March News Letter

The Best Denver Market in 12 Years??

Best market in 12 years? Well, home prices in the Denver metro area rose 8.5% in December 2012 over December 2011, marking the 12th straight month of year-over-year gains, according to the S&P/Case-Shiller Home Prices Index released Tuesday.

The report said it was Denver’s largest annual increase since 2001!

Sellers, have I mentioned to you that it is a COMPETITIVE market for buyers right now? The Denver Post interviewed an agent who had this to say: “I’ve sold real estate that long, and I can tell you this is the hottest market of my career,” said Michelle Ackerman, Redfin’s managing broker for the metro area. “Prices are up – that’s a proven fact. Inventory is loosening up a bit, and we’re seeing multiple bid offers all over the metro area. It’s a seller’s market, and it’s extremely competitive. I’ve been doing things I’ve never done before to capture a home.”

I have the same experience. As soon as a house is put on the market, I have to take my buyers there the same day, and they know they have to decide that same day whether to write an offer or not, because chances are it will be gone very soon. A few years ago, buyers had a few days or weeks to decide whether they wanted to put an offer in on a house. It’s not that way anymore. It’s hot right now.
Let me know if I can help you compete!

What Today’s Home Buyers Want

Now that home-buying is back in full swing, many sellers and home-builders are eager to find out what buyers want in a home. A study has been released by the National Association of Home Builders on exactly this: What Home Buyers Really Want. The results may be surprising.
“Nine out of ten buyers would rather buy a home with energy-efficient features and permanently lower utility bills than one without those features that costs 2 percent to 3 percent less,” the survey noted. But while buyers like the efficiency to be there already, they are not willing to pay a premium for them.

Interestingly enough, what home buyers seem to want most is high-end amenities, even if it means living in a smaller home to get them, according to the survey. Of those polled, 62% favored high-quality products over space. They want a double sink in the kitchen and both a tub and stall shower in the bath. They prefer french doors to standard and garage storage systems. They also want technology, from wireless home security systems to whole-house electronic features that control entertainment and utilities.

An elevator ranks number one on the list of things home buyers do not want. They also don’t want a home in a golf course community. They don’t particularly like wine cooler refrigerators and give a big thumbs down to laminate countertops. While they do like some outdoor space, they don’t necessarily want an outdoor kitchen.

Perhaps the most surprising finding of the NAHB survey is not what we want in our homes, but where we want our homes to be. Just 8% of those surveyed want to live in a city center, 36% prefer the outer suburbs, 30% the close-in suburbs and 27% still want the old-fashioned, rural American living. This counters recent assertions by those in the apartment sector that Americans are increasingly seeking a more urban lifestyle.

What Would My Total Monthly Mortgage Payment Look Like?

Rents are still high, vacancy rates are still very low, and interest rates are still excellent (though we experienced them going up for the last few weeks, which was a bit scary). Thankfully, this week rates went back down a bit to 3.55%, from 3.64% last week.

So what does a total mortgage payment look like? Some of those mortgage estimate websites only calculate your principle and interest, but forget about important fees like taxes, insurance, and mortgage insurance!
Let’s do a couple case studies – you might be pleasantly surprised:

Purchase Price: $200,000
Downpayment: 3.5% Downpayment: 20%
Interest rate: 3.55% Interest Rate: 3.55%
Taxes: $1000/year Taxes: $1000/year
Insurance: $1000/year Insurance: $1000 year
~Mortgage Insurance: ~$201/mo Total Monthly Payment: $889/month!
Total Monthly Payment: $1239/mo
*Note: After 5-7 years, you won’t have to pay mortgage insurance any longer, and your total monthly payment will be $1038!

Purchase Price: $300,000
Downpayment: 3.5% Downpayment: 20%
Interest rate: 3.55% Interest rate: 3.55%
Taxes: $1400/year Taxes: $1400/year
Insurance: $1000/year Insurance: $1000/year
~Mortgage Insurance: ~$301/mo Total Monthly Payment: $1284/month!
Total Monthly Payment: $1809
*Note: After 5-7 years, you won’t have to pay mortgage insurance any longer, and your total monthly payment will be $1508!

If you need more estimates on different purchase prices and downpayments, please contact me!
8 Home Owner Tax Deductions!

Before you finish your taxes, make sure you take full advantage of the following deductions:

1. Mortgage interest deduction
2. Private mortgage insurance deduction
3. Prepaid interest deduction
4. Energy tax credits
5. Vacation or second home tax deductions
6. Home buyer tax credit repayment
7. Property tax deduction

Click here to read details

Jumbo Loans are Back!

