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HomeRun Homes is a centralized marketplace which helps people Find or Sell a Rent to Own Home, both Nationwide and Globally to the thriving Rent to Own Market. http://www.lease2buy.com

October 31, 2011

Is Owner Financing In Jeopardy?

Hi Everyone,
   Happy Halloween. Yes, today I turned 40...black cat is out of the bag. To stave off any possible jokes; NO, I was not born with a mask on!

   One thing that does frighten Real Estate Investors, however, is the fact that there is a new Government Act that jeopardizes the Owner Financing Investment vehicle. Taking a step back, Owner Financing is exactly what it sounds like; the owner of the property (or another company such as an "Escrow Company"), handles the payments, which is referred to as "servicing" the payments. Dolores Demers, the president of the Las Cruces Association of Realtors (and works with Re/Max), says that, "Owner financing has worked well for generations in this country", and that it has been a great option for, "innumerable buyers who are capable of making regular payments on an amortized loan, but who don't qualify for traditional mortgage loan products". However, as DeMers writes in her article, "Real Estate View: Dodd-Frank Act puts owner financing at risk", for the Sun-News, "parts of the Dodd-Frank Act will severely restrict owner financing and will do harm to buyers and sellers"

DeMers points out a few highlights from the Dodd-Frank Act that will raise eyebrows:

* The seller cannot be the builder of the home being financed.
DeMers ask the following question: "Why would the government want to restrict a builder from selling his own product" on terms that are "satisfactory to the buyer"?

* The loan must amortize fully with no balloon mortgage allowed.
DeMers says that most sellers offering owner financing are "older than 50", and asks rhetorically, "How many are going to outlive a 30-year note?". There must be a short term balloon in case the seller wants to sell to another party (and not have to "steeply discount the note".

* Buyer has three years to rescind the sale. The seller must document the buyer's ability to pay using underwriting requirements consistent with the Truth in Lending Act.
"If the seller makes even one small error, the buyer has up to three years to rescind the sale and demand back all the money that has been paid to the seller", says DeMers, regardless of "the benefit the buyer has gotten from the use of the property during the time he had it". This is, in no uncertain terms, "Not Fair".

* Only buyers who are already eligible for conventional financing will be able to use seller financing. The seller must determine in good faith the buyer's ability to repay the loan.
Wait...isn't Owner Financing supposed to help those who cannot pass the "underwriting scrutiny of the Truth in Lending act". As DeMers says, "The buyers who need the helping hand of owner financing won't be eligible."

* Seller limited to three installment sales per year. A seller must become a licensed mortgage loan officer if more than three properties are sold in a year using owner financing.
DeMers says that there are many people in her state of New Mexico that have, "helped the people in their communities get started on the path of home ownership through owner financing", and asks what difference does it make "how many properties are offered as installment sales in a year as long as the seller has determined each buyer has a reasonable ability to repay the loan?". Very good point.

   The summary of this is that DeMers is trying to stir some action against this "sweeping rule change", and we agree. These alternate means of buying (or selling) a home are what gives people hope and a chance to move forward. She adds that the "Dodd-Frank Act treats owner financing as if it were predatory lending", which it is not. She also recommends that you contact your elected officials to protest the Act. I agree. Good point. Stand up and be counted !

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #OwnerFinance #Financing #realestateinvestors #DoddFrankAct #balloonmortgage #TruthinLendingAct #Escrow #Realtors #installmentsales #Halloween

October 27, 2011

How Can a Seller Keep a Buyer Interested in their Home?

Hi Everyone,

   Hope you are all ready for the Halloween weekend, and may your baskets get filled with Treats, but no Tricks !

   The National Association of Realtors® (NAR) released their numbers for the September "Pending Home Sales" Index. The figures came in 4.6% below the previous month, and according to the NAR chief economist, Lawrence Yun, the housing market is being excessively constrained, and he pointed to “A combination of weak consumer confidence and continuing tight lending criteria held back home buyers...". This makes me wonder...If you are selling a home, what can you do to avoid losing buyers, and to convert your own pending home sale into a sale?

