Archive for March, 2010|Monthly archive page

Have You Heard Of FHA’s 203(k) Program?

It’s an interesting government program that has the potential to make distressed properties look much more appealing to potential buyers.

In California, “sales for 2010 are projected to decrease 2.3% to 527,500 units. Distressed properties are forecast to account for nearly one-third of the sales in 2010” according to C.A.R. Chief Economist Leslie Appleton-Young.

So, that’s approximately176,000 distressed properties that may end up on the California real estate market, often at a substantial discount.

The 203(k) is an FHA-guaranteed loan that provides money to help buyers purchase and renovate a distressed home in need of repairs.

With just one mortgage loan, buyers can buy and repair their home. There’s no need to spend savings or get a remodel loan or open up a line of credit after escrow closes to deal with expensive repairs.

Assuming the property is eligible, buyers would apply for the mortgage, an appraiser would estimate the cost of repairs, the cost of repairs would be added to the mortgage amount and held back in a Rehabilitation Escrow Account in an escrow account to be paid out to contractors as work is completed. All repairs need to be completed within six months of closing.

If the repairs cost less than the Appraiser approved quote, the balance of funds would go toward reducing the mortgage loan.

Log onto http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

for guidelines and much more information on this program.

Here are two Mammoth Lakes lenders, you can contact, with questions on this program:

  1. Randi Maier/ Doug Magit, Wells Fargo Home Mortgage, Mammoth Lakes, Ca. 760-924-2270
  2. Bank of America. 760-924-4660

Please share your thoughts by leaving a comment or calling me, toll-free, at 1-800-231-0622.

For more information on Mammoth Lakes real estate, please log onto my real estate website at www.easternsierraproperties.com

References:

C.A.R. website.  C.A.R. releases California Housing Market Forecast for 2010 Wednesday October 7, 2009.

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California Extends And Expands Home Buyer Tax Credit

On March 25, 2010 Governor Schwarzenegger signed Assembly Bill (AB) 183 allocating $200 million for home buyer tax credits. The bill splits the $200 million in half with $100 million going to qualified first-time home buyers who purchase existing homes and the other $100 million for purchasers of new or previously unoccupied homes.

To be able to utilize the allowable tax credit, eligible taxpayers will have to close escrow on their qualified principal residences between May 1, 2010 and December 31, 2010, or close on a qualified principal residence on or after December 31, 2010 and before August 1, 2011 contingent upon an executed contract on or before December 31, 2010.

The credit will be equal to the lesser of 5 percent of the purchase price of $10,000, taken over three consecutive years in equal installments. Home buyers will be required to live in the home (as their principal residence) for at least two years or forfeit the credit.

This, obviously, is a huge benefit for first time home buyers and should push people off the indecision fence.

Even in a place like Mammoth Lakes, where the median home listing price is $1,267,500, there are opportunities to purchase Foreclosures, REOs and Short Sales priced under $500,000.

This, in turn, will reduce our inventory and get local contractors busy renovating these properties.

Please share your thoughts by leaving a comment or call me, toll-free, at 1-800-231-0622.

For more information on the Mammoth Lakes real estate market, please log onto my real estate website at http://www.easternsierraproperties.com

Weekly Mammoth Lakes Real Estate Listings Update

On Monday March 29, 2010 there are 69 homes listed for sale in Mammoth Lakes. The average price is $1,610,143, the price range is from $49,900 (mobile home) – $7,900,000 and the average days on market is 226.

There are 35 lots for sale. The average price is $980,472, the price range is from $109,000 – $13,000,000 and the average days on market is 402.

There are 174 condominiums for sale. The average price is $485,302, the price range is from $105,000 – $2,100,000, and the average days on market is 195.

There are 37 commercial properties for sale. The average price is $579,971, the price range is from $39,000 – $4,250,000, and the average days on market is 383.

In June Lake, there are 16 homes for sale. The average price is $3,076,437, the price range is from $128,000 – $19,998,000, and the average days on market is 171.

There are 21 lots for sale. The average price is $209,226, the price range is from $70,000 – $399,000, and the average days on market is 404.

There are 5 commercial properties for sale. The average price is $4,983,800 the price range is  $430,000 -$19,995,000, and the average days on market is 486.

There are 5 condominiums for sale. The average price is $479,400, price range is  $309,000-$850,000, and the average days on market is 649.

In Crowley Lake/ Sierra Springs, there are 9 homes for sale. The average price is $454,766 the price range is $52,000 (mobile home) – $1,399,000 and the average days on market is 145.

