Wednesday, March 4, 2015

New Homes Begin to Dominate Investor Purchases

Investors who have been buying older homes from bank foreclosures during the recession, are now realizing some of the benefits of buying new homes built this year, in 2015 direct from developers (or minimally a massive renovation - like new). The lower future incidence of repairs, the warranties, the potential developer giveaways--possible only in new home purchases (a builder can give the buyer a covered patio which may be a $6,000 option, but only costs the builder $2,000 to build) and the modern amenities and floor plans are starting to attract more investors.

Since buying homes is in its core a long term investment, starting with new homes is a great send-off with many extra years of performance available. Getting loans on new homes is usually one of the easiest procedures, and with today’s low rates, locking in a 30-year fixed rate loan on a brand-new home is an excellent “stake in the ground” for anyone’s future. Of course investors should not just blindly buy brand-new homes. The locations have to have the numbers – the right rents for the right prices.

There are some excellent markets providing very good numbers and cash flows in good areas.
For more information, you are invited to attend our quarterly ICG Real Estate 1-Day Expo this Saturday. You will not only meet teams frrm the most relevant markets and see the possibilities for yourself, but there will be expert speakers on important topics such as the new twists in Asset Protection (you must know about this), buying real estate from your Self-Directed IRA, and getting real estate financing for purchases from within your IRA.


There will be information for new investors and established investors on how to move forward powerfully. There will also be lenders to update us as to the ever-improving loan possibilities for investors (domestic and foreign), and lots of great Q&A and networking. The event is near the San Francisco Airport this Saturday, March 7th, from 10AM to 6:30PM. You may also register by emailing us at info@icgre.com or call us at 415-927-7504.

Tuesday, February 10, 2015

FNMA 3% Down Loans Are Back!

FNMA, (for those of you new to this blog, Investopedia.com sites FNMA is the acronym and the stock market symbol for the Federal National Mortgage Association, commonly called “Fannie Mae.” This government-sponsored enterprise provides liquidity for the U.S. mortgage market by guaranteeing and purchasing mortgages, indirectly enabling families to buy or rent homes through access to credit) perhaps in a bid to compete with the 3.5% FHA loans, has reinstituted its 3%-down (97% Loan to Value) loans.

The loans are primarily for new home buyers, with some limited provisions for refinancing of existing FNMA loans. The combination of these new super-low-down loans, coupled with the very low interest rates in the marketplace, AND the new government lowering of Private Mortgage Insurance (PMI) on low-down loans, combine to make buying homes much easier for new buyers.

What does this mean for investors? A lot! Not only is this loan likely to create extra demand and contribute to home price appreciation, but when an investor thinks of selling an investment home, the pool of ready willing and able buyers will have been greatly expanded. Great news for new home owners and real estate investors!

At our next 1-Day ICG Real Estate Expo on March 7th, we will have experts on the newest wrinkles in asset protection, how to use your IRA to buy real estate, and getting loans for IRA-bought real estate. In addition, there will be experts speaking  on the newest loans available (this keeps changing for the better!), as well as an array of experts, market teams, updates, learning and networking. Can’t wait. Call our office at 415-927-7504 or email us at info@icgre.com and mention this blog entry to attend free.
 

Wednesday, January 7, 2015

Price Gains Slowing; Markets May Stabilize

In a Wall Street Journal article from December 31, 2014 by Kathleen Madigan, it is mentioned that overall in the United States (as per the Case-Shiller 20 City Index) prices were up 4.6% from the previous year by the end of October 2014. The pace of growth has slowed from 4.8% in September and 10% in the first quarter. The article goes on to say this could indicate the markets are moving toward stabilization.

Understandably, in Florida there is likely to be more price appreciation, as the state as a whole reflects the recession effect due to the ultra-slow judicial foreclosure periods. All in all, however, it's definitely time to look to the stable markets with great economies and low unemployment. It is time for the classic long term hold of houses, where the tenant pays off the (very low) fixed-rate mortgage while inflation keeps eroding it.

No doubt newer homes will figure more prominently in 2015. The classic investment thesis holds strong in 2015 with an extra HUGE bonus: super low interest rates are still here - but many think they will vanish in the coming years.

Happy New Year!

Below is the article in its entirety for your review:

SLOWING PRICE GAINS SUGGEST STABLER MARKET

By Kathleen Madigan (WSJ)
Updated Dec. 31, 2014 12:41 a.m. ET

Yearly growth in home prices across the U.S. continued to moderate early in the fourth quarter, suggesting the housing market may be settling into a more sustainable recovery.