The revival in the luxury real estate market is being fueled by growth in jumbo mortgages, Reuters reports. Jumbo loans typically are more than $417,000.

“Jumbo loans are returning to the mortgage market after almost disappearing entirely in the wake of the credit crisis of 2008 and the real estate meltdown,” Reuters reports. “Most lenders stopped making new jumbo loans when the private secondary market dried up in the credit crunch.”

But now jumbo loans are coming back. Lenders are reserving jumbo loan approvals to qualified borrowers, and some reportedly are even offering these “once-pricey jumbo loans at interest rates that are barely higher than conventional mortgages,” Reuters reports.
“The jumbo market may fare better than the overall mortgage market in 2013,” says Guy Cecala, publisher of Inside Mortgage Finance.
But while jumbo loan volume was about $200 billion last year, it’s still far below the $348 billion in jumbo loans issued in 2007. Cecala predicts that 2013 volume of jumbo loans will reach about $220 billion.

Email me to get an estimate on mortgage loans for you!

Investors Corner:
The Keys to Long-Term
Investing Success
from BiggerPockets.com

Erion Shehaj – Long term real estate investing is not rocket science. In fact, when you boil it down to its essence, it’s so simple that it’s barely high school science. Here’s the gist of it in three sentences. You buy properties that bring in more income than what they cost you in operating expenses and mortgage payments. The difference between the two is positive cashflow that represents your return on investment. Over time you buy enough such properties that when held over the long term become free and clear of debt and produce enough income for you to retire. Of course, it takes knowledge and experience to know all the expenses and anticipate the unknown curveballs that real estate investments invariably throw at you. But at its very core, the mechanics of long term real estate investing are painfully simple.
Having said that, two questions come to mind: If it’s that simple,
Why isn’t everyone successful at long term real estate investing?
Why isn’t everyone doing it?
Quality
The principal reason why investors don’t succeed at long term real estate investing is the Grand Canyon sized gap between their numbers on paper and those in real life. And the main culprit for this gap is the lack of quality in their investment portfolios. In order to fully grasp the impact that quality has on your investments’ performance you must read your income and expense numbers as a conditional statement. Add “if” in front of every line item and you will see the quality or lack thereof hiding in the crevices.

Discipline
Focus on quality, got it. So then, why isn’t everyone taking action on an idea so simple? That’s because discipline is a very scarce commodity. In most areas of life, we are full aware of what needs to be done but a small minority of us have the discipline to carry it out. This is the 80/20 rule at work – although I suspect that 20% might be a bit generous in the real estate investing field. We don’t have an information problem, but an execution problem. Long term real estate investing may be simple but it’s by no means easy. Having a solid plan of action is half the work, but you still must be able to execute that plan with focus over extended periods of time. And this is something you can’t phone in or delegate – it requires your purposeful action.

 

What Today’s Home Buyers Want

Now that home-buying is back in full swing, many sellers and home-builders are eager to find out what buyers want in a home. A study has been released by the National Association of Home Builders on exactly this: What Home Buyers Really Want. The results may be surprising.

“Nine out of ten buyers would rather buy a home with energy-efficient features and permanently lower utility bills than one without those features that costs 2 percent to 3 percent less,” the survey noted. But while buyers like the efficiency to be there already, they are not willing to pay a premium for them.

Interestingly enough, what home buyers seem to want most is high-end amenities, even if it means living in a smaller home to get them, according to the survey. Of those polled, 62% favored high-quality products over space. They want a double sink in the kitchen and both a tub and stall shower in the bath. They prefer french doors to standard and garage storage systems. They also want technology, from wireless home security systems to whole-house electronic features that control entertainment and utilities.

An elevator ranks number one on the list of things home buyers do not want. They also don’t want a home in a golf course community. They don’t particularly like wine cooler refrigerators and give a big thumbs down to laminate countertops. While they do like some outdoor space, they don’t necessarily want an outdoor kitchen.

Perhaps the most surprising finding of the NAHB survey is not what we want in our homes, but where we want our homes to be. Just 8% of those surveyed want to live in a city center, 36% prefer the outer suburbs, 30% the close-in suburbs and 27% still want the old-fashioned, rural American living. This counters recent assertions by those in the apartment sector that Americans are increasingly seeking a more urban lifestyle.