There are 14 lots for sale. The average price is $431,142, the price range is from $80,000 – $1,950,000, and the average days on market is 278.

There are 4 condominiums for sale. The average price is $164,450. The price range is from $124,900 – $222,500, and the average days on market is 180.

In Aspen Springs and Sunny Slopes there is 1 home for sale. The average price is $1,275,000. The price range is from $1,275,000 – $1,275,000  and the average days on market is 112.

There are 2 lots for sale. The average price is $1,054,500. The price range is from $159,000 – $1,950,000, and the average days on market is 274.

In the Paradise/ Pinion Ranch/ Rimrock and Swall Meadows areas there are 3 homes for sale ( Mammoth Lakes listing service). The average price is $1,503,333, the price range is from $680,000 – $2,999,999, and the average days on market is 29.

There are  10 lots for sale. The average price is $517,090. The price range is from $89,900 – $2,990,000, and the average days on market is 680.

In Bishop, there are 28 homes for sale (Bishop Listing Service). The average price is $431,593, and the price range is from $225,000 – $699,000. The average days on market is 72.

There are 13 lots  for sale. The average price is $320,669 and the price range is from $95,000 – $1,300,000. The average days on market is 249.

There is 1  commercial business opportunity. The average price is $110,000 and the price range is from $110,000 – $110,000. The average days on market is 175.

To Permit Or Not To Permit?

To be honest or not to be honest? To be forthright or not be forthright? To disclose or not to disclose?

The answer is obvious, but sometimes people make the wrong decision.

Let me share a story about a listing that I was working on earning. I was contacted by the owner and ultimately mailed keys so I could walk the property. The inside was beautiful! Tastefully done and expensive. The work included an entry way, from the garage, that reduced the garage space from two cars to one. A wall was added as was lighting.

In the email correspondence, I asked about permits and the seller responded that the work was done without permits.

Although I can’t prove this, I don’t believe that the Homeowner Association (HOA) for this property was contacted, for their approval, either.

So, not only do we have a permit problem, we also have a potential HOA problem and an additional problem with parking. When any project is approved, part of the approval process involves providing  parking for residents and guests. There is a minimum allowable number of parking spaces. In this case, the work on the garage negatively affected the unit parking space allowance.

The seller and I, ultimately, could not agree on a path to follow so I walked away from the listing.

So, how do you know if you need to get a permit? I asked Troy Rowan who is President of the Mammoth Lakes Contractors Association and he said “ In regards to building permits in the Town of Mammoth Lakes, home owners should know that this is a requirement for any additions or remodels. If there is a question to the limits of this requirement, the Town staff will be able to answer these concerns without trouble.”

So, my next stop on my due diligence journey was to the Town of Mammoth Lakes Building Department. There I spoke with Alex Ramos. I asked Alex a number of questions including the necessity of obtaining a building permit. Here is an excerpt from his response, “ Building  permits provide the means for Building Officials to ensure health, safety and welfare of the building occupants. Building officials review the design and inspect the construction to ensure that minimum standards are met and appropriate materials are used. Building permits are essentially your agreement to do the work in compliance with current codes, like building codes for structural, electrical, plumbing, mechanical and other components of your home.”

Here’s the bottom line. If you live in a condominium/townhome project, contact the HOA first, with an overview of the work you want to do, and get their approval.

Next, contact the Building Department for your local community. Only a Building Official or Building Inspector is qualified to determine if permits are needed or not needed. They will promptly advise you one way or the other. Use their knowledge and services!

Final thoughts. If you’re the owner of a property where you have paid to have non-permitted work completed, you need to disclose this if you intend to sell your property. All parties to the potential purchase, Realtors -potential Buyers-Appraisers-local Building Department, need to be informed of what was done, by whom and when.

By getting this out in the open BEFORE you put your property on the market, all issues can be disclosed, discussed, inspected addressed, approved ( hopefully ) and the property sells without any surprises for the buyer, during escrow or down the road after escrow closes.

Here are some local contacts, in the Town of Mammoth Lakes, should you have any questions about the permit process:

  1. Troy Rowan: President of the Mammoth Lakes Contractors Association: 760-934-2607
  2. Alex Ramos: Town of Mammoth Lakes Building Department: 760-934-8990

Please share your thoughts by leaving a comment or by calling me, toll-free, at 1-800-231-0622.