   "In today’s down economy, sellers simply cannot afford to neglect anything that makes their home less attractive", writes Vera Chinese for the TimesReview.com Website, in an article titled, "Pay attention to buyer turnoffs in your home".

   Kristen Rishe from North Fork Real Estate Inc. reminds sellers "to be anywhere but home when potential buyers come to look", since this might make the buyers feel hurried and hesitant. On the material side of the same point, Tom McCarthy of Thomas J. McCarthy Real Estate Inc. in Southold suggests that buyers "get rid of all their junk and clutter before putting their homes on the market", since you want the buyers "imagining themselves" in the home (difficult if it is filled with "the current owner’s belongings"). McCarthy admits it's painful for owners to purge years of memories, but that “Emotionally, it is not your house anymore once you put it on the market,” he said.

   "Mildew, mold, pets and cigarettes"..."Don’t forget the buyer’s nose. Smells can be critical", advises Jill Dunbar from Century 21 Albertson in Greenport. Dunbar says that some smokers, for example, "refuse to give up smoking in their homes", but says that "it’s the only cure".

   Internally and structurally, McCarthy suggests you make repairs, and that "What might seem like a small repair to a homeowner can represent a huge burden to a buyer". Some of his tips, which the owner might walk by every day, are the "missing trim around a door, a chipped countertop or peeling paint". As a final caveat, he warns that, "loud or particularly bold colors and paint can scare off some buyers".

   Do you think if these tips were implemented, we would see a spike in Home Sales? Perhaps...why not give it a shot !?!

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #housingmarket #repair #paint #Realtors #NAR

October 25, 2011

Battle of The Home Price Indices

Hi Everyone,
   Glad to have you back with me here today!

   This week, there were two separate Home Price Indices released that reflected Home Prices in August as compared to the previous month, along with a comparison to the previous month one year prior. However, both the S&P/Case-Shiller Home Prices Index and the FHFA Monthly Home Price Index differ in their report.

   For the period covering July through August, the S&P/Case-Shiller Home Price Index showed increases of +0.2% for both the 10- and 20-City Composites. On the flip side, the FHFA House Price Index Fell 0.1%, which they deemed the "First Monthly Decline Since March".

   For the period covering August 2010 through August 2011, the S&P/Case-Shiller Home Price Index said that "Annual Rates of Change Continue to Improve", with Atlanta and Los Angeles continuing their drop, however, with the Midwest acting as a shining star, Detroit is named as "the healthiest when viewed on an annual basis" (possibly due to renewed strength in the Auto-Industry?). Once again we turn to the flip side, and we see that the FHFA House Price Index reported that U.S. prices fell 4% from August 2010 - August 2011.

   For the sake of Apples to Apples, the FHFA monthly index is calculated "using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac", and the S&P/Case-Shiller Home Price Index is a Weighted value composite of "single-family home price indices for the nine U.S. Census division"

   Did you find this interesting. Which of the figures would you place most of your faith?

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #HomePrices #FannieMae #FreddieMac #mortgage #FHFA #Detroit #Atlanta

October 23, 2011

Costly Mistakes When Mortgage Shopping

Welcome Back, Folks,
   Fall has fallen, but it's not the only thing that has fallen.

   The mortgage market is in a baffling state, which has been referred to as "Irony", in comments from Lawrence Yun of the National Association of Realtors® (NAR), a which we discussed in last Friday's Blog Post ("Snapshot of September New Construction and Existing Home Sales"). Yun points to the paradox of historical affordability conditions with more creditworthy borrowers, but contract failures that are at elevated levels, regardless of the favorable conditions.

   Could it be partial accountability on mistakes that the borrowers are making? It's quite possible, and in a recent article on the Inman.com new website, titled, "3 mortgage mistakes you can avoid", Tara-Nicholle Nelson (of rethinkrealestate.com) lists these mistakes along with some suggestions to overcome these personally-set obstacles.

