Posts filed under ‘Smart Investors’

Is a distressed property the right deal for you?

With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, “What now?” Fortunately, the door is now open to a new wave of savings: distressed properties.

For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it’s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices.

According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.

By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure – or if they’re lucky a short sale – meaning they owe more on the home than it’s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.

If you’re in the market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here’s why:

Prices are low – Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40 percent over the price of similar properties in a traditional sale.

Mortgage costs are low – With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It’s important to begin the pre-approval process so that you know how much you can realistically afford.

You have options – The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.

Austin REO’s – There are certainly fewer short-sales and bank-owned properties in Austin than in Phoenix or Vegas or the west coast, but there are opportunities.  If you wish to purchase in FL or CA or name-your-city-here, I have REALTOR® connections coast-to-coast and can hook you up with a seasoned professional in your city of choice.

Sellers and lenders are motivated – According to data from RealtyTrac, in April, one in every 387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly – and price these home to sell.

Your best ally when purchasing a distressed property is an expert. Always have a professional REALTOR® by your side to help you make informative decisions. If you’re interested in learning more about purchasing a distressed property, call us  to discuss your specific needs. 

The Nelson Project at Keller Williams Realty in Austin strives to bring valuable real estate information and news through this blog and our other online resources.  Find more about The Nelson Project and search for Austin homes at www.TheNelsonProject.com.

© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

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June 1, 2010 at 12:24 pm Leave a comment

Making offers on foreclosures in Austin (or not)

In Austin overall, sellers are getting 97% of their asking price and that includes the REO properties

Continue Reading March 29, 2010 at 4:22 pm 2 comments

A surprising safe haven for savings

An emerging story beneath the headlines  

September 29, 2008  

By Dave Jenks, Vice President of Research and Development and Jay Papasan, Vice President of Publishing and Executive Editor, Keller Williams Realty  

 

Amidst fears of a financial market freefall, the real estate market is emerging as a bright spot. Indicators are pointing to an end to the bust; in fact, real estate may be poised for a bounce.  

 

While consumers are scrambling to diversify their saving and investment accounts and retreating from paper assets (e.g. stocks) into hard assets (e.g. gold), the savviest among them are looking deeper than morning’s headlines and realizing that real estate is a solid investment option in the current market.  

 

Home prices have corrected and fallen back into alignment with historic trends. The inventory of homes for sale is finally shrinking from the June 2008 peak. Also, based on year-over-year comparisons, housing affordability is now higher than it’s been for the past five years. All signs point to the real estate market turning the corner. So for investors seeking a safe haven in this financial storm, housing emerges as a surprisingly good choice—an undervalued hard asset with upside potential.  

 

As the following chart illustrates, the unsustainably high run-up in home prices between 2001 and 2005 is coming back in to alignment with the historic 4 percent trajectory in home price appreciation. Indeed the market has corrected. While it is quite possible that the market will continue for a time to ―over correct, the important point to realize is that no one can ever predict or time the floor—until after the fact when opportunity has been lost.  

 

Is Housing Headed for a Turnaround? Home prices falling back into alignment with historical trends  

 

Source: Keller Williams Realty, Inc.  

The long-term affordability trend of 4 percent appreciation has been recovered after a five-year period of unsustainable growth (2001 to 2005) followed by a three-year market correction (2006 to 2008.) 

 
Now is the time to buy and the reasons are many: 
  • Real estate remains one of the most stable long-term investments with relatively modest fluctuations in annual gains. 
  • The extensive housing inventory in most markets is providing great choices for investors. 
  • Mortgage money is available to financially stable buyers and interest rates remain attractively low. 
  • Real estate investments tend to bring a greater annual return on investment (ROI) than stocks, gold or commodities, because they are leveraged (buyers put 20 percent down, and receive appreciation on the entire value of the property). 
  • Just as the late 1980’s and early 1990’s provided a massive opportunity for real estate investors to make great buys and build wealth, the current market will do the same. Smart money is already back in the market buying up the distressed properties. 
  • There is a simple formula for investing in real estate – Criteria, Terms and Network. That formula and the step-by-step process for using it are clearly described in the best-selling book, The Millionaire Real Estate Investor

© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

September 30, 2008 at 9:57 pm Leave a comment

2nd Place, woo hoo


Forbes Magazine says Austin is the 2nd best cities to buy a home in right now. God bless Austin. Read on …

Forbes, Real Estate
Best Cities To Buy A Home
Maurna Desmond, 07.14.08, 6:00 PM ET

Houston, we don’t have a housing problem.

