As you may have heard, mortgage lenders have pretty tough underwriting requirements right now.  It’s a little about amounts and a little about procedures.

Amounts

In general, down payments range from 3.5% for an FHA insured loan to 10% to 15% down for some conventional loans and 20% down for an investment property.  Down payments under 10% usually require that the borrower pay for Mortgage Insurance, to guarantee the loan.  This can add a couple of hundred dollars to the monthly payment during the first few years.

Of course interest rates recently have been as low as 3.75% for an FHA loan on a 30 year amortization.  Fifteen year amortizations are even less!

Plan on a 46% debt-to-income ratio.  That is, all of your payments for revolving credit (charge cards, boat or car payments, furniture payments) and your total mortgage payment (including Principle, Interest, Taxes and Insurance) when added up, come to 46% or less of your net household income.  If you have rental properties, your mortgage payments on the them are counted in the debt, but their income is counted only if they have been rented for a full year, or if the lender is more lenient, they will count 75% of the income, figuring a 25% vacancy rate.

Investors may be required to document 6 months of “reserves” to cover the mortgage payments if they can’t rent the property for a while.

Procedures:

1.  A requirement to produce 6 months worth of bank statements or other investment statements showing that you have had your down payment available.  They look back a few months, to be sure you’re not borrowing it.
2. Leases, if you own rental properties, to document the income you receive from them.
3. One to two years of tax returns, or W2s.
4. They will “pull” your credit reports, of course.
5. Other forms of identification and documentation.

As you can see, it is best to interview with a mortgage banker or mortgage broker BEFORE you begin shopping for real estate, to be sure you are shopping in the price range that your income and expenses will support.  They are experts at helping you understand what it takes to qualify and at finding the loan “product” that suits you best.  And of course, this consultation is free to you.  Knowledge is power and they give you knowledge for free!

So check with your bank, because if they have mortgage bankers there, you may get some fees waived and check our Super Service Directory (there’s a button on the home page)  for the names of a few mortgage brokers and ask people you know who have recently refinanced or purchased using a loan whom they would recommend.

Or just give me a call ;-)                                                                           Carolyn Ward

BIG EXCITING ANNNOUCEMENT!

Chocolate Properties is expanding.  We are looking for a few good Realtors with at least three years experience, or who have completed at least 30 transactions, who value excellence of service above just making the sale, and are seeking a collaborative and supportive environment.

We have LOTS to offer: Here is a partial list:

• Free on-going marketing and sales education that emphasizes relationship based marketing (Web-based, so you can do it on your own time, unless you want to learn in a group);
• Established systems for all phases of marketing ;
• A collaborative and supportive work environment ;
• One-on-One Mentoring ;
• Free graphic design work available for brochures, postcards, flyers (with printing discounts);
• Free property signs and lockboxes and flyer boxes and sign riders ;
• A free website for every listing with mobile app support ;
• A free 800 number with drip system for every listing or postcard or other campaign;
• A Free transaction coordinator;
• Discounts for professional property photography and professional floor plan drawing;
• Discounted once-per-month e-flyers for every listing; and
• Commission splits that start at 80%.

Please call Carolyn R. Ward for more information: 505-331-9049

I hope anyone out there who is shopping for a new home is using a buyer’s broker.  (see my earlier post on the subject if you don’t know what that is.)  Here, in my opinion, is what you should expect from a Buyer’s Broker:

1. An in-depth initial  interview that helps her or him understand your deepest motivation for buying a home.   If you are partnered, the interview should be with both parties, so that the broker gets a thorough understanding of your desires, dreams and underlying motivations.  This should go beyond how many bedrooms and baths and other physical attributes of the home.

2. Discussion and advice about general guidelines for determining how much of a loan, if any, you can qualify for and are comfortable with.

3.  Referrals to at least three lenders for a “pre qualification” appointment, by phone or in person.  And, in some cases, she could go with you to that appointment if you want her to.

4. Once you know the price range of home you want to see,  she should set up a portal link to thelocal  Multiple Listing Service (MLS) for you, so you can search as much as you want…and be ready to show you anything you find there that you want to see.

3. She should set up an automatic search, using the parameters gleaned from the initial consultation, that will sift and sort through all the new listings of homes for sale, and send you an immediate notification of any that meet your criteria.

