2011 by Tim

If I am selling Real Estate, whether investment property not, and using seller financing the risk can seem daunting.  Fear not!  As a Seller there are many ways to protect yourself in the transaction.  Here are Five ways to protect your interests in seller financed transaction;

1. Keep the deed in your name.  Even in a land contract the deed is transferred to the buyer, but it is held in escrow.  Make sure it is YOUR attorney that holds it.  In case of default you don’t want the buyer’s attorney to play games with that critical instrument.

2. Pre-qualify your buyer.  As a Mortgage Broker, I am very familiar with all the onerous conventional finanacing guidelines.  These were put in place to protect lenders from making bad decisions.  Get familiar with them and use them to screen your buyers.  If they fail to qualify for a conventional loan, you need to make the informed decision to move forward based on the merrits of the transaction.  Don’t be embarrassed to ask!  It’s your asset to lose!

3. Do the paperwork!  I can’t tell you how many times I’ve seen people get involved with real estate on a handshake and later have the parties forget what was discussed and whose responsible for what! There are legal instruments out there to protect all parties in the transaction.  You can be creative, but use the tried and true instruments to do it and sign everything!

4. Use professionals!  Hire a real estate attorney to help you structure your deal.  Remember, they have errors and omissions insurance, so if they miss something, they pay, not you!  It is important to note that if we all listened to our attorneys and accountants, whose job it is to mitigate risk, we would do nothing and live in a plastic bubble.  You are the client and YOU run the show!  This goes for attorneys, inspectors, Realtors, accountants and every other service you require.  Hire them and listen to them, but remember it’s your deal!  Risk equals reward!

5.  Manage the transaction AFTER it is closed.  Business IS Relationship!  Stay in contact with your buyer.  Drive by the property a few times a month for the first few months to make sure it is being cared for.  Offer to answer any questions your buyer may have and check in with them two or three times a month at the beginning of the transaction and toward the end.

Putting these steps into practice will not guarantee your transaction will be successful but it Will increase the odds dramatically.  If you get into trouble and you have followed the five steps outlined above, you will be able to recover your property quickly and with the least amount of pain possible!  Happy Investing!!

Posted in Financing, Free Tips, Investing, Real Estate | Tagged buyer, flip, great deal, investor, land contract, mortgage, mortgage broker, note, protection, real estate, realtor, seller financing | Leave a comment

Selling 1-4 Family Investment Property in this Buyer’s Market

Posted on July 23, 2011 by Tim

Conventional Financing requires 20% down for a single family non-owner occupied, 25% for a 2,3or 4 unit and 30% if you own 4 and are buying your fifth! Couple that with very stringent credit requirements, unbelievablely strict income qualifications and experience requirements and you have a cocktail for an impossible seller’s market for investment property.

I prefer to think in terms of Solutions rather than the dismal problems that face investors. Since the problem with selling investment property lies in financing it, doesn’t the solution seem obvious? Why, then, is nobody doing it?

The answer is education. The solution is Seller Financing! I like to use land contracts to protect both buyers and sellers.

A land contract transaction allows the buyer to hold title to the property. The deed transfers to the new buyer but is held in escrow by a third party until the final payment is made. Most of the time that comes in the form of a balloon payment accomplished by a refinance a few (two or three) years down the road.

The seller gets to sell and get out from under the burden of property management and buyer gets a property at today’s bargain prices without the ridiculous scrutiny of today’s banking guidelines.

A caution to both parties; Sellers should pre-qualify buyers and only accept those with solid incomes and good credit. This is not intended to be a free real estate give-away, but a means to transfer one investor’s burden to another’s opportunity. Buyers should be aware of the numbers. Remember, you are buying a piece of real estate for the purpose of making money. Our system got into trouble because easy money allowed unsophisticated buyers to amass huge quantities of real estate with little or no experience and many (most in that category) failed. The numbers still have to work!