   If your mortgage amount that you owe outstanding is greater than the value of your home, you are considered "upside-down", and if you fail to try refinancing because of that, it's a mistake, says Nelson. She writes that approx 23 percent of all American homes are upside-down, and that you should not feel "trapped" with high interest rates. As a matter of fact, Nelson writes, "multiple options abound for lowering your interest rate and monthly payment if you're upside down on your home loan", and says that banks are increasingly "amenable to simply modify existing mortgages to render them less prone to default and foreclosure", especially if the homeowner is trying to recover from financial hardship. as long as you have not missed any payments, she says that "many banks offer refis on mortgages as much as 25 percent underwater", and also mentions HAMP (Home Affordable Refinance Program) as options. Seek out help from Mortgage professionals to review your options.

   Nelson points to the potential for low satisfaction, low speed, and low assertiveness from just walking into a bank to get a mortgage, however, if you go with a mortgage broker or a private mortgage banker through referrals of your close friends and relatives, says Nelson, "chances are good you'll get someone who understands that the long-term health of their business depends on you and clients like you getting a deal closed in a timely manner".

   The third mistake that Nelson points out is when you think that you are stuck with your mortgage for 30 years, and says that she has head people say they didn't want to buy a home "because they were depressed by the thought of a debt that would last 30 years". She adds the following piece of wisdom: "you control when you pay your mortgage off, and it doesn't take a lottery or inheritance windfall to pay yours off sooner than later", and says that paying a little extra towards the principal can go a long way in shrinking the time it takes to pay off your mortgage.

   To summarize; You do have control and power to make changes to your mortgage, which can have a positive outcome on your entire financial bottom-line. What other mistakes have you seen borrowers make, and what can they do to avoid those pitfalls?

   On a personal note...a very special shout-out to a very special lady. Danielle, Happy Birthday. Love you, honey !

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Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #mortgage #realestate #upsidedown #refinance #interestrate #mortgagepayment #mortgagebroker #bank

October 20, 2011

Snapshot of September New Construction and Existing Home Sales

Hi Everyone,
   Welcome back to a beautiful Fall day with the potential for a substantial amount of pumpkin picking in the forecast.

   The September figures for both New Residential Construction and Existing Home Sales were released this week, and aside from fluctuations over the past few months, things look solid when compared side-by-side with the same time 12-months ago.

   New Residential Construction, as you might be aware, is broken down into 3 parts; Building Permits, Housing Starts, and Housing Completions. Housing Starts (Privately-owned housing starts), were up 15% from August, and 10.2% Above September 2010. This is very encouraging, especially for the Western Region of the U.S., which had figures that were substantially higher than the average (over both the 1-month and the 12-month periods). Building Permits and Housing Completions were also up over the longer-term, but not at the elevated levels as were the Housing Starts.

   Existing-Home Sales, which includes completed transactions for single-family, townhomes, condominiums and co-ops, dropped 3% from August, but are up over 11% from September 2010, per the National Association of Realtors® (NAR). In terms of regional variations, the long-haul big winner was the Midwest, checking in with in excess of a 17% jump in Existing Home Sales from September 2010 through September 2011.

   The chief economist for the NAR, Lawrence Yun, said that, “Existing-home sales have bounced around this year, staying relatively close to the current level in most months”, and he calls it "Irony" that the "affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes", but, "the share of contract failures is double the level of September 2010", and he interpreted this as pointing to "an unfulfilled demand". Contract failures, incidentally, can result from a declined mortgage application, appraisal values below the negotiated price, issues resulting from the home inspection report, job loss, etc.

   In sum, Housing Starts up 10.2% from a year ago, coupled with a 11% increase in Existing-Home Sales from a year ago, would tend to point to improving market conditions. Do you agree? Do you disagree? Please explain - we'd love to hear your angle on these figures.

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #NewConstruction #ExistingHomeSales #Residential #Housing #Building #Permits #singlefamily #cancellations #townhome #condo #Realtor #appraisal #NAR

October 18, 2011

Shadow Inventory As a Lurking Threat to Recovery

Hi All,
   There happens to be a very real threat lurking out there. One that hangs over us like the sword of Damocles. Indeed, I will most certainly elaborate.