4. She should tirelessly show you homes until you find the right one for you.

5.  She should provide a listing of all similar homes in the area(s) you like which have sold in the past 6 months to 1 year and the prices they sold for, so that you know what the fair market price for that area is.  Realtor Lingo for this is “comps”, which is short for “comparables.”

6. She should help you look critically at the homes you are interested in and be able to refer you to inspectors if you have any doubts about the condition of the home.

7. She should provide you with an estimate of the property taxes based on the price you are considering paying for the home.

8. She should provide you with the Seller’s Disclosure, if there is one, and any other available documents that are pertinent to the purchase of that particular home, such as floor plans, utility bills, inspection reports and so forth.

9.  She should have expert knowledge of Short Sales, Foreclosures and HUD auctions, if you are looking for those types of properties.

10. She should have excellent negotiating skills and offer advice and options when in the negotiating phase, based on a depth and breadth of knowledge about accepted practices in the area, experience with negotiations, and utmost  integrity.

That’s a partial list of what a good buyer’s broker can be expected to provide.

To summarize:  You should feel that your Buyers’ Broker is your very own  knowledgeable and professional ally, on your side and working for your best interests in the transaction…even though it is the seller who will pay her.

Carolyn R. Ward

I got to visit affordable solar this past week. (They spell it all lower case)  They’ve been around since 1998 and sold and serviced over 15,000 systems.  And wow, there’s a lot going on with them.  I learned a lot and I’m going to summarize here:

First and foremost:  If you’ve been thinking that you can’t afford to convert to solar, check this out:  They have “solar loans” available.  So with ZERO money down, you can finance up to 100% of the cost of your solar system.  You could possibly spend less on that solar loan, while using solar power, than you were spending on your monthly energy bill.  How cool is that?

Also, there are TWO tax breaks for going solar.  You can get a 30% federal income tax credit.  That’s a credit, not a deduction, which also applies to taxes assesed when you withdraw retirement funds.

And there is a State income tax credit of up to $9,000, based on 10% of the system price, which can be “rolled over” until 2020.

And if that’s not enough, you may be able to “sell” your excess energy back to PNM!  Wouldn’t it be sweet to have them pay you, instead of the other way around?  It’s not a joke!  Your meter will actually spin backwards!

Affordable solar also serves commercial properties and non-profits and offers assistance in taking advantage of  business tax credits and, yes even grants (they employ a grant writer for their customers!), to reduce the initial cost of the solar  system.

I really enjoyed my tour and getting to know a little bit about this company and their products.  If you want to look into them further, I can recommend you to Nick Kerwin there.  You can email him at nick.kerwin@affordable-solar.com.  Or call him at 505.944.4241. And please tell him that Chocolate Properties sent you.

If you know of other resources for “going solar”, please comment here or send me an email.

Thanks!

Carolyn R. Ward

carolyn@chocolateproperties.com

I have heard some sellers complain that all their listing broker did was put up a sign, list their home in the MLS and wait for a buyer.  Well, if that’s true, sellers certainly deserve more.  I suspect that some of the marketing a listing broker does is unknown to their sellers.

Here’s a partial  list of what we do at Chocolate Properties besides the signage and MLS to market our listings in this Buyers’ Market:

• First and foremost, we work with the seller to price the home in its “sweet spot”.
• Then, we hire professional home stagers if needed, and when the home is ready,
• We hire a professional photographer to maximize the outstanding features of the home.
•  Often, we hire professional drafters to draw up the floor plan.  Then, we go to work:
• We create a website for each home we market,  http://www.928alameda.com;   http://www.1504Lucyle.com
• Create flyers for each home,
• Create and send e-flyers for each home to every Realtor in the state (about 7,000) at least once every month, and also to our nation-wide referral sources,
• List the home in at least 10 different websites like Trulia, Zillow, Realtor.com, Lycos, Oodle, etc. with regular syndication updates.
• Hand load the listing onto specialty websites where appropriate (like Horse properties, for example),
• Attend functions where buyers might congregate and showcase the listing there (e.g., a horse show, for a horse property),
• Participate in as many Realtor home tours as we can (at least 3 per month, per listing),
• Attend at least 8 networking functions per month, both Realtor and non-Realtor, to talk about each home we market,
• List the home on our website,
• Send regular email blasts to our data base (about 1,000 people) about each home,
• Post videos about each home (and blast links to them),
• Post to numerous groups on Facebook, and  Linkedin, and to  Twitter on a regular basis about each home,
• Hold Open Houses, if the owner desires us to do so,
• “Work the phones” to other Realtors with similar listings to be sure they know about our listings, on a regular basis.