If you are a Professional Realtor reading this then seize the opportunity to be the educator of all parties. Seller financing is back and it is likely here to stay for a quite a while!

Real Estate Investing is the single most lucrative endeavor that the average American Citizen can engage in, and Today is the day to do it!!

Posted in Financing, Investing, Real Estate | Tagged buyer, buyer's market, investor, mortgage broker, owner financing, private financing, real estate, realtor, seller, seller financing | Leave a comment

Can I sell in a Buyer’s Market?

Posted on July 13, 2011 by Tim

Rates are rebounding back to the low side after a bump last week. We are looking at a 12-15 month backlog of inventory in most markets so it continues to be a raging buyer’s market.

Does that mean you should stop listing homes or trying to sell yours?

Absolutely not!

Homes that are priced properly, prepared professionally and proffered passionately will pend promptly! Whew… sorry.

Let’s break that down a bit.  Priced properly means that you have reviewed the most similar homes in your area that have sold within the last six to twelve months.  You have then made adjustments to those values for amenities that are different than yours.  For example, if you have two full baths and the comparable has only one full bath you should adjust the value of the comparable property UPWARD so that it would be comparable to your home.  I know that seems backward, but it is the way professional appraisers do it and it makes sense once you realize that you are trying to make the other property look like yours, not the other way around. Then look at your competition and price JUST UNDER the other active listings unless they are all out to lunch!  Your solds tell you the best story.

Professionally Prepared – Curb appeal, interior paint, carpet, cleanliness and staging all go into making your home stand out.  Scrub it down and paint everything that has ever had paint on it.  Think of it this way, you want to attack all five senses.  Visual, audible (put on some Jazz), Smell (bake some Oatmeal cookies – they are my favorite) touch (set your thermostat to the most comfortable setting) and taste (invite potential buyers to eat your freshly baked oatmeal cookies). 

Passionatley Proffered – Let the whole world know your home is for sale.  If you are selling “by owner” you should expect to spend about 1% of your home’s value on marketing. 

Selling your home in this market is NOT impossible, but it is a challenge.  If you are doing it “by owner” then try it for about 30 days, then hire a professional, experienced Reator who will have access to the 2000 + agents that are dying to sell your home for you and are feeding their children on the premis that it can be done!

Posted in Free Tips, Real Estate | Tagged buyer's market, curb appeal, how to sell real estate, investor, mortgage broker, real estate, realtor, seller, tips | Leave a comment

Is This the End of Low Mortgage Interest Rates?

Posted on July 1, 2011 by Tim

The tough decisions Greece has had to make to rescue it self from decades of overspending have begun to produce some economic optimism.  Couple that with NAR’s (National Association of Realtors) better-than-expected housing numbers on pending sales and we may be looking at the end of declining interest rates!

As we have said all along, it can’t last forever!  Get your buyers in the door NOW and lock those loans for them.  Our already anemic housing recovery may have just gotten the rug yanked out from under it. Higher Rates will NOT help, but have always been considered inevitable. 

The Federal Reserve can’t artificially depress interest rates forever.  Every action has an equal and opposite reaction.  That’s a law, by the way, not an idea.   

The good news is that YOU still have the ability to grab some bargains on homes with a Low Interest Rate if you move quickly.  Consider this an early warning to the pending spike.  Don’t miss the boat and think interest rates will stay low forever! 

Remember, we are at the bottom, the trough of the wave if you will.  Millionaires are made in the trough’s of rough seas, but realize their fortunes at the crest of the wave.

ACTION PLAN

  1. Do some research to confirm what is happening.
  2. Educate your self on the process and YOUR Real Estate Market (remember, Real Estate Markets are Local, NOT National)
  3. Work harder to find the right property!
  4. Get pre-qualified at Victory Funding who will match you to the Right Mortgage Product!  Call Now at 899-7700!
Posted in Financing, News, Real Estate | Tagged interest rate, mortgage, mortgage broker, Mortgages, realtor, tip | Leave a comment

Your Credit Score Makeup

Posted on June 29, 2011 by Tim

Have you ever wondered what makes up your credit score?  How do the three rating agencies determine your score?  The raw break down looks like this;

35% Payment history – Making your payments on time, every time will take care of   this one!