The city’s $152,500 median home sale price is up 6.6% from 2005. It boasts a low vacancy rate and an oil-rich economy. Throw in a bubbling entrepreneurial tech scene, and you’ve got four factors that put Houston on the top of our list of best places to buy a home.

San Francisco, Charlotte, N.C., Jacksonville, Fla., and St. Louis, Mo., are other areas buyers can feel safe investing in.

In Depth: Best Cities To Buy A Home

We examined the country’s 40 largest metropolitan areas and looked at where home prices have appreciated over the last two years. We also measured tightening vacancy rates. These metrics indicate places where buyers are investing in homes in order to live, not just make a quick buck, and where the housing market is relatively solid. We culled our vacancy and home price information from the U.S. Census Bureau and the National Association of Realtors.

The average vacancy rate across the major metro areas was 2.88%, and the average percent appreciation was just .07% over the last two years.

With lending tight, we also factored in the spread between a monthly rent check and a mortgage payment at the median level (assuming that the down payment was 10% and the fixed interest rate is 6.25%). Encino, Calif.-based real estate brokerage firm Marcus & Millichap provided stats on median monthly rents.

Cities where a mortgage payment was close to, or less than, the average rent were given a higher score. For instance, in Cleveland the average rent is $702, and the average mortgage is $565.78. With a lower monthly payment, tax incentives and the opportunity to build equity, it makes sense to buy here.

In stark contrast, San Jose, Calif., has an average monthly mortgage payment of $4,322.33, versus an average rent of $1,612.

Lots To Like In The Lone-Star State
Texas dominated our lineup of mortgage-worthy areas. Thanks to a business-friendly tax environment, many large corporations call the Lone Star State home, which creates jobs and tax revenue.

The University of Texas campus provides young blood and research-related jobs to No. 2 city Austin. This state capitol is a hip area on the rise. The vacancy rate has fallen by 37.5% in the last 24 months to just 1.5%, despite a lot of building in recent years. And buying isn’t much more expensive than renting. An average mortgage payment is $1,022.40, and average rent hits $767.

San Antonio, No. 5, and Dallas, No. 6, made the list thanks to affordable housing, which continues to appreciate. In both cities, the median home price hovers around $150,000, and a monthly mortgage payment of around $800 is pretty close to what one pays in rent. If you can pony up the down payment, these are great areas to live.

Coast-to-Coast Sweet Spots
Philadelphia landed at No. 4, with homes appreciating by 9.1% in the last two years and vacancy rates staying low at 1.9%. This university town, which plays host to the University of Pennsylvania, certainly has its charm. A city on the rise with a tempting cost of living, Philly is a great place to buy a new home.

The South made a nice showing with Charlotte, N.C., Jacksonville, Flo., and Atlanta, Ga., making our list. Charlotte and Jacksonville have surged in price by 12.9% and 8%, respectively. Atlanta has seen huge amounts of growth and remains reasonable with a median home price of $172,000.

San Francisco, this year’s best city for young professionals, came in at a respectable No. 8. While housing certainly isn’t cheap in the City by the Bay, it is definitely in demand and continues to appreciate. For a buyer, San Francisco offers a culturally rich and beautiful city that is chock full of opportunity.

1. Houston, Texas

Houston, we don’t have a problem. Well known as an energy industry hub, this growing metro area recently made Forbes.com’s Top 10 Up-And-Coming Tech Cities thanks to the Houston Technology Center and bubbling entrepreneurial tech scene. With home prices on the rise by 6.6% and vacant homes disappearing by 11.3% in the last two years, this is one area where buyers can feel safe jumping in.