For more information on Mammoth Lakes real estate, please log onto my real estate website at www.easternsierraproperties.com

“ Good judgement comes from experience, and a lotta that comes from bad judgement.”-Cowboy’s Guide To Life

Anyone Else Worried About The Commercial Real Estate Market?

From what I’ve read, commercial real estate foreclosures are happening now, at record levels, and more are imminent. There’s something like $1 trillion plus of commercial real estate loans that are maturing between 2010 and 2013.

What happened? I think the same type of exaggerated optimism we all saw in the residential marketplace spread to the commercial real estate marketplace. Ownership opportunities were fueled by political, economic, lending and social forces.

Like the residential real estate market, the economy in the years 2005-2007 pushed commercial rents up and the overly high valuations followed.

In 2008, when the economy went South, commercial real estate values followed suit and left lenders, many of which are small to medium sized community banks, with over $1 trillion of commercial real estate loans maturing over the next couple of years.

“ According to Real Capital Analytics, the default rate for commercial property mortgages held by all U.S. banks more than doubled in the fourth quarter of 2009 and may reach a peak of 5.4 % by the end of 2011.”

Sadly, and I suppose predictably, many commercial real estate owners are walking away from their properties, just like many in the residential sector.

These defaults and free-falling prices in the commercial real estate market are going to lead to more substantial bank losses at a time when banks are already taking serious losses from home mortgage defaults.

Even more disturbing is that a disproportionate share of these losses will be shouldered by small and mid-sized banks. The communities they serve, will also feel the pain.

“ A big enough wave of commercial mortgage defaults would trigger economic damage that would touch the lives of every American.”

The extent of the damage will, in my opinion, be tempered by the speed of our economic recovery.

So what do we do in the meantime? Communicate, cooperate, adapt, change, grow and know that this is a cycle. We will always have them and we will work through them.

Please share your thoughts by leaving a comment.

For more information on the Mammoth Lakes real estate market, please log onto my real estate website at www.easternsierraproperties.com

References:[i]

  1. And Now Get Ready For The Commercial Real Estate Knockout Blow. Michael Snyder. Business Insider. The Money Game. March 19, 2010 9:50AM
  2. Massive Bank Failures Due, Says Oversight Panel. Charlotte Cuthbertson. Epoch Times Staff. February 25, 2010

[i]

Should You Rent Out Your Resort Condominium?

Now That You’re In The Market For Buying A Townhome, Should You Rent It Out?

Assuming this isn’t your primary residence, here are some questions that should be addressed before you make an offer? Is the prospective property currently on a rental program? With whom? How long has the rental management company been in business? How much gross rental income has the property earned over the last couple of years? How much does the rental management company charge? What services do they provide? Do they have a website for people to browse? What is their policy for dealing with any damages or stolen property by renters? How many similar sized properties do they manage? How many are in the same project? What should your rental income expectations be? How many days, per year, can you expect rental income? How long of a commitment does the rental management company want?

Addressing these questions, and more, are critical to be making an informed decision before you make an offer on any property you would like to purchase.

In Mammoth Lakes, most condominiums and townhomes can be rented out on a nightly basis. Single family homes, with the exception of those in certain subdivisions, cannot be rented out on a nightly basis.

Depending on the unit size and proximity to the chair lifts/ gondola, your rental income will vary. Particularly during the Holidays! People will pay a premium to stay in ski-in/ ski-out locations. You will also pay a higher price for purchase of such properties.

If you’re paying cash, then a substantial portion of the rental income is going into your pocket. However, if you’re getting a loan there’s a lot more to talk about. Your lender needs to be advised of your rental intentions. How much are you putting down? How much are your monthly payments? How much is the monthly Homeowners Association ( HOA ) payment? What is the local tax rate? Would the current rental income cover your payments, HOA dues and taxes? If not, can you afford to put more money down?

If you can’t afford to put more money down, then you have to discuss looking at smaller properties where the gross rental income is going to be less. The calculation of projected costs needs to be done for these properties too.

You see, when you are counting on cash flows to help you afford the purchase of a property it has to work for you in good times and in bad times. Understanding your projected cash flows/costs and being confident you can handle those costs under varying economic conditions is part of your due diligence prior to writing any offer. In fact, I would go so far as to say that if you can’t afford the purchase, without the rental income, you should think twice-even three times- before proceeding with any written offer.

Your Realtor is going to be an important source of information and local knowledge during this process. Lean on him/her! In addition to your Realtor, you also need to speak with a couple different reservation companies and gather as much information as possible.