   "Officially, there are 3.5 million homes for sale nationwide. But there are millions more lurking in the shadows", writes Toluse Olorunnipa for The Miami Herald, in her article, "'Shadow inventory' of homes could topple real-estate recovery" (Sacramento Bee reporter Rick Daysog contributed to this story). Additionally, Olorunnipa says that this ballooning shadow inventory stands as the most "menacing problem" for the Housing Market, and it is "threatening to stifle recovery for several years".

   "The question that you might be asking is; "Well, what is Shadow Inventory?".

   Basically, Shadow Inventory falls into 3 categories, as broken down by Olorunnipa; Real-Estate Owned (REOs), which are repossessed properties which are not for sale, properties in the midst of the foreclosure process, and "severely delinquent" properties that are headed for, but not yet in foreclosure.

   The national supply of homes is officially listed at about 3.5 million, or nine months' worth of homes (home sales are on track to reach about five million this year), writes Olorunnipa, but adding shadow inventory more than doubles that to "at least 7.5 million", but a "healthy housing market", writes Olorunnipa, has about six months' supply of properties, which would be about 2.4 million.

   South Florida has one of the nation's largest collections of unseen inventory. "A lot of people don't understand how much inventory is set to come online in the next 18 to 24 months," said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. "When you compare what the Realtors show is inventory to what's out there, you realize we have a long way to go."

   Economists say that the housing industry "will not normalize and recover" until most of the foreclosures work their way through the system (several years, writes Olorunnipa).

   However, if mortgage lenders were to list and sell these homes and flood the market, it could be a disaster (due to the deep discounts and also the potentially poor condition of these homes). Selling off these REOs would basically crush their bottom line due to write-offs, and thus, Olorunnipa writes that "a growing number of vacant homes have idled on banks' balance sheets for several years."

   Going forward, things are looking to remain bleak due to the "robo-signing" chaos (false or incomplete foreclosure documents were signed), leaving banks "struggling to prove that they have legal standing to foreclose", writes Olorunnipa, who cites info from the data firm Lender Processing Services, which found that it now takes an average of nearly two years to repossess a property.

   Nearly two million homeowners who haven't paid their mortgage in three months or more have not received a foreclosure filing, writes Olorunnipa, with 800,000 of those that haven't made a payment in more than a year, (according to LPS). As Olorunnipa writes, there is a "lesser-of-two-evils" option at work here, where Lenders are basically letting delinquent homeowners stay in their homes (quick foreclosure would mean empty homes, additional maintenance costs, and more documentation woes).

   With the slow pace that banks are selling off homes, they would not be able to keep pace if they start aggressively foreclosing on homes, and Olorunnipa writes that even at the currently slowed pace, "national foreclosure starts are three times higher than foreclosure sales". Some struggling homeowners are doing "strategic defaults" to take advantage of this precarious situation for the banks.

   The alternatives to foreclosures? Short sales have been on the rise, and additionally, some banks are "cutting deals with homeowners who agree to hand over the keys to a house, rather than go through a legal battle.", writes Olorunnipa (basically, "lenders are forking over wads of cash to convince troubled borrowers to leave their homes amicably.").

   With some ugly options on the table, it looks like Lenders will need to be creative to ride out the storm, and to walk the balance sheet tightrope. What would you suggest to the banks?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #shadowinventory #foreclosure #reo #housingrecovery #mortgagelenders #robosigning

October 17, 2011

The Crystal Ball of Future Homes

Hi Everyone,
   Hope you had a nice Fall Weekend, wherever your travels took you.

   Have you ever wondered to yourself what homes will look like in the future? If you were in the 1970's wondering what homes would look like in 40-50 years, you would have probably thought about homes in outer space with all robotic features, or as Erika Riggs of Zillow puts it, "something akin to The Jetsons’ home complete with Rosie the Robot and other space-age appliances that dressed and fed the family", as she discusses in her story, "A Look Ahead at New Homes of 2015", featured on Yahoo! Real Estate.

   Home Size...This might surprise you!