Prices nationwide increased 4.6% in the year ended in October, according to the Standard & Poor’s/Case-Shiller home-price report released Tuesday. That was down from 4.8% in September and a far cry from the 10%-plus gains in the first quarter. A 20-city measure more closely followed by economists increased 4.5% over the year in October, also down sharply from double-digit gains earlier in the year.

Demand for housing has slowed significantly in recent months despite stronger job growth, a rebound in consumer confidence and falling gasoline prices, which puts more money into consumers’ pockets. Sales of both new and existing homes fell in November. Yet the slowing trend is a positive for the 2015 housing outlook, say economists who follow the industry.

Price appreciation of about 5% is close to a sweet spot where more buyers are able to purchase a home and current owners accumulate housing wealth, but the market avoids a price bubble that could trigger a financial crisis, as happened in 2007.

“It’s a healthier market because first-time buyers feel more comfortable about coming in,” said Bill Banfield, vice president of capital markets at mortgage lender Quicken Loans, adding that the industry needs more first-time buyers to buy smaller homes that allow existing owners to move up into new construction or to an existing house that better suits their needs.

For 2014, however, first-time buyers accounted for only 29% of existing-home sales, according to data from the National Association of Realtors, much less than the historical norm of 40% for sales of primary residences.

Economists at IHS Global Insight agree slower price appreciation is a positive for the housing outlook. “Home appreciation at a reasonable pace makes homeownership an attainable dream,” said Stephanie Karol, a U.S. economist at IHS Global. A repeat of the double-digit growth seen in early 2014 “would risk producing a bubble,” she said.

But just as each real-estate market is local, she pointed out the Case-Shiller price index of 20 cities masks the individual pricing experience going on across the country.

“Prices are rising fastest in cities such as San Francisco where geographic or legal constraints limit new construction,” Ms. Karol said. Cities with fewer zoning laws and more space—such as Charlotte, N.C., and Phoenix—are seeing smaller price gains.

Still, the average home-price gain of about 5% is good, she said, and IHS Global is upbeat about home demand and prices in 2015. The forecasting firm projects home prices, as measured by an index compiled by the Federal Housing Finance Agency, will increase 5% over the course of next year and sales of new and existing homes will average 5.92 million, up from 2014’s current pace of about 5.3 million.

Here is a link to the Wall Street Journal U.S. Housing Market Tracker:
http://graphics.wsj.com/us-housing-market/


Tuesday, December 2, 2014

You Think You Can't Get Loans?




Many investors have almost given up on getting loans to buy investment real estate. It may be that their credit was ruined during the recession. It may be that they own over 10 properties and exceed the FNMA guidelines. Or, it may be that their income is not sufficient or their loan to income ratio doesn't work.

Nowadays, securing a loan from a lender is far more difficult and a lot of very good people get left out in the cold. However, there are alternatives. One such alternative is the Asset-based loan. This is a loan based on your stock portfolio (as a bonus your foreign friends can also get a loan against THEIR stock portfolio in 30 different stock markets worldwide).

At our ICG 1-Day Expo this Saturday, one of our expert speakers will be Mark McKay, who specializes in Asset-based loans.

Take a look at the descriptions of these loans by Mark:

SecureLoan™
Still the best and easiest way to finance your real estate investments.
·         Loan is leveraged against your stock/securities portfolio
·         Lowest interest rates in the nation
·         Not a margin loan and generally several percentage points lower than margin loans
·         Not credit score driven
·         No limit on number of properties owned
·         You maintain ownership of your stock/securities portfolio
·         You continue to receive all the dividends
·         Fast and easy processing – generally 2 or 3 weeks
·         So low doc almost NO DOC
·         Established as a line of credit, you only pay interest on what you use
·         Dual appreciation


Come hear Mark THIS SATURDAY near the San Francisco Airport (details at www.icgre.com/events). Send us an email at info@icgre.com and mention this blog and you and a guest can attend FREE.




Monday, November 10, 2014

Appreciation Rates Slow Across the US

Multiple sources report slower appreciation rates in the U.S. overall, year-over-year. The amounts vary from an average of a mere 2.6% all the way to 6%.

