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I may have sounded a tad uninformed and I am certainly not against the free market and yes, taking a risk on a property to rehab it is everyone's choice. Investors should not be prohibitted. I think investors who are successful in rehabbing homes to make them livable again are doing the community a great service whether they sell or rent it out after.
I just wish that it were EASIER for families to be given loans to do the same thing, assuming the total cost of home+renovations would not exceed what they could have afforded for a move in ready home. I do think that would benefit neighborhoods.I think BOTH investors and qualified families( defined as those who want one home to live in) should be apart of restoring neighborhoods.
Maybe its easier to get Homepath Renovation Loans in AZ than it is here in IN. I was told here, do 2 (regular)mortgages and the bank won't want to finance you even on a cosmetic remodel . Ask for a regular loan on a more expensive home, no problem. But yes, we could take a financial risk on a higher interest loan just like an investor, but it would not be worth it because we don't want to flip or rent it, but live in the home.
There may be a bunch of holes in my understanding of all this, but I believe that it could be made easier for families with the proper income and credit rating to obtain(within their means) short sales and foreclosures that are deemed salvagable. I do believe this would be good thing.
Case/Shiller Says Phoenix Market Turns Faster Than Almost any Other
Quote:
Originally Posted by SOON2BNSURPRISE
I also heard that the area may not recover for a few more years. Have also heard how people from other parts of the nation and world are moving here and buying up homes. Prices are amazing right now if you ask me. Would love to be able to pick up a place for each of my kids. Since our youngest is 3 I doubt that will happen anytime soon.
Well, the latest Case/Shiller Index shows Phoenix repeat-sales raising 0.5% month-over-month against the seasonal trend (which is going lower in the winter). This is a VERY strong showing IMO. And it's stronger than any other metro area except for LA.
I saw that the Phoenix area had the #1 drop in rental rates of any U.S. city in Q4 2009 at -8.7%. It came from the residential data compiling company called RealFacts.
And I would rather have a full time primary resident over an empty overpriced investor owned home next to me.
Actually, I have that right now and the greedy pighead had it on the market for nearly 6 months now trying to get rich from it . At the current investors new price, no one is going to touch it until he gets real. I would have preferred the bank didn't allow the investor to buy it. What role does the flipping investor serve in the marketplace other than "scalping" homes? There are plenty of buyers in the market willing to own and live in them.
At least if a real home buyer bought it, they would be living there now.
This is capitalism though and I do understand. But as long as we are stating preferences, I prefer a primary resident to a "capitalist" anyday, and beyond that I prefer the banks didn't sell to the middle man.
Thank "flippers" for skyrocketing housing costs and the resulting disaster of loan debacles, foreclosures, and crazy property taxes. The gougers have finally been gouged by their own kind, unfortunately others are paying the price as well.
When I was growing up, buying a house for $300k-$500k was unheard of. Houses were used for living in... not as ATM machines
I may have sounded a tad uninformed and I am certainly not against the free market and yes, taking a risk on a property to rehab it is everyone's choice. Investors should not be prohibitted. I think investors who are successful in rehabbing homes to make them livable again are doing the community a great service whether they sell or rent it out after.
I just wish that it were EASIER for families to be given loans to do the same thing, assuming the total cost of home+renovations would not exceed what they could have afforded for a move in ready home. I do think that would benefit neighborhoods.I think BOTH investors and qualified families( defined as those who want one home to live in) should be apart of restoring neighborhoods.
Maybe its easier to get Homepath Renovation Loans in AZ than it is here in IN. I was told here, do 2 (regular)mortgages and the bank won't want to finance you even on a cosmetic remodel . Ask for a regular loan on a more expensive home, no problem. But yes, we could take a financial risk on a higher interest loan just like an investor, but it would not be worth it because we don't want to flip or rent it, but live in the home.
There may be a bunch of holes in my understanding of all this, but I believe that it could be made easier for families with the proper income and credit rating to obtain(within their means) short sales and foreclosures that are deemed salvagable. I do believe this would be good thing.
I think you do have some misunderstandings of this marketplace, and you may have been given some misinformation from loan companies in IN.
The Home Path Renovation loan is through Fannie Mae and is available in most, if not all, states.
Here is a link. HomePath - HomePath Renovation Lenders (http://www.fanniemae.com/homepath/financing/renovationlenders.jhtml;jsessionid=5DDL4YPI0GSZPJ2 FQSISFGA - broken link)
Flagstar is one of the banks that do this in IN. A client of mine who got a renovation loan got it through Flagstar here in AZ.
The renovation loan is only for homeowners using the home for their primary use. That loan is not available for investors.
So actually it is easier for a primary homeower than an investor.
Investors (rehabbers) either come up with their own cash, get short term loans from professional hard money lenders at 18%, or find private-money investors to borrow money at 12%.
I have a partner and we use our own money, plus we also have a private money investor who will loan us project money at 12%.
When a home buyer buys a home in need of renovation, then they are actually "investing" on a novice level. They are planning to fix the house up to make it more valuable so that when they do sell it sometime in the future they will hopefully be able to sell it at a profit.
The purpose is to save money. Nothing wrong with that. Everyone wants to get the best deal available.
However, the buyers should know in advance what is involved in this process.
Here is what has to be done:
The Home Path loan requires the buyer to hire a licensed, insured, contractor to do the work.
The buyer must determine exactly what they want done to the property
Then they must write a scope of work to give the contractors to bid on (apples to apples)
Then interview contractors to determine who is the most reliable and who will do the best job at the best price, within the budget.
They must make sure the materials the contractor recommends meets their needs and is not over priced.