   Rather than space-age technology, says Riggs, "the biggest thing that is expected to change in future single-family homes is the size", and “Homes will get smaller,” adds Stephen Melman, Director of Economic Services at the National Association of Home Builders (NAHB) in Washington D.C..

   The NAHB asked builders, says Melman, "what do you anticipate the new home size would be by 2015?", and the average reply was 2,150 square feet, which is a decrease from the current single family home average of 2,400 square feet. Is this recession-related? Yes, but as Riggs adds, "many believe that the real estate changes will stick around even after the economy and home values get back on solid ground". “Although affordability is driving these decisions, smaller homes are a positive for builders,” says Melman, and adds that it is an opportunity to deliver a better home", allowing for "more creative design, more amenities, better flow".

   What else will change? The living room is expected to merge with other spaces such as the family room and become a "Great Room". Riggs says that 30 percent believe that it will vanish completely to save on square footage. Riggs says to expect spacious laundry rooms, master suite walk-in closets, porches, eat-in kitchens, two-car garages, and ceiling fans. She says to expect to see less of mudrooms, formal dining rooms, four bedrooms or more, media or hobby rooms, and skylights.

   "Going Green" is driving a lot of these changes, says Riggs, which lead to energy efficient windows, etc. Additionally, with the aging Baby Boomer population, says Melman, "they’re empty nesters, so they don’t need five bedrooms".

   What do you think about homes of the future?
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HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #singlefamilyhomes #HomeBuilder #NAHB #squarefeet #recession #greatroom #babyboomer #zillow

October 13, 2011

What Makes Buying a Home So Special?

Hi Everyone,
   Friday is here, and glad you're here with us today !

   If you're a Generation X or from a time even before that, you might remember your parents saying that owning a home is the pinnacle of success in life, and over time, that thought was ingrained in your head. What made them say that? Why does it still hold true today (for a majority of folks)? With all of the chatter surrounding home prices, mortgages, and the housing market, what are the real mental, emotional, and lifestyle benefits of owning a home?

   It's all about the "Roots"

   Carla Hill writes about these roots in her story, "The Joys of Homeownership", on the RealtyTimes.com website. Hill says that you put down roots by becoming part of a neighborhood and community (as opposed to renters, who "come and go as quickly as leases renew"). These roots can potentially develop lifelong relationships, and Hill says that during your time in the home, the home "will see you through many of life's important milestones".

   The image of a young couple buying a home and building a nest, with a plan on starting a family, will make these homes become "the container of countless memories", as Hill says. The "realm of homeownership", as she says is not limited to just young families seeking homeownership. It also encompasses growing families needing more space or retiring adults "seeking out warmer climates or smaller, more manageable homes".

   Roots can also pertain to planting trees and shrubs. Hill explains that While Renters are rarely afforded the luxury of gardening, as a homeowner you are able to "create your own green oasis".

   The pride factor, as Hill says, is that this little piece of property and land is yours, and no one can take that away from you. This security allows people to form deep attachments and spurs many owners to make improvements and additions, which makes it more comfortable and usable (and "improves neighborhood values and overall curb appeal.").

   So, people may initially be motivated by a major life change, such as a new job or a new family, says Hill, ultimately, people buy based on emotion. They want a home they can fill with memories of Christmas mornings, summer vacations, and other happy moments. Hill tells us to, "Remember this sentimental side of homeownership" the next time we read about stocks, bonds, and housing woes.

   Do you own a home? What is your happiest memory of owning a home? If you do not own a home, does the prospect of owning one sound exciting?

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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #buyingahome #Homeownership #pride #stocks #bonds #housing

October 11, 2011

5 Tips to Protect Your Home from Robbery

Hi Folks,

   As the Holidays are fast-approaching, we'd like to focus on one of the hottest trends this Holiday Season (and all Holidays Seasons); Home Break-ins and Burglaries. As a matter of fact, the FBI says that a home is robbed every 14.6 seconds and the average dollar loss per burglary is $2,119.