It’s hard to attribute that much importance to such general overall numbers. However, the U.S. is not one real estate market but a few HUNDRED local sub-markets. The state of Florida continues its march upwards in the aftermath of the recession and the price improvement that followed. Due to the much slower judicial foreclosure process in and due to the strain on the state's court system, there are still numerous foreclosures that started as far back as 2008 and are not resolved. This creates a steady “diet” of freshly foreclosed homes, adding to the supply equation and mitigating super-fast rises like we have seen in Arizona and Nevada.

The FL numbers should be superior to the average U.S. numbers reported.  In addition, the stable markets are becoming more popular. Texas is becoming a sellers’ market and Oklahoma City is attractive due to its stability, low unemployment rate (reportedly 3.8%), VERY low property taxes and the newly-found reserves of oil & gas; reportedly 3.5 times that of the reserves in North Dakota.

We will discuss this, as well as the ever-changing lending landscape (for the better that is), 1031 exchanges and year-end tax strategies at our upcoming 1-Day Expo on Saturday, December 6th from 9 to 5 p.m. near the San Francisco Airport (click here for details).

Mention this blog and you can attend free with up to two free guests (just email us at info@icgre.com). As always, there’s lots of learning, networking, extensive Q&A’s and meeting the market teams. This time, Dallas will be present in the new markets. Looking forward to seeing you there and Happy Holidays.





Monday, October 27, 2014

Lending About to Get Loosened


The WSJ reports  (in an article on Saturday 10/18 by Joe Light), that Fannie Mae, Freddie Mac and mortgage lenders are in discussions to ease lending standards; including loans with 3% down to homeowners and allowing people with weak credit access to home loans.

Apparently an agreement is in sight to enact these measures.

Even if none of this trickles down to investors (which I doubt), this is great news. As more people qualify for loans, greater demand for homes is likely to help push values up in many markets. It will also be easier to sell investment homes due to the larger pool of potential homeowner buyers.

I suspect that, as usual, the more lax lending standards will reach investors in one form or another; making investors able to increase their portfolio at the current incredibly low rates (from a historical perspective). We are already seeing a local lender in Oklahoma City lending to foreigners at good investor rates (albeit at 50% down), as well as to investor purchases for investors owning between 10-15 financed properties (also with 50% down. In fact the loan is identical to the foreign investors’ loan). This lender has already agreed to lend in Atlanta and may soon expand to other states as well.


This is positive news for investors, no matter how you slice it.

Monday, September 29, 2014

What Property Managers Do & Why You Should Let The Pros Manage It

A full-service property management company has four coordinating functions: people (tenant screening); financial (rent collection and disbursement, accounting services); construction (maintenance and repair); and legal (lease agreements, eviction proceedings). They are responsible for renting and managing your property in all its aspects, and will offer these services:

-Advertising and marketing
-Property showing
-Tenant screening, including credit checks and background checks.
-Lease negotiation
-Rent collection
-Repair coordination and oversight
-Property inspection
-Monthly and annual accounting
-Lease renewal
-Tenant negotiation
-Eviction services

After you sign on with a property management company, they determine the monthly rental rate based on comparable rentals in the surrounding area. The property manager then advertises the rental, using all the means at their disposal, including newspaper advertising, signage, Web based advertising, and multiple listing services.

The property management company will show the property, collect tenant applications, conduct tenant interviews and credit checks, and review the rental history of potential tenants. They will offer recommendations on the best tenant for your property. After the lease agreement is signed between you and the tenant, the property management company will make sure that your rental property is in move-in condition.

Each month the property management company will collect rent from your tenant. The check will be deposited in a large trust account in which you, the property owner, have a separate account. You are paid by the property management company out of this trust account.

The property management company will keep you apprised of any necessary repairs and will coordinate the repairs by contacting tenants to arrange times for vendors or repairmen to come by. Often, property managers work with a select group of contractors with whom they’ve negotiated discount pricing.

The property manager understands the state and local landlord-tenant laws. This is extremely important if any problems arise with your tenant. A good property manager can help you stay out of small claims court and knows how to conduct a tenant eviction so that it’s effective yet abides by state and local laws.

An important part of property management occurs when there’s a tenant turnover. A difficult aspect of rental management is distinguishing normal wear and tear on a property from excess wear. The property manager knows how to tell the difference and how to determine the correct amount of the deposit refund. They can help you avoid any disputes over this issue, which is often a troublesome one for property owners.


For more information and to find out important questions to ask potential property managers; reach out to me directly at gorel@icgre.com or turn to my book, Remote Controlled Real Estate Riches: The Busy Person’s Guide to Real Estate Investing available on amazon.com