Archive for October, 2008
You Are Rich, You Share With Me….Ooppps “us”. Ventura County Real Estate Doing’s for Week Ending October 25, 2008
October 26th, 2008 Categories: Weekly Real Estate Activity In Ventura County
Strange talk amongst the Democrats in Washington.
For example being discussed is the transfer of all 401K savings into the Social Security system.
It is said that Government will guarantee a 3% annual return on your 401K type money.
The Government will then issue you Social Security monies when you retire plus the standard monies one would receive based on your age, etc., from your 401K money.
But when you die 50% of what remains in your 401K account goes to the government and the rest goes to the surviving spouse (although someone indicated it should be surviving heirs).
Whatever, the funds received will be taxable to the spouse and or heirs at a significant tax bracket (over 50%) regardless of amount (no cap). Now that is distribution of wealth.
No mention had been made of an individual being able to borrow monies from his 401K to buy a house. This could impact 1st time home buyers.
Banks are now limiting the number of properties an individual may purchase. The number is 4 in total. Obtaining funds for properties over that number will be extremely difficult to non-existing.
This wealth distribution talk appears to be political euphemism words to penalize individual accomplishments. There is the dumbing down of education and now steps are being suggested to dumb down individual achievements. Our fore fathers will be turning over in their graves.
It appears that we are on the horizon of Government treating everyone as equal with Government determining what individuals should or should not have. To be sure the political forces will make sure they are excluded from this scenerio.
Hmmmmm……sounds like socialism at work or worse, communism.
Ventura County Real Estate.
Listings continue to decrease; property sales continue at a slower pace; the variance between list price and actual sales price has stablized.
Prevailing in the market now is to “STAY PUT”. People do not know what is going to happen and the changes that are occurring. They want time to sort things out.
Credit appears to available but individuals need to have a strong financial positions to obtain monies for mortgages. 20% down; high end debt ratio appears now to have settle in the range of 38 to 42% (all debt including mortgage when compared to income should fall into the range of 38 to 42%).
This was the general standard in the very early 1990’s but was relaxed significantly when Congress changed the rules and now we have the current problem.
Overall Ventura County is still doing well and other parts of the Country appear to have stablized. Florida, Arizona, and parts of California still have problems but these appear to be bottoming out.
Your comments are welcomed.
| Currently 25 Comments »
Insurance—A Necessary Consideration for Real Estate Investments
October 25th, 2008 Categories: Real Estate Investment Notes, Real Estate News
Insurance that real estate investors should consider for rentals are listed below. By all means this should not be considered as a complete list. It is simply a “head start” to guide you in the right direction.
Of course cost is the final determination that will prevail when shopping for insurance, so shop as you find necessary and select what is required.
Just like a lighthouse land mark you want to have a safety net around your investment and your immediate assets.
Insurances to consider:
- Hazard Insurance
- Landlord’s Liability ($ 5,000,000) with Personal Injury Protection (an endorsement type of landlord’s liability).
- Dwelling/structure not covered by Association
- Wind and Flood Insurance
- Earthquake insurance
- Mold and bio-agent insurance
- Animal insurance protection
- Loss of rental income insurance
- Assessment (inadequate insurance obtained by association)
- Damage (a result of a legal liability for an event emanating from one’s unit)
- Discrimination Insurance
- Excess Liability Insurance
- Sewer line insurance (sewer line gets blocked and sewage backs up into residence or rental unit)
I also ask that if I have left something out do let me know. There may be an insurance that may be mandatory to have in specific locations (like flood insurance along coast lines).
Your comments are welcomed.
| Currently Comments Off
Investment Loans Just Got More Expensive!
October 24th, 2008 Categories: Real Estate News
Investment loans are geeting more expensive.
Starting in November Fannie Mae and Freddie Mac will begin charging substantial fees on all investor loans. These will be in addition to earlier imposed restrictions, such as limiting investor applicants to a maximum of four rental properties. These “adverse market fees” as they are being called could increase your out-of-pocket by thousands of dollars. So investors have to have a sharp pencil and do the math diligently to see if a specific property is going to be worth the investment.
But of most importance is the fact that individual investors will be limited to four rental properties. I do not know the impact to corporate type real estate investments but I am sure there will some stringent conditions applied.
In general I think that real estate investment over the long term will be worth it. Flippers and other short term investments could be hurt with the added cost.
Here is a summary of the new fees one has to pay to get an investor loan:
Fannie Mae will up their fees on all loans purchased after December 1st
Loans with 10-15% down payments will require a 3.75 point “adverse market fee”
Loans where you put 20-25% down will require an additional 3 point “adverse market fee”
Loans with 40% down or more will require a 1.75 point “adverse market fee”
If you can find a 10% down loan, your rate will be about 3% higher than for an owner-occupied program.
Freddie Mac will impose similar fees, but they start on November 7th
Some large PMI companies are going to stop underwriting investor loans completely. How does this affect you?
-
Low down payment programs for investors will probably disappear, not just in hard-hit markets, but all over
-
You will not be able to buy as many properties because each one will require so much cash to close
-
You may not be able to get a loan
The above changes will apply to almost ALL investor financed properties.
