Positive Real Estate Professionals » investment

Buying a Home is an Investment

Rich Dansereau — Sat, 07 Feb 2009 17:02:44 +0000

A couple of days ago I came across a very interesting post by Danny Thornton. In that post he examines some of the fundamentals of how one approaches and evaluates home ownership. Oftentimes economists and personal finance professionals look only at something as either an asset or a liability. There is of course no absolute black or white when one looks at homeownership; there is the interplay of the two. I think this article quite effectively examines some fundamental questions about home ownership.

Via Danny Thornton:

I recently received a comment on one of my outside blogs that talks about a home being either a liability or an asset. They stated that a home that is currently being rented out to be an asset and a home that is used as a primary or secondary residence to be a liability. Personally, I agree and disagree.

First, lets take a look at what dictionary.com states for both liability and asset:

OK, now that we all are on the same page as to what is a liability and what is an asset, we can move forward.

Frankly, when you are buying a home, you have to look at it as an investment and not a liability. Home ownership is truly an investment into your future. It is a savings account that will either retain, gain, or lose in value based on many factors. However, if it is kept up over the years and even improved on, then more than likely, by the time that you have finished paying on the home, you will have a cash cow of an investment on your hands.

Bottom line, owning a home is owning an asset that has a liability attached to it. Once the liability matures, you have an investment that can help you retire.

College Student Housing 101, FHA 203b with Non Occupant Co-Borrower

Rich Dansereau — Fri, 12 Dec 2008 04:46:47 +0000

Fred Chamberlin, one of our consumate mortagage professionals here at Positive Real Estate Professionals (PREP) wrote an article today that is a perfect scenario for purchasing a home in this buyer’s market. His article looks at a family with one child going to college, imagine the benefits of his article if you had two or three children heading off to college within several years of each other. The saving and actual accrual of equity can be phenomenal. I hope you enjoy this informative and well written article.

Via Fred Chamberlin – Eugene/Springfield’s #1 Experienced FHA Mortgage Consultant:

The University of Oregon Ducks call Eugene home, but it is also home to Northwest Christian University, Eugene Bible College, Gutenberg College and Lane Community College. One of the biggest college expenses is housing for your student. College is expensive and Oregon was way down on the list of affordable college states, so how about a way to make, at least, housing more affordable?

Now, there are some requirements that will go along with this, but let’s talk about what you can accomplish first and then go over some of the things that have to go together. First, I want to use a “real life” example of a home for sale. For this, I have chosen a home listed by Gary Johnson with 7 Gables Real Estate, 541-510-5073.

The home is listed for $170,000 and is located at 1202 Quinalt St. It is 3 bedrooms and 2 baths and the seller will pay closing costs up to $5,000. It has an attached garage and storage/garden shed. For more information about the property, check with Gary, 541-510-5073 or swede4440@msn.com.

Using my handy dandy “rentometer” that will tell me if a comparable apartment in the area is priced right, it appears that about $1000 per month is pretty average (for an apartment.) So, using an FHA 203b program to purchase the home in the student’s name with the parents as “non-occupant” co-borrowers, let’s compare the rent vs. buy on this home with 3.5% down payment. We are also assuming a 25% tax bracket and no appreciation on the home during a 3 year period.

Purchase Rent

Price $170,000 n/a

Monthly Payment (PITIMI) $ 1,142 $1,000

Tax Deductibility $ -205 $ 0

Adjusted Payment $ 937 $1,000

Payment Difference $ -63 – Assumes no rent increase -

Mortgage Balance $158,915 $ 0

Mortgage Reduction $ 4,285 $ 0

(Includes Down Payment Return)

I have calculated this with a 5%/5.853% APR* FHA rate but it will work at a higher rate. Imagine what could happen with even a slight appreciation in value.

So, what are the requirements: First of all, the buyer (student) must have some credit and it would help if they had some income, not matter how small. Second, the co-borrower must have sufficient income to make the debt ratios work when added to their current debts. Third, there has to be down payment coming from somewhere, it isn’t even a gift if it is coming from the co-borrower. Finally, get pre-approved for the loan, preferably with me, make an offer on a property and start saving money.

Students attending or going to attend the University of Oregon should call me to discuss this program to assist in paying for your student housing. Any other college or university in Oregon, Washington or California I can help you with also. The FHA 203b home purchase program is a great way to help pay for college. First time homebuyers are especially valued for this program.

*Rates and terms subject to change without notice. Maximum loan amounts vary by state, county, and property type . Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision. OR License #ML-4832.

Authored by Fred Chamberlin, senior mortgage consultant, Eugene/Springfield Oregon.

Real Estate Market Turning(?)

Rich Dansereau — Wed, 03 Dec 2008 04:02:15 +0000

On the heels of the article that I wrote yesterday regarding the importance of countering the mainstream media’s constant negative spin; I came across this article from Fred Chamberlin. He illustrates the point that the buyer’s market is gaining momentum and backs up this point with the expert advice of Roger Schlesinger, author of “Mortgage Minute.” If you are able to get qualified for a home loan and want to begin to build long term wealth through real estate, you will find enlightenment in Fred’s words.

Via Fred Chamberlin – Eugene/Springfield’s #1 Experienced FHA Mortgage Consultant:

Rather than “The Sky is Falling,” which is what we hear from the national news media day in and day out, one national “expert” on the Real Estate Market front, Roger Schlesinger, has the following to say:

“The long-awaited event is gearing up and will greatly surprise the media, the Wall Street gurus, the apartment dwellers, the naysayers, and nervous homeowners. Real estate is preparing for the turn; are you? It will be a small one at first, but its momentum will make some forward-thinking lenders once again focus on profits, not losses.”

Mr. Schlesinger has gained acclaim through his “Mortgage Minute” not only sees the market turning around, he also states that now is the time to buy and build wealth through the Real Estate market downturn.

Now could be the time to start your Real Estate empire or you could be one of the average people that will watch and wait, all the while muttering, “It isn’t time yet.” This could go on for several years and basically rules out “Joe Average” for any potential profit. Some will venture forth because they realize that “close to the bottom” is about as close as anyone will achieve.

Mortgage rates have started to climb as worries about inflation shake the bond market. Is not the time to buy? That is a question only you can answer.

Looking to Invest in Real Estate

Danny Thornton — Fri, 28 Nov 2008 17:02:56 +0000

Today, so many actual buyers are put off from the housing and mortgage crisis that it is keeping them off the buying market. The problem with this very thought is the fact that the market is saturated with great buys at this moment. On top of that, mortgages rates are a historic lows.

Let’s take a moment to take a look at what is driving this type of market. The first driving factor is the increased number of foreclosures. This is typically being driven due to people buying homes using a 2, 3, or 5 year Adjustable Rate Mortgage (ARM). What compounds this even more is the people that used the Pay Option ARM to get more house than what they can afford. The problem is not actually these types of mortgages. The problem is that people did not have a plan on how to get out of these types of mortgages.

Now, with so many of these mortgages getting to the adjustment period, some of them can go up as much as 1.5 to 2% higher than the original amount. The big issue with that is the home owner has not increased in income enough to compensate for the higher mortgage. In this case, the property owner starts to fall behind and starts to lose the home.

So, that gets us to where we are today. A house is waiting for the right buyer to make it a home. In that time, there is a gold mind out there for investors that are not looking for a quick buck. If you are an investor that looks at the long term, then buying property in today’s market is a smart investment. There will be a lot of people that are looking for rental property because they cannot buy for 3 years due to foreclosure or bankruptcy. Having property that you can rent or even place on a “Rent to Own” basis, will draw people to you.