The Mechanics of Buying Real Estate

I talk a lot about the good deals in Las Vegas, but I think it’s fair to say that some of you who read this may not even be familiar with how to purchase a property, for an investment or personal use. If you have only done it once or twice, or if you have never done it, there may be some things you don’t know.

Unless you are paying cash, finding the right home starts with finding a good lender. You need to know how much home you can afford, how much money you will need for down payment, and closing costs, and what your monthly payments will be, before your real estate taxes and insurance. A lender can pre-approve you for a loan and issue an approval letter. This is imperative when you are negotiating on real estate! If more than one comparable offer has been received and none of them are cash offers, the seller will always choose the buyer who has the financing in place. Many sellers will not even look at your offer without a pre-approval letter. (If you need lender recommendations, I have them for you!) Of course, cash is still king!

The next step is determining which neighborhoods you prefer within your budget. Since the first rule of real estate is location, location, location, if the property will be your home, I suggest choosing the best community you can afford even if it means choosing a somewhat smaller or less luxurious home, as long as it will accommodate your lifestyle comfortably. Then when you are ready to sell the home and move on you will be assured of a better pool of buyers. Of course location is important for investment properties as well. You want to be in a neighborhood poised for appreciation, but where the tenants are not going to have the Home Owner’s Association (HOA) after you all of the time. Make sure you look into the real estate taxes and insurance costs when determining affordability, and know that landlords have different types of insurance coverage than homeowners. (If you need a great insurance agent, let me know.)

Once you have identified several neighborhoods to look in, I can customize your search to fit your special needs. I can search by size, number of bedrooms & garages, school zones, lot size, pools, fireplaces, floor plan style, etc. I will preview the homes for you, and only show you the ones I know are the best on the market for price and condition. And don’t worry, you will know the home when you walk into it! It will feel like your space. For investors, the best buys typically have more bedrooms and less square footage.

Next we need to negotiate an offer with the seller, often a bank. The two most crucial points in the contract will be the selling price and the closing date. To find the proper offer price, we will do a market analysis on the neighborhood for you and determine how much other similar homes have been selling for. The seller will not want to spend a lot of time waiting for you, however you must have a reasonable time to inspect the property and evaluate the HOA. Then your lender’s job (if you have one) is to close quickly.

Don’t be afraid to offer the seller an amount that the property is really worth – having said that, if a property is priced right to begin with and you waste time making low offers to save even more, someone else is likely to swoop in and buy it out from under you. Sometimes trying to save a couple of thousand dollars is not worth losing the home of your dreams or a great investment property.

After the offer is accepted it is time to choose a home inspector. I always recommend having one. In fact, if the property is bank owned, I suggest spending a few dollars more and getting an engineer to inspect. Your inspector will go through the home and up in the attics checking all the major systems. They will find defects a normal buyer could not reasonably expect to discover and often the seller doesn’t know about them either. A few hundred dollars invested here can save you thousands. Of course also understand that the inspector’s job is to point out every single defect in the property, so don’t let your inspector scare you away.

The lender will eventually be sending out an appraiser. The appraiser’s job is to make sure you are not paying more than fair market value for the property.

Just before you have ‘closed’ on the purchase, contact the utilities to get those into your name including water, sewer and trash. If you will be hiring contractors to do work, you will want to schedule them now, as the good ones are usually busy.

The day of the closing you will want to do a final walk through of the home. (I can do that for you if you are not in Las Vegas) You will check to make sure everything in the home is still in good working condition and anything that the seller was supposed to fix has been. Then we will go to the escrow office to sign the final loan documents and turn in a cashier’s check for the balance of the down payment and closing costs. Of course if you aren’t in Las Vegas, this will be done by overnight courier and wire transfers.

The day your home is recorded at the county recorder’s office is the day you get your keys. You can now either begin to work on it, move in or get it rented!

Are you ready to buy real estate in Las Vegas? Visit www.MyFastEasySale.com, click the “Wholesale Buyers” link, and fill out the form. Let’s get you going.

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Who is getting mortgages in Las Vegas these days?

The candid truth about who can get a mortgage for Las Vegas real estate, and some things you may not know.

I have a friend who works as a loan officer for a pretty big mortgage lender in Las Vegas. He called me today to ask me what I wanted for my birthday (yes, today is my 41st).  I answered “dinner with Jennifer Anniston”.  Then I said, “As long as we’re being honest, tell me what is happening in the mortgage industry. Who is getting loans right now?”

