The Investment Real Estate Corner: INSURING THE PAST!

Title insurance is among the costs of successfully closing a real estate transaction, but many people don’t understand what this is for, or why they must pay for it.  First of all, realize that title insurance works differently from traditional insurance policies in a very important way. 

Other types of policies may protect you from future events, and you must continue to pay the premiums for as long as you want that protection.  Title insurance is (usually) a one-time purchase that actually protects you against losses arising from hazards from the past. 

Why is it so important to own clear title to a property?  Last year, the biggest issue that title insurers covered was obtaining releases or pay-offs for liens that were discovered during a title search (like unpaid prior mortgages, taxes, child support, etc.)  You wouldn’t want to buy a home, and then have creditors show up and say, “Sorry, but the previous owner owes us and this house was the collateral.” 

If you question the cost of title insurance, keep in mind that many companies often search records back fifty years or more to discover and correct problems, often without even involving the homebuyer. 

Be sure to ask the real estate agent any questions you have about title insurance or other fees included at closing.  A little knowledge can go a long way.

The Investment Real Estate Corner: LIKE CATS AND DOGS!

When you’re ready to sell your home, your agent will inform you how to successfully price, present and market your property; but some “family members” may be left out of the loop, completely unaware of the process and feeling the attendant anxiety.  No, it’s not your kids, but your pets. 

Unfortunately, there is no way to communicate to your pets what to expect during a showing, and sometimes their barking or jumping or hissing or scratching can be a real turn-off to otherwise enthusiastic and qualified buyers.  

We know that our animal companions are creatures of habit, and strangers visiting your home can be very stressful.  How do you successfully show your home and protect your pets at the same time? 

The ideal solution, especially early in the listing when you can expect multiple showings, is to board your pet (there’s even daycare!), or have a trusted friend or family member baby-sit your pet at their home.  This can involve effort and cost, but it’s ultimately safer and less stressful for your pet, while insuring your home is shown under the best circumstances.  If this is just not possible, consider a large comfortable crate in a room with a television or radio. 

Finally, keep pets, bedding, furniture and carpeting clean.  Take a few steps and plan to make buyers and pets more comfortable during showings.

The Investment Real Estate Corner: THE UPSIDE OF “FIXER-UPPERS!”

Competition in the mortgage industry has resulted in a great opportunity for buyers who want a “fixer upper.” Private lenders have devised all sorts of unusual loans to put money into the hands of credit-worthy buyers. Now FHA is getting in on the action by offering a new “limited repair” loan, or the “Streamlined K.”

How does this kind of loan help buyers? Those with lower incomes but healthy credit histories can now buy less expensive homes in need of repairs, and roll the cost of those repairs into the mortgage.

Up to $35,000 in repairs can now be eligible for addition to the loan amount (up to 110% of the property’s value). Qualifying repairs include, but are not limited to, projects like roofing, heating and air conditioning systems, plumbing and electrical systems, weatherization and insulation, handicapped accessibility, siding and painting, even new appliances.

It used to be that purchase contracts involving FHA loans were considered a delicate business, because appraisers often insisted on the sellers making silly little repairs or bigger improvements which sellers simply did not want to complete. Now sellers have less responsibility, while buyers have greater flexibility.

Real estate agents get excited about this kind of financing, because it allows more people to participate in the American Dream of home ownership. Contact an agent or a loan officer for more details.

 

The Investment Real Estate Corner: POPPING BUBBLES!

The “real estate bubble” is still a hot topic these days, and many homeowners looking to sell are concerned. Look back about a decade, and you’ll see it’s like deja vu all over again!

In the 1990s, home prices dropped by as much as a third in major markets from coast to coast, the result of an inflation adjustment. Sellers, buyers and agents all managed to survive, and eventually the real estate industry experienced amazing growth, which again may need adjustment.

It’s helpful to realize that real estate is like the stock market, meaning it’s best to ride out the bumps on an otherwise smooth and profitable journey. Home prices adjusting downward cause alarm for sellers, but just try to look at it in another way: what can be painful for sellers can be a great benefit to buyers, especially first-time buyers or families who would otherwise be unable to afford the purchase.

Ultimately, this is good for the economy and for the real estate marketplace.

It’s a natural law: what goes up must come down. What’s bad for one party may be good for the other. Most people selling their home will also need to buy another, so a loss experienced on one side of the transaction could very well turn into a big gain on the other. The ultimate message: don’t panic.

How To Raise $650,000 Of Capital In 48 Hours

Raising capital for real estate development projects is difficult. However, when you have a good project that pencils and have qualified, experienced business people working the deal, a lot of difficulties disappear like Casper the ghost. This holds true for the project, I’ve told many of you about, called Northern Place in Glendale, Arizona.

After discussing with a few of you, I found that maybe you would like to know more specifically about the ins-and-out of a real estate development project.

Since the semi-custom new home development in Glendale is going to be around a 26-30 month project. I have decided to make it an on-going update feature.

A few weeks ago, we needed to hand over the 25% earnest deposits check to the seller. When the capital call went out, we unfortunately received information that one of the bigger capital investors, who has going to place $650,000 in the project, had issues we are not going to disclose and would not be able to fund his agreed upon amount. Scary, huh!

Especially, when you need $3.25 million to close on the land. Well, only if you have a project and a proforma that doesn’t pencil. In less than 48 hours and a few phone calls using the million-dollar Rolodex that gentleman’s position was filled. The 25% check was cut… and we are moving forward.

A few lots were lost, because Glendale is going to turn Northern into a main arterial thoroughfare, yet our proforma numbers were solid down to 24 lots. Unfortunately, for the new subdivision, built in 2004-2005, to the west of our project, the city stated that they would utilize eminent domain on a few homeowners and tear down a water feature that a city council member pressed the developer of that project to create.

On May 16, annexation with the city of Glendale started to take place for this 27-lot gated community project. During this current process there are three phases: zoning (telling the city how we intend to rezone the property), design review (presentation of fully developed housing product design and floor plans), and preliminary plat (discussions about how to subdivide the acreage).

At first, they stated it would take four months, now they have told my managing partner, Brad Chelton; it will be closer to six months. The holy grail of making your real estate development project profitable is to close escrow on the dirt and start construction as quickly as possible, therefore you want your purchase contract to stipulate that you will close escrow when you have completed your process with the city… and that’s what the Northern Place contracts stipulates. Entitlements, and subsequent closing, is anticipated in late forth quarter of this year.

SAVING MORE THAN MONEY!

Forget about tree-hugging – the high cost of energy is making environmentalists out of everyone!  Homebuilders and homeowners are no exception, and it’s anticipated that by 2010, about ten percent of all new homes will be “green.” 

The biggest challenge to green building has been the misconception that it costs more to construct such a home.  But if you do the math over the long run, the money saved will far outpace the money invested. Consider that environmentally sound design actually uses less construction materials, and you can see that green buildings may indeed cost less to build than more traditional methods. 

Buckminster Fuller developed the idea of dome buildings decades ago, and builders are now capitalizing on the fact that a “dome home” might use only a third or even a quarter of the materials needed to construct a traditional house. Aside from using less materials, the materials being chosen these days are also more durable than those used in the past.  That translates into lower repair and replacement costs.  Sounding better and better, isn’t it? 

Finally, environmentally and financially friendly design manifests itself outside of the home, where dry landscaping (xeriscaping) helps to conserve water.  “Green” homes also save water with fixtures like low-flush toilets, low-flow showerheads, and water recycling systems built right in.  It’s good for you, your wallet, and your planet!

Hello world!

Let’s Get Ready To Rumble!

 All comments will be reviewed by the administrator before posting to this blog.