30% Debt – How much credit you have versus the amount you are extended.  You can have a perfect payment history but have three small cards that are maxed out and have a sub-par credit score

15% Time accounts open shows the depth of your credit experience.  If you have managed your finances properly for ten years you will be more attractive than a borrower with only 12 or 24 months of experience

10% Credit mix or Account Diversity – Installment payments like auto loans or student loans plus some revolving credit like credit cards will show a more diverse experience with credit and improve your score.

10% Search for New Credit or Inquiries – Who are you seeking credit from and how often.  The more you shop for credit the lower your score will be.  However, every industry and every credit bureau has windows of time when you can shop for services without be penalized multiple times.  For example, if your shop for an auto loan from 3 different lenders within a week you will lilely only be hit for that credit pull one time. The bottom line is only apply for new credit when you need it, not for 5% off a $50 purchase!

Soft pulls don’t count against you.  Soft pulls can be from many different avenues. Creditors that you are currently doing business with can check your credit periodically with out it affecting your score.  Employer checks, credit card offers and Auto Insurance carriers are other examples of soft pulls.  

Your Credit Score drives the decision engine of your creditors, including Mortgage Brokers, when it comes to determining your interest rates and how much credit to extend to you.  Don’t get caught without an education!

Posted in Free Tips, Real Estate | Tagged advice, Buyers, choice, credit score, credit score makeup, creditors, determine credit score, education, intrest rates, Life, mortgage broker, Real Estate Investor, tip, tips | Leave a comment

6 Reasons to BUY Real Estate NOW

Posted on June 29, 2011 by Tim

“Why would anyone get into this crazy market right now?” you may be asking.  The reasons are very clear and very compelling!  As bad as the selling market is, the buying market is that much better.  If you live near the largest economic development project in the US then you have the perfect storm.  Global Foundries is building a chip fab in Malta, NY in Saratoga County just North of Albany, NY the Capital.  The state is pouring in over 1.2 billion dollars in tax breaks and infrastructure and the plant is tooling up now in the beginning of July, 2011.  They have already hired over 400 people and expect to be fully staffed to 1400 – 1600 people by early 2013. 

So, let’s see if this makes sense…

1. Interest Rates lowest in 40 years! Actually the number is higher, but suffice it to say that this is a once in a lifetime event.

2. Housing Prices NATIONALLY have fallen 33%!! That’s 2% worse than the Great Depression!  Remember, Housing Markets are LOCAL!

3. LOCAL housing prices are UP 2% for existing homes and 6% in Saratoga County!

4. LOCAL Unemployment Rate is 7%!!

5. Global just HIRED 200 more Employees and Several Employers are Hiring in This Area!

6. There ARE Still Mortgage Programs at 100% Financing with NO MI!!

If these six things don’t motivate buyers to get into this market then renting is probably an excellent lifetime choice for them.  There is nothing wrong with being a tenant, someone has to pay real estate investors for their hard work and risk!

Posted in Free Tips, Investing, Local, Real Estate | Tagged Buy Real Estate, Buyers, Creative financing, faster, Global Foundries, investor, real estate, Real Estate Investing, Real Estate Investor, Sell, tip, tips, usda | Leave a comment

It’s A Choice

Posted on June 25, 2011 by Tim

Anyone that has spent much time with me has heard me say “It’s a Choice”.  I believe so strongly that nearly everything in our lives is a choice that I have made it my personal mantra. 

Have you ever been in a store and had a clerk ask you “How are you today?”?  That’s a dangerous question, and for some, an opportunity to whine and complain about everything in their lives. 