Here is what he said – 

“The optimal person who is getting a loan right now is a person who does not own a house, (then he added) of course you know, everything is full doc1. There is not one stated income2 program around. If someone is calling a program ‘stated’, they’re lying. FHA loans have gone from 5% of our total pipeline3 to 50% of our total pipeline over the last year. A lot of buyers are going to FHA [loans] even though they have great credit scores or whatever, just because they are easier to close than conventional loans and you only need to have 3 1/2% down. If you have 20% down on a conventional loan, they’re lending on that; 25% down on investor properties, is going to be your best rate. We’re still lending a lot. I just did my pipeline report. I’ve got 5.5 million dollars in my pipe that is set to close before February. The sales manager that I work with, his pipeline is at 3.8 million dollars; so there are loans out there. There are definitely loans out there.”

Then he said

“If you own property right now, and you are upside down in it, and you want to buy another house, you have to be able to qualify [with proof of income] for both payments without using rental income from the one you are leaving.” [this is because people who are not behind yet, were buying a new homes, then ‘bailing’ on the one that they were upside down on. It did not take lenders long to get wise to this buy-n-bail scam]

Finally he said

“The other thing to be aware of the at the beginning of this year, the FHA loan limits in our market [Las Vegas] got changed to a maximum of $287,500 which is a purchase price of $295,000.  Conventional loans in Las Vegas are very difficult to get. The mortgage insurance companies don’t want to issue policies. So now you have a gap between the conventional loan limit, which is $417,000, which dramatically decreases the number of borrowers who can qualify. In [his] personal opinion over the next year, [he] think you’re going to see values of homes in that zone [between $295,000 and $417,000] degrade into an FHA loan. If you are going to list your house for $310,000, why wouldn’t you drop the price to $295,000, so you have a bigger pool of potential buyers. If you don’t, you’ll have fewer offers, and if you do get an offer and the buyer ‘falls out’ because they can’t get conventional financing, you may go ahead and drop the price to $295,000 so that you can sell it.”

That’s what he said, and he’s on the front lines of the Las Vegas mortage industry every day and has been for a few years.

1 – Full doc: Short for full documentation – in other words, prove you have money, prove you make money, and prove that it is all legitimate.

2 – Stated or Stated income: When people with excellent credit history are allowed to just state how much they earn

3 – Pipeline: Loans that are in process that are likely to be approved for funding

Are you ready to buy real estate in Las Vegas?  Visit www.MyFastEasySale.com, click the “Wholesale Buyers” link, and fill out the form.  Let’s get you going.

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But what if we aren’t at the bottom in Las Vegas yet?

Don’t wait until the market hits bottom in Las Vegas to start buying real estate. Let someone else pay the bill while it continuies to decline, and cash in later.

I think the question I get most often is, “Jeff, what if Las Vegas Real Estate has not hit bottom? If I buy now, and it continues to decline in value, what do I do then?”

Great question, so let’s start by taking a look at a graph I got off of Zillow.com awhile back.  If you look at this, it certainly does not indicate that we have hit bottom.

Las Vegas Real Estate Prices

So let’s look at how we can be sure that won’t work against us.  I grew up in California, where I have seen the Real Estate markets swing radically every few years.  I remember I had a friend many years ago, who got divorced, and refinanced his home to give his former wife her her share of the divorce settlement. Shortly afterwards, the local market began to decline steeply and within a couple of years my friend was alarmed to discover that he owed more on his house than it was worth.  He asked me if I thought he should ‘walk away’ from it like many others were doing.  I first asked him if he could still afford it (of course this was long before exotic mortgages, and he had a 30 year fixed rate loan), and he stated that he could. I then asked him what he was going to do if he sold it, and he said he would rent a place for himself. The obvious solution was to continue paying the mortgage and live there, so he did.  Several years later, he was getting remarried and moved into his new wife’s home. When he went to sell that house, it sold for much more than he owed on it.

So what if you bought real estate, and someone else was paying the mortgage for you? Would it really bother you if it declined in value? For the first time since 1991, there are a lot of single family homes in Las Vegas that can rent for more than the mortgage payment (as well as the RE taxes, property insurance, maintenance and property management fees). When the property is producing positive cash flow, you can afford to wait for it to go back up in value! Think about it, your tenants will cover the expenses on the house, while it continues to decline in value, until it finally goes up!