Here are a couple of reservation companies, in Mammoth Lakes, that you can contact:

  1. Elizabeth Gonzales of Mammoth Property Reservations. 1-888-MAMMOTH. Local: 1-760-615-5295
  2. Mammoth Premiere Reservations. 1-800-336-6543. Local: 1-760-934-6543

Please share your thoughts by leaving a comment.

For more information on Mammoth Lakes real estate, please log onto my real estate website at http://www.easternsierraproperties.com

Weekly Mammoth Lakes Real Estate Listings Summary

On Monday March 22, 2010 there are 71 homes listed for sale in Mammoth Lakes. The average price is $1,641,561, the price range is from $49,900 (mobile home) – $7,900,000 and the average days on market is 227.

There are 35 lots for sale. The average price is $981,330, the price range is from $109,000 – $13,000,000 and the average days on market is 395.

There are 166 condominiums for sale. The average price is $502,228, the price range is from $105,000 – $2,100,000, and the average days on market is 201.

There are 38 commercial properties for sale. The average price is $569,946, the price range is from $39,000 – $4,250,000, and the average days on market is 375.

In June Lake, there are 16 homes for sale. The average price is $3,057,937, the price range is from $128,000 – $19,998,000, and the average days on market is 175.

There are 19 lots for sale. The average price is $203,671, the price range is from $70,000 – $399,000, and the average days on market is 369.

There are 5 commercial properties for sale. The average price is $4,983,800 the price range is $430,000 -$19,995,000, and the average days on market is 479.

There are 5 condominiums for sale. The average price is $479,400, price range is $309,000-$850,000, and the average days on market is 642.

In Crowley Lake/ Sierra Springs, there are 10 homes for sale. The average price is $459,200 the price range is $52,000 (mobile home) – $1,399,000 and the average days on market is 136.

There are 15 lots for sale. The average price is $412,733, the price range is from $80,000 – $1,950,000, and the average days on market is 265.

There are 4 condominiums for sale. The average price is $164,450. The price range is from $124,900 – $222,500, and the average days on market is 173.

In Aspen Springs and Sunny Slopes there is 1 home for sale. The average price is $1,275,000. The price range is from $1,275,000 – $1,275,000 and the average days on market is 267.

There are 2 lots for sale. The average price is $1,054,500. The price range is from $159,000 – $1,950,000, and the average days on market is 260.

In the Paradise/ Pinion Ranch/ Rimrock and Swall Meadows areas there is 1 home for sale ( Mammoth Lakes listing service). The average price is $2,999,999, the price range is from $2,999,999 – $2,999,999, and the average days on market is 65.

There are 10 lots for sale. The average price is $515,090. The price range is from $89,900 – $2,990,000, and the average days on market is 677.

In Bishop, there are 25 homes for sale (Bishop Listing Service). The average price is $433,726, and the price range is from $225,000 – $699,000. The average days on market is 81.

There are 12 lots for sale. The average price is $325,808 and the price range is from $95,000 – $1,300,000. The average days on market is 233.

There is 1 commercial business opportunity. The average price is $110,000 and the price range is from $110,000 – $110,000. The average days on market is 168.

What Is A Condotel?

For starters, a Condotel can also be referred to as a condo hotel or hotel-condo.

Condo hotels, typically, are high-rise buildings that are developed and operated as high-end, luxury hotels. Think branded properties like the Ritz Carlton or Westin!

These properties operate just like any hotel you’ve ever checked into, but each room is individually owned.

As the owner, you take fee simple title to the property. It’s yours, just like the home you currently own. But unlike your current home, there is a professional staff engaged in marketing, renting and daily management.

So, who normally buys these types of properties? People who want to enjoy a particular lifestyle and those who are looking for cash flow and appreciation

The people who buy for the lifestyle ( families with young kids, couples, athletic singles ) want to own a property at a resort that they love to go to. A resort  that offers year-round fun for all levels, and all ages of  outdoor enthusiasts. Come on, who wouldn’t be attracted by the idea of owning a beautiful property, at their favorite resort location, that’s cleaned, managed and looked after by a team of professionals?!

The other group of  buyers are buying, only, if the property makes financial sense. These folks are looking for appreciation and cash flow. It also helps that the property is essentially 100% hassle free.

A note needs to be added here that the U.S. Government is super strict about how condo hotel projects can be advertised. In the past, condo hotel projects have advertised themselves as “real estate investments” and because the dollar value of these “real estate investments” was not clear, the U.S. Government will not allow the use of this reference.

