Down Payment Assistance Through Grants, Part II

MR_Blast

I wanted to follow up my last discussion about mortgage assistance.  All week I have been speaking with potential new home buyers who have shared down payment affordability concerns.  The California Association of Realtors has recently shared this link which I want to pass on which can help potential home buyers with additional resources to find down payment assistance.  CLICK HERE:  http://bit.ly/2orSGPP

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The Price is Probably Right

California-Hot-hi-res

In 2017 home prices in California were priced right at market more than 2/3 of the time.  WAIT?  Is that what this data is telling us?  Well . . . YES!  If you look closely at the percentage of homes in 2017 that sold above asking price was 32.9%.  That also means that 67.1% of the homes were price at or below market.  One of the greatest challenges for home buyers is feeling comfortable long after the escrow closes and the movers have left that the price paid for that new home was a deal.  Isn’t it?  For most homeowners their home IS the largest asset they may ever own in their life so it strikes home, no pun intended!  Although the data in this share today indicates California is getting to be a very warm market, at least for those that already did buy they can rest assure they at least paid a market price.  And if they didn’t, there was a good chance that another buyer right around the corner probably would have.  Unsure if now is a good time to buy or sell a house in California?  I can help!  Feel free to message me to learn about options that are available to you!

Tax Reform: Is California a Winner?

As always, check with your tax advisor about how any changes in the tax laws will impact you.  Need a tax professional referral?  I’ve got you covered!  Two years ago I hired an excellent tax professional in LA that I have been very satisfied with and can refer to you.  Just send me a message!

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Down Payment Assistance Through Grants!

Buy v Rent

Recently I heard from some customers that rented a home in a very nice neighborhood that they want to begin the process of stepping up into home ownership.  But there was one problem.  When my customer’s spoke with their mortgage lender they were told they would need a seasoned down payment in order to qualify for the mortgage.  Although it is not uncommon for lenders to want to see a home buyer with some skin in the game, there are programs today that can even help with a home down payment!  So what is a seasoned down payment?  Simply put, its the amount of money that is in your bank account that will be used to cover the down payment and has been in your account greater than 2-3 months.  The reasoning behind the seasoning requirement for this article is not important because what my customer needed is to find the amount of money they don’t have saved with the amount the lender demands to qualify for the mortgage.  The loan my customer wanted was the First-Time Home Buyer loan which only required to have 3.5% of the purchase price in their savings account as a down payment.  Having only been able to save up 1% of the amount (because my customer is renting an expensive house) I told them about programs that are available that could help them obtain a grant towards the down payment.  And best yet, would not have to pay the grant back!  Not everyone will qualify for a grant, but just typing in “house down payment assistance” yielded no less than 2 million results!  Although no one has the time to research (nor will they need to) I am familiar with at least 20 programs in Los Angeles that home buyers can research to determine if they qualify for a house down payment grant.  It is important to note that no matter what direction you chose for down payment assistance, it is vital to communicate which program you chose with the realtor your working with so that when your offer to purchase is submitted that appropriate closing deadlines are planned so that you have enough time to receive the grant funds to fund your escrow.  To become more familiar with down payment assistance this Freddie Mac resource written by Danny Gardner is a perfect first step to understand the options home buyers have available to them.  Go here—–>  http://bit.ly/2od7yBQ

New Balance!

New Balance

Every once in a while I get blown away by a new product or service.  As I write this I want to let readers know I am NOT an affiliate or getting paid by New Balance in any way to praise this product.  In real estate I am on my feet a lot so I appreciate any footwear that makes it easier to get through the day.  So I wanted to share my experience with these kicks from New Balance because they ARE crazy good!  A good friend of mine has been loyal to New Balance for some time know as I always preferred Saucony.  But I recently noticed something about my Saucony sneakers.  Over time the sole “caves in” on me and doesn’t hold an even shape.  My first pair of New Balance kicks were purchased last year and I was impressed how well they held up.  I wasn’t even in the market for a pair of sneakers the day I bought these as I was in the store buying baseball cleats for my son when I noticed these gel-comfort sneakers.  I can definitely say after two weeks they haven’t felt uncomfortable once.  Even though I visit properties often I always power walk for at least 45 minutes a day.  I love power walking for the added benefit of just reducing stress from the day and an opportunity to talk with friends and family.  Even with that much time on my feet I don’t feel foot fatigue or any stress on my joints, heel or knees.  I’ll update you in six months but for now these are great sneakers for all us road warriors.