2. Austin, Texas

Here, a whopping 98.5% of homes are filled, and that small sliver of vacancy is thinning. Home prices, meanwhile, have surged from $163,800 in 2005, to $183,700 in 2007.

A trendy art and music scene–the city plays host to music festivals South by Southwest and Austin City Limits–makes it an affordable place to live for any culture vulture.

3. St. Louis, Mo.

St. Louis is a great place to settle because it’s not overbuilt and is reasonably priced relative to income. Thanks to the attractive cost of living, many large corporations–including brewing behemoth Anheuser-Busch and financial heavies Stifel Nicolaus and Edward Jones–call St. Louis home. With a family friendly culture, and a steadily appreciating median home price of $145,400, the “Gateway to the West” is a great place to buy a home.

4. Philadelphia, Pa.

The City of Brotherly Love has a tight housing market–just 1.9% vacancy–reflecting the lure of a charming and historic American city. Steeped in tradition, this city is priced well, with a median home price of $234,900, up from $215,000 in 2005. With abundant cultural outlets, including universities, museums and theaters, Philly is a great place to call home.

5. San Antonio, Texas

This Latin-flavored American city is growing fast thanks to bustling businesses and a low cost of living. Having major corporations like IBM certainly helps attract residents who bring brains and tax revenue to the city. With a median home price of $150,900, up from $133,900 in 2005, it’s an affordable place relative to the rest of the country. Home to professional basketball’s Spurs, this town is packed–just 2.4% vacancy–and full of Texas pride.

6. Dallas, Texas

Shiny skyscrapers and charming suburbs make Dallas a tempting place to sign mortgage papers. With appreciating median home prices in the $150,000 territory, just about anyone can get in. And with just 2.5% of homes vacant, it appears they are. While the city has a reputation for cowboy boots and big trucks, Dallas is a sophisticated metropolis that rivals any major U.S. city in terms of culture and cuisine.

7. Charlotte, N.C.

Don’t be fooled by the sweet Southern accent; Charlotte is the second-largest banking capital in the U.S., behind New York City. With the University of North Carolina nearby and tons of cultural attractions, this is a city that won’t get tired. The market is reflecting what residents already know: Median home prices hopped to $205,400 in 2007, from $180,900 in 2005. Charlotte’s vacancy rate is just a bit above the national average at 3.1%, reflecting a lot of space that is likely to get snapped up.

8. San Francisco, Calif.

The City by the Bay may be pricey, but it’s one of a kind. If high culture, good food and great architectural bones are to your taste–this is the town for you. If a median home price of $805,000–up $52,800 from 2005–and cold, damp weather all year long aren’t, you might try somewhere else. This city is rich in history, human capital and fun. That’s part of why it topped our 2008 list of Best Cities For Young Urban Professionals.

9. Jacksonville, Fla.

Since 2000, Jacksonville’s population has grown an impressive 8%. Meanwhile, median home prices have climbed 14% in the last 24 months to $189,200. Along with its other virtues, sunshine-rich Jacksonville came in at No. 3 on our 2008 Cleanest Cities list thanks to fresh air and clean water.

10. Atlanta, Ga.

A city that constantly tops our lists of best places for just about anything, Atlanta is a great place to buy a home. With median properties in the $170,000 neighborhood, this booming city is affordable and packed with things to do. Ranked No. 6 on the 2008 Best Places For Business list, Atlanta has jobs and a competitive cost of living. This means taking out a mortgage is a safe long-term decision.

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© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

July 25, 2008 at 1:24 pm 3 comments

Hula Hoop Lending


 

So lending these days has a few more hoops than it used to. Oh you can get the loan, you just need to sharpen up your hula hoop skills. Here’s what appears to be the hula deal … the more un-conventional your financial situation, the more hoops you will need to jump through.

What is unconventional? Depends on the lender but here are a few examples … self-employed, investor, non-owner occupied property, business owner, change in profession, a perceived change in profession, new job, asset rich, a large deposit in one of your accounts, a complex balance sheet. You may be the lowest risk client the bank has seen in a while but if you do not fit into the easy box as defined by the lender or, more specifically, underwriting, then more hoops. Different box, more hoops.