Know upfront you will need to be pre-qualified! Sellers and real estate agents will not take a person seriously without a pre-qualification letter. Pre-qualified is not the same as being pre-approved. To be pre-qualified significant documentation will be required which will include tax returns, pay stubs and other income related data. Allow time to do it right and all will be well. Most certainly you do not want surprises when attempting to buy an investment property.
A portion of this article came from Marshall Reddick note and comments.
Your comments are welcomed.
| Currently Comments Off
Betrayal and Lack of Confidence. Ventura County Real Estate Doing’s for Week Ending October 17, 2008
October 19th, 2008 Categories: Weekly Real Estate Activity In Ventura County
As mentioned last week it looks like the institutions(Congress, The Administration and Judiciary System) have betrayed the American public.
Fannie Mae and Freddie Mac should never have occurred.
Congress, The Administration and the Judiciary System fell asleep at the switch. Today it can be said that the American public lacks confidence in these institutions.
The public is looking through a window at the rain and wondering when it will let up.
Which suggests another point. The American public has betrayed itself. We listen to all the free things the politicians say we are going to get. We don’t care who pays for it as long as it is not us. It doesn’t register in most peoples minds it is they that will have to do the paying.
More dismaying is the Socialistic talk that has surfaced regarding the re-distribution of wealth and doing away with our Capitalistic form. People talk and think that up to 70% or more should be taken away from the rich and re-distributed to the poor. The rich are defined as anyone making over $ 250,000 per year. Once we go this route the rich will be re-defined as those making over $ 50,000.
We have lost our character. It is a crazy world.
There is also the under lining thinking that Washington (or any State capital and local political entities) would be best to guide the economy and future development. That is scary.
National Real Estate.
Based on the chart of areas that I keep tabs on (see below) it appears that real estate is still doing well and California has begun its’ swing upward. It is not going to be a thunderous up-swing but a gentle looping trend upward for the next year or so and then watch out.
Chico, San Luis Obispo, Santa Barbara (including Santa Maria) and Ventura/Santa Paula appear to be areas that will witness the greater appreciation over the next 36 months.
Ventura County Real Estate
Sales tailed off over the last week; listings continue to decrease; the variance between list and sales price was higher due to large discounts of beach properties.
Of greater concern is the fact that unemployment approximates 7%; and lenders are reneging on approved loans. There appears to a lot of mortgage monies but the lenders are tightening lending requirements. This will continue for some period until confidence builds up in the economy.
People are controlling expenses and if done to the extreme this will send the economy south (recession and possibly a depression).
| Currently Comments Off
Quiet! Robbery In Progress. Ventura County Real Estate Doing’s for Week Ending October 11, 2008
October 12th, 2008 Categories: Weekly Real Estate Activity In Ventura County
The storms are hitting us left and right and there will be at least one or two more.
The road looks foreboding but there is sunshine after the storm passes. Just hope that it passes quickly.
We are starting to see and hear to see what happened in the Fannie Mae and Freddie Mac fiasco. Our Congress fell asleep at the switch and U. S. citizens will have to carry the brunt of the cost. Not much has been heard from Frank and Dodd and others that pushed the legislation that created this mess.
Beginning now will be the biggest show on earth with all of the finger pointing that will start and the culprits who initiated the problem quietly sitting in some corner waiting for the storm to pass.
Continuing is the melt down of Wall Street…….these are the experts who know how to handle money. Say what? Again U. S. citizens will carry the brunt of the cost.
Things happen in three’s. So what is the next surprise in store for the citizens of the United States? I can hardly wait.
As mentioned previously States have a huge problem funding pension plans and the problem gets larger as time passes. This will be a huge nut to crack. Monies to cover this will be beyond our imagination. But I do not think that this is the next problem.
How will all of this impact real estate? I think the worse is over for real estate. Getting loans will continue to be a problem but if a person has 20% down; has a 40-42% high end debt ratio (or lower); has good FICO scores, can show that they can pay for the property there is no problem.
This was the standard used until Clinton and Congress in the 1990’s decided that everyone should have a home and many people were offered opportunities to buy with nothing down and not to worry if they could not afford the payments, they still could have a house. There is logic in this someplace but I fail to see it. If some one knows enlighten me, please.
However if Congress sees fit to have a house in every pot then the problem will continue and real estate will be impacted significantly.
Ventura County:
As shown in the chart below, sales have slowed as expected. Listings continue to decrease; the number of days a home is on the market before it sells has decreased; the variance between list price and sales price has fallen this past week to below 3%. Expired properties have shown a significant decrease over the last few weeks.
What does it all mean? People are digging in and waiting out the market. If they do not have to move they are willing to stay put for the time being.
If one feels that they are stuck in Ventura County be thankful. There are not very many places in the world better than Ventura County. If nothing else there are the beaches and most certainly that is a fun place to be.
The County overall is still in good shape but further increases in unemployment and the decrease in job opportunities will start taking its toll. California is on a tight rope and the State’s political machine in Sacramento is a mirror image of what is happening in Washington.
Your comments please.
| Currently 5 Comments »