   Now, however, even though burglaries were down from 2009 to 2010, writes Celia Kuperszmid Lehrman for the Consumer Reports Website, in her article, "Break-ins are down, but your house may be screaming 'rob me'", locking your door and windows is not the only thing you should be doing to protect yourself. Lehrman names 5 things that she says you are, "probably doing that make your home a target, and what you should do instead".

   One of the first tips provided by Lehrman, in light of the explosion in popularity of Social Media, is in regards to posting vacation photos on Facebook, as she says that, "Burglars troll social media sites looking for targets". The suggestion is to post the photos once you get back, or to tweak your Security Settings to allow trusted friends only to see your adventures.

   Lock your garage from the inside! Lehrman says that if you don't, a burglar can gain entry to your home via an internal door by using "any tools you haven’t locked away" to break into your home "out of sight of the neighbors".

   Hiding Spare Keys is a bad thing. "Burglars know about fake rocks and leprechaun statues and will check under doormats, in mailboxes, and over doorways", says Lehrman, who suggests that you give a spare set to a neighbor or family member.

   Ladders should be kept stored away and out of sight. Lehrman says that they can be used to "reach the roof and unprotected upper floor windows".

   Let's not overlook the home security alarm factor. Silent alarms are great, and noisy alarms are irritating, However, noisy alarms are also irritating to burglars, but the smart thieves, says Lehrman, know that "it can take as long as 10 to 20 minutes for the alarm company or cops to show up after an alarm has been tripped", and she suggests using both silent and audible ("noisy") alarms.

   One bonus tip for you; beware of people calling with a survey in which they ask if you have an alarm system. They could potentially be "casing" your home as a target. Additionally, an answering machine saying you are not home is also bad (instead, make it a generic message).

   Do you have any other tips? We'd love to hear.

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #HomeBreakins #Burglaries #homesecurity #homealarmsystem #socialmedia #Facebook #Consumer Reports

October 8, 2011

Evaluating Your Home For Sale

Good Morning,
   Happy Columbus Day to those of us residing in the USA. If you are lucky enough to have the day off from work, enjoy your day, and thanks to all for checking in with us.

   When you are selling Real Estate, whether it be your own home, or, the home of a client, it is important to take various factors into consideration, such as price, condition, and location.

   In regards to price, you will want to look at the most recent closed sales in your area (and the data must be less than six months old). You want to confirm that your price is right, no pun intended. As Chris Griffith recommends in her story, "Reevaluate your real estate to sell this season", on the Naples News website, you should also ask your real estate agent (or the agent you’re interviewing) to "list your real estate for an absorption rate", and that you'll want to check how much "inventory your home is competing with neighborhood wide or even in your home’s price range" (this should be checked periodically for any changes/adjustments).

   When it comes down to condition, the old adage of "you never get a second chance at a first impression" holds true here. As Griffith says, "There is little opportunity for a second chance to get them back through the door once they’ve been turned off by something negative", and calls it a "a downright shame" if it was a correctable negative condition like cleanliness or neatness that was toxic to your potential buyer. One interesting point Griffith makes is that sometimes, "homeowners are a little too close to the forest to see the trees", and need to take a long and hard look (or get a second opinion) about their home, the cleanliness, etc.

   Location, Location, Location. We've all heard that before when discussing Real Estate. Griffith suggests that you, "Compare apples to apples and be prepared to adjust the price to correct the differences", and provides the following example; "two nearly identical homes, one on a lake and one backing up to a sound wall next Interstate 75, sport very different values". Location "can influence buyers positively or negatively", adds Griffith.

   These 3 factors are a huge component of your potential sale. Can you think of anything additional? Perhaps the demeanor of the homeowner or the agent? The weather during an open house?

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HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #sellingRealEstate #absorptionrate #inventory #closedsales #price #condition #location

October 6, 2011

Real Estate Investing - Angles and Analysis

Good Morning,
   How is everyone doing this morning? Fine, I hope!

   Where do I even start in terms of this topic? It is such a broad topic, and if you ask 10 different people, you might wind up with 10 different answers and multiple opinions.