So what are the hoops you may need to hula through? Doubling up on verification of this and that, same docs you produced last month you need to produce again and updated this month, if you change jobs then definitely at least two paychecks, a letter from your mother (just kidding … well, not really … if she gave you some money, then a gift letter may be required), a letter from your CPA, a letter from your employer etc.

What has always been the deal is that there is “pre-approval” and then there is underwriting for final approval. Let’s not confuse the two and note that these two pieces have always existed. It’s just that you are being required to jump through a few more hoops for pre-approval and then re-jump those hoops plus, typically, a few more for final approval. When everyone knows this up front, then the hoop skills are, well, hoop ready vs. being blind-sided by additional run-around.

Why is this? It is actually very simple. Your lender will most likely need or want to sell your loan after you close. It’s called the secondary market. They need to make sure they can sell it. The more you fit nicely into their existing boxes, the easier it is for the lender to group it with other similar loans and sell them as a package. If you’re in a round box, not as easy to package and sell.

But here’s the other deal, it can change from month to month so your lender and your Realtor and your title company are all, if they’re on top of their game (actually, on top of your game) having to re-hone their hula skills and learn new hula skills all the time … and then coach you through the ever-changing hula course and the emotional taxations that come along for the ride.

Loans are being approved, just more hoops.

Happy hula.

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© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

July 15, 2008 at 12:21 pm Leave a comment

Cash Flow Property on the TX Coast


Investment or Vacation Property
I have a new development property I am working with in Port Aransas, TX two blocks from the beach that is projected to cash flow. I have purchased one of the units (as has my sister and a couple of friends) and personally know the builder and developer (all out of or originally out of Austin). I do not represent the seller but serve only as a buyer rep for this project.

Port Aransas, TX
Call it the 3rd coast or call it the other coast but it’s the TX coast which represents some of the only remaining underdeveloped coastal property in the continental United States. A fishing and vacation destination for Texans and snowbirds, 2 hours from San Antonio, 2 hours from Houston and 3 ½ hours from Austin, Port A is a sport fish and family beach vacation destination. It used to be a sleepy fishing village but is now home to a new Arnold Palmer golf course set to open this fall. Good restaurants (flip flops optional) but you’ll have to go to Corpus for a Starbucks.

Port A had its first million $ property close a few years back and now it is a common occurrence. You can purchase a new construction home with a water view for $500k – $600k and plenty of condos with views for $250k – $350k. Not a high-rise type of coast, Port A is laid back and still evolving with a bit of an artist’s edge.

The Project: The Commons
   2 blocks from the beach
   30 townhomes / 8 buildings
   3 bed / 2 ½ bath
   1246 sqft
   ICF construction
   pool
   $219k – $225k

Cash Flow
If you choose to use as a vacation rental, these units are projected to cash flow. The developer will consider price breaks for purchase of more than one unit.

See the following for marketing and pro-forma:
http://www12.sendthisfile.com/d.jsp?t=p2Bimw5HtlkmcMkp85BroAs5

Interested? Contact TheNelsonProject@austin.rr.com or 512-794-6608.

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© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

June 9, 2008 at 4:13 am 1 comment

UT parents cash drain: rent

 
 

Attention UT parents. Tired of paying rent, a lot of it? Do the math of 5 years x $$. You really can turn the college rent drain into an investment. Let’s do a little math.

Purchase a $200k home with 3 bedrooms and 2 baths. Put 20% down, get two roommates and here’s an estimated breakdown at 6.25%:
$985 principle, interest
$350 tax, insurance
$1335 total
($1000) 2 roommates
$335 your out per month

vs. what you’re paying now
plus appreciation 5 years down the road?
Perhaps you have more than 1 child to put through UT … 8 years?

We have a listing right now that may fit the bill. A block from the bus, a straight shot up Lamar, a 3 / 2 ½ with 3 living (lots of desk options), 1 car garage. Here’s the link: www.7508paxton.com

© Julie Nelson and The Nelson Project at Keller Williams Reatly, 2008-2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Julie Nelson and The Nelson Project at Keller Williams Realty with appropriate and specific direction to the original content.

June 8, 2008 at 2:06 am Leave a comment

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