Turning Raw Land into Equity

raw-land

The internet is full of strategies on how to invest in raw land and why its so important.  Seldom do I see n author breakdown a simple strategy of how to exit land holdings to upgrade to an real estate income or growth opportunity.  Here’s the conundrum:  after paying off all your debts early in life you were finally able to save.  A family member tells you about a great land investment opportunity so you need to act now!  The land is cheap, taxes are minimal, and maintenance nearly nonexistent.  Then a decade goes by.  “What’s happening with your land” your family member asks.  Nothing.  It’s sitting there doing nothing.  Sure maybe it appreciated . . . a little.  So what now?  You decide you would like sell or exchange the land to get a better return on your money.   But how?  It’s not worth much.  HERE’S a solution most experienced investors have shared with me.  Think of your land holding like a checkbook.  But your not done there.  Instead they say, go for the 3 Times Trade.  Here’s what that means.  Let’s say your land property has a value of $25,000.  Next, you find a list of houses selling for $100,000.  Three times the value of the land.  Next, make offers to sellers till you find one that will accept your land as a down payment for the house.  Next, bring your purchase and sale agreement to your banker, mortgage broker or private lender.  Request a mortgage for $75,000 to close on the remaining deal.  Why would the lender be willing to make this loan?  Because the seller is already giving you credit for the land as a $25,000 down payment!  The house is only 75% mortgaged leaving 25% of the house in the clear.  You just turned the land into  $25,000 of equity!

Another way of using this formula if you want a less expensive house si to go for the 2 Times Trade.  In this example your land is worth $25,000.  Next, you make a list of houses worth $50,000.  Next, you find a seller that will accept your land as a down payment.  Next, you bring the purchase and sale agreement to your lender and request a  $25,000 mortgage to close on the house.  The first $25,000 represents half down in this transaction which means you are turning the land into  . . . $25,000 of equity!  Why would the lender do this?  Because you are only mortgaging the house by 50%.  Most lenders will see this as a great deal because when you close you will have 50% equity in the house!

New possibilities now become available with the house that weren’t available with the land.  Renting, house-flipping, Air B&B, home squatting just to name a few!  These are two quick examples of how to exit out of land and step up to another asset class of real estate.

If you know of someone sitting on a piece of land and they aren’t sure what to do Share this article with them!

Garage Conversion Flop

garage-conversion

Although the concept of converting an unused garage into a livable dwelling is not a new idea, Gerry Brown signed the Wieckowski bill into law which actually promotes the idea http.  See http://bit.ly/2dSK7rc.  However if your conversion is not done right, not only can it be a disaster for your tenant, local laws can sting a homeowner financially.  In Los Angeles there are local housing laws like the Los Angles Rent Stabilization Ordinance that must be  followed in addition to state law.  One garage conversion I remember went so badly for the owner that they ended up paying over $14,000 to the tenant.  The situation was like this:  A new owner bought a property sight unseen in the city of Sylmar California.  The house was a 3 bedroom 2 bathroom with a detached garage in the back yard.  There were tenants living in the front house and the detached garaged which was converted into a 1 bedroom apartment.  The back tenant had a child who was getting very sick living in the back house because the ventilation was very poor in the bathroom.  Add that the front house tenant was also the previous owner who had been foreclosed and had not yet surrendered possession of the property to the new owner.  The previous owner was very upset about losing his house so he would let the 2 pit bull dogs living on the property roam the yard. Unfortunately for the back apartment tenant the dogs were unfriendly towards people so the dogs would intimidate and often try to hurt the back tenants. So now we have a back tenant who has a very sick child because of the ventilation problem and they couldn’t come and go as they pleased, essentially entrapped in the garage. Eventually I was able to negotiate with the owner to leave the front house (since he was living rent free from the resulting foreclosure) but the back tenant wouldn’t leave. As it turned out, she had hired an attorney who hired a professional licensed mold testing company who took samples throughout the garage and verified the existence of black mold spores. It wasn’t short after that the attorney wrote a letter to the owner stating that, under LARSO rules the owner MUST pay the tenant as much as $18,000 to relocate the family and even threatened with an additional $36,000 of health related damages suffered by the tenants child! Although the owners attorneys responded and disagreed with some of the claims, a settlement was quickly reached of over $14,000 in favor of the garage tenant. Although the previous owner had probably never foreseen the potential disaster that ensued, new home owners must be aware of how local laws can impact a planned garage conversion. Had the previous owner used sound building and construction practices, the ventilation issue would most likely not have been an issue and would not only have kept the family safe, but the new owner from having to pay a large settlement to move the tenants out.