That’s all I have space for, and you get the idea.  There’s a good chance that listing brokers do a lot more to market their listings than meets the eye!

Did you know that in New Mexico every Real Estate Broker is working for the seller, and must put the seller’s interest above her or his own, unless he or she has an agreement with the buyer to be a Buyer’s Broker?  A Buyer’s Broker gets to put the Buyer’s interests first.   Furthermore, the services of a Buyer’s Broker are absolutely FREE to the buyer!  It is the seller who pays the buyer’s broker to bring a qualified buyer for the property.

PLUS, when buyers agree to work with a  buyer’s broker; they save loads of time.  The Broker will listen carefully to the buyer’s needs and verify their qualifications, then use her expertise and experience to search the MLS data base and other listings, to sift out the homes that are best suited to that particular buyer…there are about 4,000 homes on the market right now..that’s a lot of time saved!

And a good Buyer’s Broker will provide the buyer with a list of similar homes sold in the area in which they are looking, so the buyer can see what a fair price is in the neighborhood for that type of home.  And drawing on her experience, a buyer’s broker can help the buyer notice blemishes or concerns about the property that might require a closer look by a qualified professional.

In short, a Buyer’s Broker HELPS  buyers find the best home for them from among the thousands that are on sale right now and advises them, based on a depth of experience and knowledge and from a place integrity, so they can make a wise decision about one of the most important purchases any person makes!

So, please don’t drive around and then call the listing broker who’s phone number is on the sign in front of the house you would like to consider…..call a professional buyer’s broker first and shop for your home with the advice and counsel of a true expert on your side!  (my number is 505-331-9049..in case  you need it :0) )

Happy Home Shopping!

Carolyn Ward

If you want to successfully close on buying a home in today’s crazy market you need a team of experts that will get the job done.

There are some people who will do anything to save costs – even if it hurts.  In real estate (buying a home) many people will buy a home without doing any due diligence or research.

More importantly, they will not seek expert third party advice.

You have to have an alliance with a really good team to help you:
<ul>
<li>a great Real Estate Consultant,</li>
<li>a great mortgage consultant,</li>
<li>a cracker jack title person,</li>
<li>a trustworthy and knowledgeable home inspector, and so on.</li>
</ul>
You need people that you can trust and that have proven themselves over and over again many times to their past and current clients.  You need clarity to help make a good decision — and you accompsh this by working with the experts.

A great real estate consultant can save you hundreds of hours in just the home searching. A great consultant can also earn their salt in consulting with you, negotiating the sale, and following up on all the details.  It doesn’t cost the buyer (in this area) a commission, which is normally paid by the seller.

Call Carolyn or Bob today at 505-856-6035 for a free thirty minute coffee or tea consultation – they will enlighten you and make your buying process a lot more fun.

Home Properties For Sale Expert
(505) 856-6035

Yesterday I was part of a local bank’s rally to help Realtors at the Century Rio 24. We spent two hours listening to a wonderful presentation on what’s going to happen in the housing industry. I have my lender buddy Sandy R. to thank for this.

Seems that because of the mortgage mess the builders really haven’t been building for the past 3.5 years, so the supply is drying up.  And in about 18 months from now there is going to be a shortage of homes of all types. The prices won’t skyrocket (like two years ago) but there will be a Seller’s Market where there will be multiple offers on a home.  Another big factor: the children of Baby Boomers are the “Echo-Boomers”.  These are the 18-35 year olds who are buying their home for the first time.  Our 27 year old daughter is thinking of buying in about 18 months (I kid you not).  And there are twice the number of “Echo-Boomers” than the Baby Boomers (who by the way, are starting to expire, die) right now.

Point of the story: you have about year to beat the rush. However, now is the very best time to buy. The interest rate is extremely low and the home prices are very low.  What are you waiting for?  Give us a call today for a No-Hassle Coffee/Tea Consult.

It is rare to see any advice about building a retirement fund from real estate investments. Yet, many of us heard from our parents that real estate was a good investment because it was tangible, durable, and provided income in your old age.  Some of us grew up in families that owned several “rentals” that provided family income.  Yet, we rarely see the advice our parents dispensed appearing in print.  To be sure, a version of this advice is sold by many real estate investment gurus teaching how to become rich through real estate…but they don’t fully address how ordinary people with average incomes can use real estate investments as retirement income.