   Let's look at some of the angles of Real Estate Investing. Basically, the bottom line is that you purchase a property, hold on to it in hopes that the price will appreciate (possibly renting it out while you wait to recoup all or part of your monthly payments), or, you purchase a property and "flip" it, which means buying and selling a property quickly for a profit.

   Where can you find properties? Foreclosures have spiked, and the homes that are foreclosed upon are often sold on the steps of the local courthouse (depending on where you are). The problem here is that these are very risky investments. In a story written by Veronica Chufo on the DailyPress.com ("Real estate investing: Is now the time to buy?"), some investors and real estate agents weighed in on the process and the risks involved.

   In the article by Chufo, Greg Hatcher, an investor and real estate agent with EZ-Vest Realty, pointed to the fact that a majority of these homes are "underwater" (the value of the home is less than the outstanding mortgage). This means that it would not be a good investment, says Hatcher. There is also the potential for liens on the property, says Hatcher, which would need to examined via a Title Search. One other risk Hatcher mentions, which is probably one that we are all quite familiar with when discussing foreclosures; "an investor can't see inside the house, let alone have an inspection, as a traditional buyer could". In sum, Hatcher says that we would only recommend this to very experienced investors and those that "have cash that they can afford to chance".

   A Less-Risky ("safer?") route is to find sellers that must sell, but do have home equity. Hatcher says that real estate agents could be very helpful in your search.

   When you find an investment property and you're ready to purchase it, it's time to think about financing. Hatcher says that investors often must have a larger down payment (of about 20 percent), and that they also need money "in reserves and cash for upgrades and closing costs". He said that with lenders, "The theme would be cash is king", since they look for buyers who have liquid funds (lines of credit, cash in the bank, money available in 401(k)s or IRAs, per Hatcher).

   What you do with the property boils down to the local market, financing, and your own desires. The typical decision is "Flip or Rent", and this is analyzed by Chufo. Flipping was popular during the Real Estate boom, but has slowed down dramatically, because the "buyer pool has shrunk because lending requirements are stricter", writes Chufo.

   The other flavor is buying a home and renting it out (and sell them when the market rebounds). Other buyers, as Chufo refers to them, are "keep and hold" investors (they will act as landlords by renting the properties instead of reselling them). Patti Robertson, a HomeVestors franchisee in Norfolk and president of the Tidewater Real Estate Investors Group, adds that investors are getting "more rental income now than ever before", and she points to higher rental payments vs. lower housing costs. Specifically, she said, "Rents more than cover mortgage payments", and provides "instant cash flow". Of course, it would be a disservice not to mention Rent to Own, in which the home is rented out with an option to buy at a predetermined price during a specific term, i.e. 12-months, 24-months, etc. (Learn More on Rent to Own Homes Here).

   To determine rent/hold or flip, Hatcher says that a real estate agent would need to conduct a "market analysis on comparable properties", and a post-rehab value of 75-80% of market value would be favorable to a keep-and-hold investor, but he says that a "flipper" would need a property at a market value (post-rehab) of about 60%.

   Investors are still out there scouting for deals, says Chufo. Hatcher suggests that new investors should try to joint venture or partner with more seasoned investors, and can network with other investors via a Real Estate Investors Association (an REIA). One investor, Maryann Krzywicki, has done her homework, and found a business partner. She feels it's a good time to invest, "because it's a buyer's market". Chufo also quotes Patti Robertson (an investor for over 4 years), who is also positive on Real Estate Investing, and says that, "Most people have their money in the stock market right now earning zero, or in the bank earning half a percent. Real estate is on the bottom. It has to go up," she said.

   Are you a Real Estate Investor? Are you a potential Real Estate Investor? What is your experience with the Real Estate Market? Please pass along any tips to our friends that are reading this article.

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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #RealEstateInvesting #foreclosure #fliphomes #renttoown #underwatermortgage #financing #renting #lending #landlord #keepandhold

October 4, 2011

Expensive to Build in The USA? Not Even Close!

Hi Folks,
   Welcome back.

   We often hem and haw about prices, and how expensive things are, but if you lived in Switzerland, you might think differently about things! True, it's a beautiful country and has a reputation for delectable chocolate, but it also topped the list of the "Ten most expensive countries in the world to build", in a recent article.