What Would My Total Monthly Mortgage Payment Look Like?
Rents are still high, vacancy rates are still very low, and interest rates are still excellent (though we experienced them going up for the last few weeks, which was a bit scary). Thankfully, this week rates went back down a bit to 3.55%, from 3.64% last week.
So what does a total mortgage payment look like? Some of those mortgage estimate websites only calculate your principle and interest, but forget about important fees like taxes, insurance, and mortgage insurance!
Let’s do a couple case studies – you might be pleasantly surprised:
                  Purchase Price: $200,000
Downpayment: 3.5%                          Downpayment: 20%
Interest rate: 3.55%                            Interest Rate: 3.55%
Taxes: $1000/year                             Taxes: $1000/year
Insurance: $1000/year                        Insurance: $1000 year
~Mortgage Insurance: ~$201/mo          Total Monthly Payment: $889/month!
Total Monthly Payment: $1239/mo
*Note: After 5-7 years, you won’t have to pay mortgage insurance any longer, and your total monthly payment will be $1038!
                   Purchase Price: $300,000
Downpayment: 3.5%                          Downpayment: 20%
Interest rate: 3.55%                            Interest rate: 3.55%
Taxes: $1400/year                              Taxes: $1400/year
Insurance: $1000/year                         Insurance: $1000/year
~Mortgage Insurance: ~$301/mo            Total Monthly Payment: $1284/month!
Total Monthly Payment: $1809
*Note: After 5-7 years, you won’t have to pay mortgage insurance any longer, and your total monthly payment will be $1508!
If you need more estimates on different purchase prices and downpayments, please contact me!

 
8 Home Owner Tax Deductions!

Click here to read details

Jumbo Loans are Back!

The revival in the luxury real estate market is being fueled by growth in jumbo mortgages, Reuters reports. Jumbo loans typically are more than $417,000.

“Jumbo loans are returning to the mortgage market after almost disappearing entirely in the wake of the credit crisis of 2008 and the real estate meltdown,” Reuters reports. “Most lenders stopped making new jumbo loans when the private secondary market dried up in the credit crunch.”

But now jumbo loans are coming back. Lenders are reserving jumbo loan approvals to qualified borrowers, and some reportedly are even offering these “once-pricey jumbo loans at interest rates that are barely higher than conventional mortgages,” Reuters reports.

“The jumbo market may fare better than the overall mortgage market in 2013,” says Guy Cecala, publisher of Inside Mortgage Finance.

But while jumbo loan volume was about $200 billion last year, it’s still far below the $348 billion in jumbo loans issued in 2007. Cecala predicts that 2013 volume of jumbo loans will reach about $220 billion.

Email me to get an estimate on mortgage loans for you!

Investors Corner: 
The Keys to Long-Term 
Investing Success
from BiggerPockets.com

Erion Shehaj – Long term real estate investing is not rocket science. In fact, when you boil it down to its essence, it’s so simple that it’s barely high school science. Here’s the gist of it in three sentences. You buy properties that bring in more income than what they cost you in operating expenses and mortgage payments. The difference between the two is positive cashflow that represents your return on investment. Over time you buy enough such properties that when held over the long term become free and clear of debt and produce enough income for you to retire. Of course, it takes knowledge and experience to know all the expenses and anticipate the unknown curveballs that real estate investments invariably throw at you. But at its very core, the mechanics of long term real estate investing are painfully simple.

Having said that, two questions come to mind: If it’s that simple,

  1. Why isn’t everyone successful at long term real estate investing?
  2. Why isn’t everyone doing it?
Quality

The principal reason why investors don’t succeed at long term real estate investing is the Grand Canyon sized gap between their numbers on paper and those in real life. And the main culprit for this gap is the lack of quality in their investment portfolios. In order to fully grasp the impact that quality has on your investments’ performance you must read your income and expense numbers as a conditional statement. Add “if” in front of every line item and you will see the quality or lack thereof hiding in the crevices.

DisciplineFocus on quality, got it. So then, why isn’t everyone taking action on an idea so simple? That’s because discipline is a very scarce commodity. In most areas of life, we are full aware of what needs to be done but a small minority of us have the discipline to carry it out. This is the 80/20 rule at work – although I suspect that 20% might be a bit generous in the real estate investing field. We don’t have an information problem, but an execution problem.  Long term real estate investing may be simple but it’s by no means easy. Having a solid plan of action is half the work, but you still must be able to execute that plan with focus over extended periods of time. And this is something you can’t phone in or delegate – it requires your purposeful action.

 

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