Why Hire a Property Manager?

Why hire a property manager when you rent out your home?

Let me back up a bit,

I  have had several friends retire and move away  recently. Several more have asked me if they should try to take advantage of this down market to purchase either a smaller home, or to move up to a larger home. Often times, they have enough equity in their current and enough savings to purchase another home without being forced to sell their current home at today’s much lower prices.

I always advise these friends who are moving out of California, NOT TO SELL if they don’t have to. Even though our prices are down, historically we always bounce back, and the places they are moving to, do not typically get the type of appreciation that California does. In general, that makes it virtually impossible to move back here, when they decide in two or three years, that they want to come back. Most of them do move back, but not all.

When people get ready to move, they say to me, I can manage the property myself, it’s not that difficult…and I just cringe inside. Houses and condos need maintenance, and even when they are properly maintained, things break. Water heaters leak, toilets overflow, sprinkler systems go haywire and flood the house, slabs leak…on and on I could go. How are you going to solve these problems when you are 2,000 miles away and in a different time zone? Do you have a plumber on call, 24 /7? Do you have a reputable carpenter or tile guy who can come on a moments notice?

And, oh yes there is this one. “Cindy I just rented my place to a really good friend of mine. No, I didn’t run a credit report, verify their employment, check with their current landlord to see their payment history, they are really nice people, I am sure it will be fine “  That is one scenario that rarely works out…

How about the nice landlord who rents their two bedroom condo for $900 a month, when other similar properties command $1,200 per month. Often times the owners need that income to properly maintain and support the property, which benefits the owner and the tenant.

All these things are reasons why it is a good idea to have someone manage your property for you. We run the ads, put the property into MLS, meet prospective tenants at the property, and check their credit, employment and income. When they call with emergencies, we have a full complement of trades people, whom we work with on a regular basis. We collect the rents,  keep an accounting of all the rents and expenses for you. And every so often, do the really hard part of the job, which is to deliver notices for non-payment of rent, hire the attorney  to handle the eviction,  and go to court as your representative. The last one rarely happens to us, it usually happens when the owner has to get his nice friends out of the property, because they aren’t paying the rent!!!

Property management is something that many people do on the side. I believe the best property managers do it as a business. If you are thinking of upgrading, or downsizing, or just moving away..think about the  things discussed in my blog today..

Loan Modifications – Can they be done?

Several  time a week I get calls from clients, many of  whom have friends  in trouble financially, asking if they can  do a loan modification. I have also had calls from clients who have had a loan mod company call them, taken several thousand dollars from them  and done nothing.

Please be careful… While there are some very few companies who actually do loan modifications, many of the Loan Mod Companies out there are not legitimate. They are staffed by  the same people who sat at desks and just took loan calls, pumping them through the system,  and they were a big part of the mess we are in now.  Over 150 of those companies are now under investigation for fraud.

Loan Modifications do happen, but they really  only work in a couple of ways. For people who are making their payments and are employed, President Obama  initiated a new program . It is only for people with Fannie Mae or  Freddie Mac Loans. If you go to www.fanniemae.com/loanlookup  and follow the instructions to see if you have a fannie mae loan. Likewise for Freddie Mac. 

I believe that if  your loan amount is higher then $417,000, you are most likely  not a Fannie or Freddie loan. You can also call your lender directly and ask if you have a Fannie Mae or Freddie Mac loan.

The  Obama  plan for homeowners is for those of us who have verifiable income. If you would like to see whether the program will  work for you,  go to this site  makinghomeaffordable.gov..  

Once you have educated yourself on how the program is supposed to work, then  contact your current lender. Let them know you have read up on the program and you believe you are qualified for it. It is also important to have pn hand  proof of your income i.e. paystubs and/or W2’s, your bills, and a hardship letter detailing precisely why it is you are requesting this loan modification. 

Again, this program is for people who are employed and earning money, but because  they may have taken a cut in pay,or a spouse has lost their job,  making the mortgage payment has become a financial hardship on them, and may lead to them becoming unable to meet their obligations in the future. If  you have been late on your payments this will not work.  That is who the new program is meant to help people who are still making their payments. I also understand from reading the guidelines, that the Lenders will be paid an incentive by the government to negotiate your loan and  bring your payments down to no more then 38% of your gross monthly income.