Then the proper paperwork has to be submitted in the Home Path required form for approval.
The buyer then must monitor the work progress to make sure it is being performed as agreed.
Many contractors will insist on a certain amount of money up front from the home buyer. However, Home Path will only pay the contractor in three scheduled payments as work progresses.
The buyer must insist that the contractor fully accept Home Path's rules, or find another contractor.
The renovation budget is determined and added to the purchase amount to determine the maximum loan amount that the buyer can qualify for.
Therefore, a home buyer should determine if they have the time to select and negotiate with contractors in order to stay within their budget, and to monitor the work progess to make sure it's performed as agreed.
The advantage is the home buyer gets to renovate the home the way they want it, within the budget.
The disadvantage is the large amount of work required of the home buyer.
Using a Home Path mortgage, the contractor makes the profit from his work, his mark up on materials, and his mark up on the labor that he hires. and the home buyer has to do a lot of work in planning, hiring and supervising.
The professional rehabber is able to get the same work done for a lot less money, and the end buyer is able to buy an updated move-in-ready home at or below the current market value. Most rehabbers need to price their homes just below the market in order to get them sold fast to eliminate high holding costs.
The rehabber, is essentially the contractor, who does all the legwork of buying the home, planning the renovation, hiring and supervising the labor, and working to keep the costs low so he can sell the updated house at a below market price and still make at a profit.
Usually the end price to the buyer is about the same.
So a buyer should decide if it is best for them to go the Home Path loan route, or to buy a move in ready home. These move in ready homes can be found from rehabbers, regular sellers, banks, and short sales.
Nothing is made easier for the professional rehabber.
They need to have the market education, the construction education, and the willingness and ability to spend a lot of time locating homes to buy that are suitable to renovate for a profit.
They have to compete with other investors as well as the general public for properties.
They have to use cash or pay high short term interest rates for money.
And they take substantial risks if they misjudge the renovation costs.
If you would like to talk to a buyer that did a Home Path renovation loan, to find out how they did it, send me a private message. I'll get you in touch with the client that I helped buy the home to renovate. They got it completed and did a great job.
That is all information that helps. Thank you so much! The bank I consulted is our local FCU and they are great, but probably not a lender for that program. I cannot recall if there are income requirements for Fannie Mae.
Our first choice would be a move in ready home in our price range, but I would like to feel that we could do a renovation, mostly cosmetic level and clean up on a foreclosure or short sale if we find one we love that passes inspection as no huge issues. I would rather make my own choices than pay for what a flipper chose. I am rather good at that and my husband is handy. Does one really HAVE to pay the contractor for things like- new flooring, pool clean up, new counters, new paint,landscape. I can and have managed all (but pool)that on my own,with Home Depot etc. Nothing structural, but cosmetic and maintenence.
Perhaps thats how the banks make sure the $$ is used to improve the property and not for other purposes? Here in IN I know you can be your own general contractor if you do the paperwork.
Thank "flippers" for skyrocketing housing costs and the resulting disaster of loan debacles, foreclosures, and crazy property taxes. The gougers have finally been gouged by their own kind, unfortunately others are paying the price as well.
When I was growing up, buying a house for $300k-$500k was unheard of. Houses were used for living in... not as ATM machines
So, who gets to live in a $300-500K home? If you have an income of $120,000, that is a reasonable amount to pay. Mod Cut: Rude.
Last edited by Grannysroost; 02-26-2010 at 02:43 PM..
Why do you insist on taking a thread that is about whether the market is good for an investor to come here to get back into investing, and turn it into realtor bashing?
I don't care whether you're referring to me, or "global" as you put it, calling realtors ignorant and unethical it is realtor bashing and is adding nothing to the topic of the thread.
If you want to bash realtors then start your own thread.
Why don't we hear about "supply and demand" anymore? That was the mantra as the housing market heated up. In Gilbert, there are less than 380 houses for sale in the MLS as of today (2-25-2010), according to Realtor.com. How many people move to Gilbert every month? I don't know, but I sure would like to hear more about "supply and demand" again.
Remember the good old days when people bought homes to live in? My thoughts are that someone buys a home that they like, can afford, and have the ability to maintain. Who cares where prices are going if you have bought something that you are prepaired to pay for. I know that at times jobs can be lost and the need to move to another area can be a problem. In the past though people bought a home, paid it off and passed it on to the next generation. My uncle lives in a home that my great grandparents bought who knows when. My parents have owned 2 homes, one in California and the one they are in now in Surprise. Just wish sometimes that people would get back to the basics and buy a home as a domicile and not a piggy bank. Isn't that what got us into this mess in the first place?
Not taking this out on the realtors that do this for a living, just those of us that are not in the business and from what I read here, may want to stick with their day jobs. lol
Yes, people buy homes to live in, but sometimes things change. For instance, my next door neighbors moved here from Tennessee in 2002. They are both middle age medical professionals with no kids. They have a beautiful home, but are tired of Arizona and want to move someplace else, but they can't because even after living in the house for eight years, they have no equity. They didn't take out a 2nd mortgage or a bad loan, they just can't get the money out of their house that they put into it when they bought it for 20% down. Everyone is so quick to blame the homeowners and it just doesn't make sense to me. Homeowners are just the scapegoats for the globalists' ambition to lower the standard of living of the U.S. so that we lose our political power.
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Case/Shiller Says Phoenix Market Turns Faster Than Almost any Other
Thank you so much! The bank I consulted is our local FCU and they are great, but probably not a lender for that program. I cannot recall if there are income requirements for Fannie Mae.