In reality, our emotions, attitudes and actions are our own personal choices. We own them and no-one can take them away from us or force them upon us.  If you choose to be happy then you own that.  If you choose be angry, then you own that and by the way, I think you will agree that being angry is not nearly as much fun or productive as being happy.

I don’t pretend to believe that what I am saying is easy to accomplish.  The principle is simple, but you will likely spend the rest of your life learning how to apply it to all the facets of your own life. I have certainly not arrived and can point to many areas where I don’t even have a reservation yet. 

The point is, make the choice toward this goal and don’t look back.  You WILL find that the rest of the world around you makes a whole lot more sense once to embrace your power to choose!

Posted in Real Estate | Tagged advice, choice, choices, Happiness, Life, satisfaction | Leave a comment

5 DIY Tips to Sell Your Home Faster

Posted on June 24, 2011 by Tim

Here are 5 things you can do to dramatically increase your chances of selling your home faster and for more money.

1. Dress up the outside. Load up the mulch, mow the grass and plant some colorful flowers. Paint everything outside that has paint on it now. Soft wash your roof and seal your driveway. Replace the lockset on your front door!! You get the idea.

2. More Paint. Move inside and paint every room in your house that hasn’t been painted in the last two years. Paint is the number one best return on your money and the fastest way to transform your home.

3. Use Color!! I know, more paint, but the truth is that most people want to use a nuetral color because they either can’t make up their minds or they don’t want to scare away a potential buyer. This is a very common investor mistake, by the way. People that flip houses tend to be so focused on saving money with 5 gallan buckets of off white that they miss out on the excitement color can bring to a property! Go crazy and don’t give up the WOW factor!

4. Pre-qualify your HOUSE for financing! Do some research. call a Mortgage Broker and find out what types of financing and loan programs your home is qualified for. For example, if you are in a rural area as designated by USDA your buyers may qualify for 100% financing with closing costs rolled in and no mortgage insurance! Many Real Estate Professionals aren’t aware of these programs so take it upon yourself to find out!!

5. Attack all 5 senses of your potential buyers. We have discussed the visual, now lets look at the other 4.
First, put on some soft Jazz Music. I don’t know why, but Jazz sells!?! Next, bake some cookies, oatmeal will do just fine if I am showing your home! Then, put the cookies on a plate along with an insulated container of milk and some sodas or juice and INVITE your guests to enjoy a treat with a note. Finally, adjust the climate of the home to the most comfortable setting you can. 72 in the winter and 70 on a hot summer day.

If you follow these tips your home will stand out among the competition and soon you will be signing a contrac for the sale of your home!

Posted in Free Tips, Investing, Real Estate | Tagged faster, investor, mortgage, mortgage broker, real estate, realtor, Sell, tip, tips, usda | Leave a comment

Where To Find Seller Financed Deals

Posted on May 27, 2011 by Tim

Once you know the why, you will know the where.

You are looking for Motivated Sellers and they can be found everywhere. The why you are looking for is why sellers are willing to sell their properties without getting all cash for them.  Their needs vary from a life change like a new job or an inability to manage their property to a need for a higher price without getting the big chunk of cash. 

Expired listings are a great source since they are folks that were unable to sell their homes for all cash the first time around. They may be open to seller financing since they are likely to get a higher price. The relationship between price and terms is inversely proportional. In other words, if you pay cash you can expect to pay a lower price, or if you get great terms the price will likely be higher.

Another great place to look is investment property. Most investment property that is listed in the MLS is poorly managed and investors that want out are usually more amenable to creative financing than home owners. Look for comments like “rents could be higher” or “make an offer”.  Also look for properties that are currently vacant.  One vacancy could represent the entire profit for a building so the seller could be bleeding through their wallet! 

The bottom line is to seek motivated sellers, listen carefully to their needs and craft your creative financing around their needs. Do this and you will find an endless stream of seller financable deals! Keep Investing!

Posted in Financing, Free Tips, Investing, Real Estate | Tagged Creative financing, Mortgages, Real Estate Investing, seller financing | Leave a comment