If you can abolutely no longer afford to make your payments there is something else you could do. Temporarily stop paying your  mortgages,( I am not advising you do this, I am just telling a story here) . Once you are 30 days late, you will get calls from your lender. If you let them know that you can no longer make the current payment , request they put into contact with the Loan Counseling Department and that is where you can begin to negotiate a Loan Modification. Before you attempt this, or any loan modification, please know this:

 No Matter what anyone tells you , if you do not have a job, are not earning  income, and even if you are earning money,  but you cannot properly document that income, the lenders cannot lend you money. It would be irresponsible for them to modify a loan that has little chance of being paid back. Now, if you can show proof of  at least some income,  and some assets, they will eventually  help you, but it will not happen quickly or easily.

 Be prepared, before you call, either open a Word Document, Excel spreadsheet, or simply create a file .  Have your payment coupon handy with your loan number.

Make Your call to Loan Servicing, ask for the Loan Counseling  Department. When you are connected , you get the name of the person you are speaking to,  record the date of the call, the duration, and what was discussed. Then follow their instruction and  send them all the paperwork they ask for.

One week later,  follow up,  get the name of the person you are speaking to,  record the date of the current call, and when they can’t find any of the information from last week’s call, or any of the documentation you already faxed or Fed Exed to them,  read them all of the information that you wrote down last week, and ask nicely for a supervisor.

You speak with the supervisor, you are assured your information is now up to date and someone will contact you. WRITE down the name of the supervisor, and everything you talked about.

ONE WEEK LATER you call again. You write down the name of the person you are talking to, and when they can’t find it in your file you give them all of the information from the previous two phone calls….Are you starting to get the idea that this is a process? Don’t yell and scream, don’t cry, and don’t give up. You are trying to save your home,and thousands of dollars, it is now your new part time job. TREAT it like a job, and you will get results.

If you call twice, and  never follow up again, I am sorry, but they will not help you. Do you remember the saying ” It’s the squeaky wheel that gets oiled” ?  Well that is the truth, in order to get help you must squeak!! In fact, to be sucessful with either of these options, you must treat the process like a new job that you very much want to succeed at, or you will not get help.

In summary, proof of income, a well written hadship letter, and lots of persistance are needed no matter what. And like the Kenny Rogers song says, ‘Know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run” .

Loan Modifications can work, but in my experience it is best to do them yourself.

Home Prices in South Orange County

Can I get a 4 bedroom, 3 bath home in South Orange County for under $400,000?

Sales Statistics for the past four months

 

Over the past three weeks I have had people from various areas all over the country, and even in South Orange County, ask me if they can buy a home here, with FOUR bedrooms, for $400,000 or less. My gut instinct was to tell them they are out of their minds!!!  Couple that with the fact I also have friends and neighbors ask me what homes are selling for these days on a regular basis.  Because I am in the business, I always have a pretty good idea of prices off the top of my head, but just to be certain, I decided it was important to run some actual numbers and make sure that these people who want 4 bedrooms for under $400 weren’t seeing something that I wasn’t.

 

To make it fairly simple, I kept the following parameters for each search: South Orange County cities of Laguna Niguel, Dana Point, Aliso Viejo, Rancho Santa Margarita and Mission Viejo. Simply because these were the cities I was asked about the most!!

 

Here are the facts, just the facts on Sold Listings Only!!! (Close of escrow on or after 4/15 to yesterday)

 

Search One:  2 bedroom 2 bath properties, at least 800 square feet, price range $100,000-$300,000

Results: Four properties 3 of which were condos

 

Search Two: 2 bedroom, 2 bath properties, at least 800 square feet, price range

$301,000-$400,000

Results: Fifty Four Properties  18 of which were condo’s the rest were single family homes between 1200 – 1600 square feet

 

Search Three: 3 bedroom, 2 bath properties, at least 1100 square feet, price range

$401,000 – $500,000

Results: One Hundred and Thirty Four Properties

Between 1500 and 2000 square feet

108 of which were Single Family Homes

 

Search Four: 3 bedroom, 2 bath properties, at least 1500 square feet, price range

$501,000-$600,000

Results: One Hundred and Ten Properties

Between 1500 and 2000 square feet, average sq feet around 1900

Average Sale Price was $550,000

105 of which were single family homes

 