   According to a story on InternationalEat.com, "Switzerland remains the most expensive place in the world to build new properties", with data pulled from the latest EC Harris report. Using UK prices as a baseline, construction costs in Switzerland are more than 25% higher than anywhere else in the world (the story adds that the "price of construction in Switzerland is 71% higher than in the UK"). Mathew Riley of EC Harris said that he was not surprised to see Switzerland and the Scandinavian countries as the most expensive places to build, since "high labour costs and the need to import materials are all combining to drive prices up."

   Taking a step back, Europe came in as the most expensive continent in which to build, with 8 European countries populating the Top 10 list. The other two countries were both Australia and Canada. The cheapest countries to build in? It was a tie between India and Sri Lanka (construction costs estimated to be 72% cheaper than the UK baseline).

   If you are a builder or a contractor, you have seen your profit margins get slimmer and the competition on the rise, and the results of this report point to the need for Western economies to, "start planning ahead now to guarantee access to the raw materials needed for future construction projects."

   As for North America, the report finds that the average construction costs in the US are around 10% lower than in the UK, however, as the economic recovery progresses, these costs are likely to rise.

   In terms of construction spending during August 2011, we were at $799.1 billion (Up 1.4% from July and almost 1% from August 2010). Public Construction was on the upside, at 3.1% above July, and more specifically, Educational construction and Highway construction both posted gains of 3.5% and 4.3%, respectively. Private Construction Changes were negligible to minor.

   Penny for your thoughts...

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TAGS: #constructioncosts #Switzerland #Europe #UK #builder #contractor #constructionprojects #rawmaterials #public #private #educational #highway

October 2, 2011

The Return Of Subprime Mortgages?

Hi Folks,
   Welcome back, and glad to have you here. It is October, and as much as I don't want to face it, it is the month that I will turn the big 4-0 (On 10/31 - Halloween). Oh well !

   One other sad thought is one of the people who have been hit between the eyes due to the subprime mortgage crisis. Subprime mortgages are loans made to people with less than perfect credit or financial situations, and these types of loans dominated the lending market until the house of cards fell down, literally. Subprime has become a household name, and most people cringe when they hear it...but there are others who get very excited at the very thought of these types of loans!

   According to Preston Howard, a Mortgage Broker/Owner with Rose City Realty, Inc. in Pasadena, California, "subprime financing is poised to make a re-entry into the market place in a big way", in a recent story he wrote, titled, "Can Subprime Make A Comeback?", on the BrokerAgentSocial.com Website. "Where there are payments to be chopped up into little pieces, someone on Wall Street will dice and transform them into some form of marketable security to be sold to the masses at a cost, and generate profits for the investment bank that brings them to the Stock Exchange floor", says Howard

   But how can this happen, after what we have all suffered from the subprime fallout? "The answer lies in the structure and the insurance", Howard says, pointing to a Money Backed Securities (MBS) offering with "seven times the insurance protection that is normally required for a high quality, private securities offering", but has earned a "debt rating that is better than the United States of America".

   Are we really going to do this all over again? At first glance, the pool of sub-par mortgages looks more like FHA loans (as opposed to subprime deals), with a 4% yield, >640 Credit Scores of the borrowers backing the mortgages, and an LTV at about 95% on average. But, as Howard adds, "It appears as though the product is being packaged in a “sub-quality wrapper” to prep the market for additional, lesser quality deals in the future."

   Let's look at the good here: "this could be the start of something beautiful as the housing market is languishing in a rut, awaiting products to unleash pent up demand", says Howard. Very true.

   "Conversely, this could be the lever that pulls us into a second recession", says Howard, who says that there is a moral hazard potential here, where the needs of unqualified borrowers will take a back seat to the fees generated. This is a big risk.

   Are you willing to take the risk? Will it hurt us again, or have we learned our lesson?

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TAGS: #subprimemortgage #MoneyBackedSecurities #MBS #FHAloan #lending #mortgagebroker #financing #WallStreet #recession