So, here are some tips, for those who have decided residential real estate might be a better investment for one’s old age than stocks, bonds, or mutual funds.  

Make your money when you buy, AND when you sell.  In other words, buy below the market!  Buy below the median price for the area you’re buying in and buy at least 15% below the market for that area.  You’ll have instant equity if you have to sell quicker than you originally planned.  (Your Realtor can help you find these bargains.)

1. Don’t fall into the trap of buying a money pit.  No matter how good the price, if the property is going to require extensive renovation or repair…or if you see problems you can’t explain with a visual inspection, our advice is… RUN AWAY!  At the same time, don’t require that the property be up to your living standards, unless you’re buying a luxury home to rent to movie stars (which we don’t recommend..see number 3)
2. Buy what is likely to be easy to sell.  Here in the greater Albuquerque area, the most homes sold are in the price range between $100,000 and $200,000.  Therefore, a home in that price range will have more potential buyers than a more expensive home.  Every investment needs an exit strategy and this is part of yours.
3. Be open to all financing alternatives.  Sometimes obtaining financing for investing in real estate is challenging.  Be open to paying a higher interest rate if the end goal will still net you a nice profit.  Consider partnering with one or two other investors, just to get started.  Look at alternate financing options like “sandwich leasing” if you’re short on investment capital.
4. Make a long-term plan and stick to it.  Decide how much income you’ll need to retire on and when you want to retire, and work backwards to determine your plan.  As an example, our personal 10 year plan will provide about 25 properties producing $7,000 to $10,000 per month in residual income.  We’ll get there by starting with what we’ve got, and over time, reap our profits and re-invest them in more properties until we reach our goal.  Each time we sell a home, we’ll be able to buy two more. Our retirement fund, therefore, will grow exponentially.

 There are other more passive forms of real estate retirement income, for those who prefer a less “hands on” approach.   One we like in particular at this point in our country’s real estate history, is to buy into pools of REOs (foreclosures) that are being sold by entities like Fannie Mae and HUD.  There is a minimum investment of at least $50,000 to get into these pools, so they may not be appropriate for everyone.  The pools we have researched are holding their properties right now, and renting them out. So, they are either paying or reinvesting dividends (from the rents) now, and when the market is right, they will sell.  These have typically been bought for cents on the dollar and will sell at a tidy profit when the time is right.

I just read the AARP magazine which was supposed to be about retirement. There was not ONE mention of funding retirement with real estate! We are so programmed to believe that retirement vehicles are things like annuities, and life insurance policies, and mutual funds, and CDs, and reverse mortgages (and usually by the persons who are selling these instruments) that we never even THINK of funding our retirement with income producing properties! (And maybe we think that such a path is just too much work..even though it isn’t.)

Is this system working? Well, consider this…97% of 65 year old Americans cannot write a discretionary check for $600!. And for over 7 million recent retirees in America, retirement lasted only 2 years! No, this system does NOT work and YES there is a better way.. And it doesn’t require a lot of work, and is risk mitigated, and is suitable for people with average jobs (or businesses) and average credit. And it is a proven system, with mentors to help you, and it is in Real Estate! 

One of the best aspects of it is that there is no maintenance for the investor to perform on the properties.  Another part we like is that, while it is straight, it is not a quick path, although it could be if you chose to make it that way.  Our personal program will take 10 years to complete.  And at the end of that time, we will have residual income of $7,000 to $10,000 per month to retire on.  Will your retirement account provide that?

Yet another aspect we like is that we have mentors whom we can consult all along the way.  They have trained us over the past 2 months in weekly and bi-weekly sessions, and with a number of outside reading assignments.  And their coaching and consulting will continue as we master our new skills and knowledge.

We believe that this program is especially well suited to entrepreneurs, like ourselves, who may not have a pension or other retirement plan set up.  It is also “doable” because our mentors have a financing component that understands investors and their financial needs.

So, maybe this is why no one thinks of Real Estate Investing for retirement…there hasn’t been a comprehensive, easy-to-follow method of doing so before that was also coupled with training and financing to help ordinary folks like ourselves accomplish this.  Hmmm. Considering what’s going on in the Stock Market…I guess this solution has appeared just in time!

What do you think?