Search Five: 4 bedroom, 2 bath properties, at least 1800 square feet, price range

$601,000 and $700,000

Results: Ninety Five Properties

Between 1800 and 2500 square feet

Average Sale Price was around $670,000

All of which were single family homes

Search Six: 4 bedroom, 3 bath properties, at least 2000 square feet, price range

$701,000 – $800,000

Results: Sixty Four Properties

Between 2100 and 2800 square feet

Average Sale Price was around $777,000

All of which were single family homes

 

And there are another 120 homes, priced between $200,000 and $800,000 that are currently pending sales. They are not closed yet, so I did not include them in my statistics.

 

 

I think the results of my research are indicating this: if you would like to have a single family home, with 4 bedrooms and at least 2 bathrooms, you will most likely be paying over $400,000 for that home, even in today’s economy.

 

If you can only spend $400,000, that will still buy you a lovely home, it just won’t buy you a 4 bedroom, single family home. And for those of you who have been worried about home sales in our area, I am hoping you will find these numbers somewhat reassuring. Yes, Real Estate has gone down from the all time highs, but no, it has not fallen through the floor, and yes homes are selling.

 

Rates are good, if you can prove your income, there are good loans out there, with very good interest rates. Short Sales are no longer taking months and months to negotiate.

It is a good time to buy up, if you have been waiting to be able to afford a bigger home; or it is a good time to trade down, if you would like a smaller home. Yes, you will net less out of your current home then you might have in a hotter market, but you can also buy much more home and at greatly reduced, long term interest rates, then you could in any other market I have seen in this area.

 

I hope you find this information useful. Stay Cool, it’s hot out there today!!

Good News in the Mortgage Industry

Rates are down again a bit today. And the turn around times for closing loans is getting much quicker.

I also got some more good news, Citibank is opening up their correspondent division again. About a month ago they shut down most of their Correspondent division. Which gave people like me one less place to go for your loan.

You see, in the world of Mortgage Brokering that I live in, there are two main ways to fund loans, the one I was always most comfortable with was Brokering. Which meant I had around 150 Lenders, to whom I applied and was approved, where I could shop for the best loan for my clients. I got to know the underwriters and the funders and I had strong relationships with many of them.  Some of those were “A” paper Lenders, some were “B” paper lenders, and so on. Based upon their appetite for a certian kind of loan, I knew where to place files to get the best rates and service.

There is also the Correspondent portion of the Mortgage Industry, and to get access to those funds, I work with a company called Clarion.   Correspondent lending  is sometimes easier to del with because the Borker can goto a delgated underwirter, and cut out some of the time it took for the middlemn. The Correspondent Mortgage Originator will initially fund the loans in their own name, then sell it to a Wells Fargo, Bank of America, Flagstar or Citibank. When the Industry virtually collapsed in late 2006, many of the correspondent relationships collapsed as well, because banks couldn’t or wouldn’t fund those big lines of credit that were needed for the Mortgage Lender to initially fund and hold loans until they got purchased by those major lenders.

Needless to say, it has been a difficult time, and many many lenders and mortgage companies have had to close their doors. That is a sad thing for alot of people. But kind of a double edged sword for those of us in this industry who have a strong client and realtor base, and who really know how loans work. It has cleaned out some of the people who were in it for all the wrong reasons, and who helped caused many of the problems that brought us all down. And after some fits and starts it appears that some of the long time correspondent lenders are back, and some new ones are cropping up. Here is an article from the Implodometer web site:

“So you think the market is all doom and gloom? Not us. There are actually lenders out there that are operating and focused on smart business fundamentals. Listed below are companies that wish to express that they are still operating in good health and soliciting business:” Assurity Financial Services, Key Financial, Bay Equity

I believe that things are beginning to get better again. I also believe that it will be a long, hard recovery. I believe that real estate is still one of the best long term investments there is and I believe that people will want to work with someone they know has their interests at heart, regardless of whether they work for a Bank or a Broker…

HO-6 ?