So WHAT ARE YOU WAITING FOR?

Las Vegas real estate is ON SALE.
Get yours now!

To contact me so I can help you make great decisions on Las Vegas Real Estate, visit www.MyFastEasySale.com, click the “Wholesale Buyers” link, and fill out the form so I can start helping you today!

Even ‘The Donald’ is making adjustments in Las Vegas

High end Las Vegas rentals just became more available, but that is not a concern for the typical investor.

The Donald may be starting a new trend
Trump Tower Las Vegas

 I remember when I was still buying in Las Vegas before I stopped and then started again. (Did you follow that?) In other words, a couple of years ago.

When the Trump Tower Condo-tel project was announced, my partners and I looked into buying some of the units pre-construction. The initial thought was to buy 5 @ a price tag of roughly $600,000 each at pre-construction pricing. We would ‘flip’ 3 of them after completion and keep the other 2 luxury vacation rentals. Well, we did the math and it did not appear to be very lucrative, so we never went any further with it. (I still get emails once in awhile from the sales associate.) I remember that the first tower had nearly sold out and they began preparing to pre-sell the second tower.

Fast-forward to the present day.  Almost 400 of the 1,282 units have closed.  That’s it.  All of the other buyers have walked away and Trump has this enormous alligator on his hands, eating away at his cash.   The hotel rooms have been so underused, that when a friend of mine stayed in one of the condo-tel units this week, he simply asked if he could get a nicer room and they gave it to him.  Much nicer.  He paid less than a suite at Encore or Bellagio, and had a spectacular view of the ‘Strip’.

So, Trump is now listing all of his units for lease, including studios, one bedrooms, two bedrooms and even the penthouses.

The lowest price is $1,600 a month for a one-year lease on a studio. One bedrooms are as low as $2,600 and a three-bedroom penthouse is $6,500 for a one-year lease.  Those same units are $7,500 a month for those who only want it for three months and $7,200 a month for a six-month lease. Of course those are furnished nicely.

In the past few months, some staff members were let go and that reduced services. By bringing in more people as tenants, they should be able to increase jobs again.  So has ‘The Donald’ started another trend? Are the unsold units of the condo-tels around the country going to be leased as year-round rentals?  I’m certain that they will, and until the economy turns around, if you are in the market for a pretty high-end rental anyway, my guess is you’ll be able to get a significant upgrade in the short term.

The good news for me, is that these units are certainly not competing for any of the lower end rentals.  That market is still strong, as long as you know what neighborhoods to buy in.  If you have money and / or good credit and are ready to take advantage of the deeply discounted Las Vegas real estate market, please contact me.  I have deals coming out of my ears and all of the resources in place to help you get them repaired, rented and managed. In a few years, I’ll be happy to help you sell them for a very nice profit.

Las Vegas real estate is ON SALE.
Get yours now!

To contact me so I can help you make great decisions on Las Vegas Real Estate, visit www.MyFastEasySale.com, click the “Wholesale Buyers” link, and fill out the form so I can start helping you today!

Shut up and listen!

Visit http://www.BluefishCoveHouse.com to see how to live on the ocean cheap and easy in Marshfield Massachusetts

OK, now that I have your attention, check this out. I have been investing in real estate for awhile now, and I have to tell you, last summer, I found the greatest little beach house in the Brant Rock area of Marshfield, Massachusetts! Most beach front property in the Marshfiled/Duxbury area will cost you more than $500 per square foot of living space. Why? Simple! When you buy a home on the beach, you pay more for the land than the house. If you have a lot of land and a little house, you’re going to pay plenty. If you have less land, and more house then you get more for your money. Who wants a big yard to care for when you live on the ocean anyway?  Why spend more time doing yard work and less time on the beach? This house has a small lot, and therefore costs less!

So, why am I telling you this? Because this great Marshfield beach house has been renovated, and it’s now for sale. The best part?  You don’t need good credit to qualify to purchase it. You could live in the great little community of Brant Rock (right next to Duxbury). Not looking to move? This is a great investment property which gets up to $2,600 per week as a summer vacation rental. For more information visit http://www.BluefishCoveHouse.com