News Bulletin – Condo Owners!!
As most of you already know, when you own a condo, you own a percentage of the over all complex and the space within your unit.
When you pay your Home Owner’s Association Dues each month, hereafter stated as HOA Dues, you contribute to a Master Insurance Policy that covers from the interior walls of your unit to the outside of said unit.
It has always been a good idea to have what is more commonly known as Content Insurance, or what most people nickname Renter’s Insurance.
That way if something happens to your condo, your personal possessions are covered by this type of policy. Now, it seems it has been determined that not all Condo Insurance Policies coverage is the same.
So Fannie Mae and Freddie Mac are requiring (means not just an option, to be purchased at the owner’s discretion_) you to have an HO-6 Policy in place before they will close your loan.

I have copied the information direct from Fannie Mae’s website. To get more specific information about the policy and what exactly it would cover, please contact your Insurance Agent.

Taken from Fannie-Mae’s Web Site

Hazard Insurance for Units in Attached Condominium Projects
Including 2-4 Unit Projects

The Selling Guide, Part XII, Chapter 5, Insurance Requirements require that lenders
verify that hazard insurance for all condominium projects with attached units, including
two- to four- unit projects, covers fixtures, equipment, and other personal property inside
individual units if they will be financed by the mortgage.

The updated policy now requires that the borrower obtain a “walls-in” coverage policy
(commonly known as HO-6 policy) unless the lender can document that the master policy
provides the same interior unit coverage. The master policy must include replacement of
improvements and betterment coverage to cover any improvements that the borrower
may have made to the unit.

The HO-6 insurance policy must provide coverage in an amount that is no less than 20
percent of the condominium unit’s appraised value. In the event such coverage can not
be obtained, the lender should call the Fannie Mae Project Standards Department at the
phone number listed at the end of this Announcement.

Mortgage & Real Estate News for South Orange County

Well, there are some good things happening this week with interest rates. They have been coming DOWN!! Unfortunately that decline in interest rates is almost always tied to not so good economic news…

I know that many of you have heard from me during the past three years, that it was nearly impossible to get a Jumbo loan. Well I have noticed more a more rate sheets that do have some form of Jumbo pricing on their rate sheets. For example, I now have two different lenders that are showing loan amounts of up to 2 million at up to 70% loan to value, And while it is a mis-nomer to say there havent been ANY Jumbo loans around,the rates have been very high, and the loan to values low. This is the highest combination of reasonable rates and LTV that I have seen in a while.
There are also several loans out there that are good Adjustable rate loans, that start in the 3% range and have low margins based upon the 6 month LIBOR.

While some people are upset that it is more difficult to “get” a mortgage right now, I am kind of an old timer, and while it certianly is more difficult to put a good package together than it was three years ago, it is NOt more difficult than it was 10 years ago.
There are some things I have encountered that I haven’t had to deal with before, and it is not regulations that affect my borrowers as much as they do me. The Appraisal craziness, which is frustrating and silly, the severe regulations on our Title companies, and the fact that so many of my best lending sources are just plain gone. The good thing for me personally is this market is going to clean out many of the people who were doing loans that were just after the easy money. Money is good, don’t get me wrong, but there were people out there who just had NO clue as to what Mortgage Loans were all about, and now they have to do something else.

Many of my clients who are out looking for properties are going through some frustrations right now. They are looking at homes that are attractively priced, and many of those are short sales. By the time they put an offer in, there can be several other offers being submitted at the same time. Bill said to me, Cindy, I thought this was a buyers market…and while in some ways it is, in many ways it isn’t. If a property is over priced, buyer are either ignoring those properties, or making low ball offers, that sellers refuse to accept, and the buyers end up offering on short sale and REO properties that are priced well, but they are getting multiple offers that drive the prices back up. So, buyer’s market? Not Really…Seller’s market? sort of…

Hello world!

Welcome to my blog. There will lots of good information to come about the world of Real Estate Transaction. Although my primary area of expertise has been mortgages  for the past 20 years, I am also fairly knowledgeable about Real Estate Transactions.

The thing I am most excited about today is the fact that I am GOING GREEN. Although I have been processing my files mostly as PDF’s, I still had to obtain most of my information via paper methods, but this weekend I am changing to a Calyx Point web site. This will allow my clients to input all of their information on line ( or most probably I will still input it for them, that’s part of my charm) and I have a couple of lenders who even do paperless loan docs these days. Being a former computer geek, I love getting rid of paper.

Talk to you soon!!!

Cindy