What about financing?  Yes, you can get a loan, but not through traditional lenders. And you may have to pay rates that are anywhere from 1% to 2% higher than for a traditional condominium.

Why?  At this point, there’s no established secondary market. These types of “portfolio” loans are held onto and serviced by the lender who originated the loan.

Are there monthly Homeowner Association (HOA) Dues?  Yes. The fees and corresponding services can vary.  The HOA dues are applied to services like utilities, outside grounds maintenance, management & administration services, security and more.

What about insurance?  The Homeowner’s Association will have a Master Insurance Policy. This policy is designed to cover the structure outside of the walls of your condominium. It is imperative then, that you obtain an insurance policy for the unit itself. This policy will cover from the walls in and will include liability and personal property. To do so, contact a local insurance broker who can then contact different insurers for the best policy. You may even want to make having an insurance policy, in place, before the close of escrow a condition of any offer.

Here are some contacts that can assist you with finding financing and insurance for a Condo hotel property in Mammoth Lakes:

1.   Mat Dlugolenski of Cal Con Mutual Mortgage in San Diego, Ca. Office: 858-429-4638 ext. 105

2.   Debbie Kruse of Sierra Sage Insurance Services, Inc., in Bishop, Ca. Office: 760-872-4051 Fax: 760-872-4071

Please share your thoughts by leaving a comment.

For more information on the Mammoth Lakes real estate market, please log onto my real estate website at http://www.easternsierraproperties.com

Seller Carry back

Seller Carry back / Owner Financing

Have you noticed more Owner Financing opportunities in your MLS or in the local newspaper real estate classifieds?

What does that mean? Well, it means that the seller assists the buyer by acting as a lender and financing part or all of the sale of the sellers’ property. The term applied to such financing is carryback financing. The seller versus a lending institution, is literally carrying back part or all of the financing on the property.

Can this be applied to different types of real estate? Sure! Large parcels, lots, mobile homes, mobile homes on a lot or large parcel, single family residences, condominiums, motels …. you get the idea.

Who benefits? The seller and buyer! Why?  For the buyer, the rigorous lender qualifications  aren’t involved, seller lending terms may be more favorable than those offered by a lending institution,  lower closing costs and reduced personal liability ( the property sold is the security for the debt ).

Benefits for the seller include a larger number of prospective buyers, an opportunity to defer taxes on an installment sale, a higher sale price plus terms that provide for monthly income and a cash payment for all or a portion of the note carried.

Sounds great, huh?! Well, why aren’t more people doing it? Because there’s a lot to it!

 If you, as a buyer are interested in going down this road, I  recommend that you work with a Realtor who has extensive experience with seller carry back transactions and/or an attorney, with the same type of seller carry back experience. Each of these people will discuss and review your offer/ counter offer terms and make sure that your risk is minimized, that you understand your responsibilities and that the reward of homeownership is truly within your grasp.

Here are two local legal contacts in Mammoth Lakes:

  1. Jim Reed of Liebersbach, Mohun, Carney & Reed at 760-934-4558
  2. Therese Henkel at 760-934-3133

Please share your thoughts by leaving a comment or call me, toll-free, at 800-231-0622.

For more information on the Mammoth Lakes real estate market, please log onto my real estate website at www.easternsierraproperties.com

Weekly Mammoth Lakes Real Estate Listing Update

On Monday March 15, 2010 there are 70 homes listed for sale in Mammoth Lakes. The average price is $1,699,615, the price range is from $49,900 – $7,900,000 and the average days on market is 236.

There are 35 lots for sale. The average price is $985,037, the price range is from $109,000 – $13,000,000 and the average days on market is 388.

There are 161 condominiums for sale. The average price is $502,199, the price range is from $105,000 – $2,100,000, and the average days on market is 207.

There are 38 commercial properties for sale. The average price is $570,735, the price range is from $39,000 – $4,250,000, and the average days on market is 368.

In June Lake, there are 17 homes for sale. The average price is $2,898,647, the price range is from $128,000 – $19,998,000, and the average days on market is 163.

There are 18 lots for sale. The average price is $202,888, the price range is from $70,000 – $399,000, and the average days on market is 362.

There are 5 commercial properties for sale. The average price is $4,983,800 the price range is $430,000 -$19,995,000, and the average days on market is 472.

There are 5 condominiums for sale. The average price is $479,400, price range is $309,000-$850,000, and the average days on market is 635.

In Crowley Lake/ Sierra Springs, there are 10 homes for sale. The average price is $466,800 the price range is $52,000 (mobile home) – $1,399,000 and the average days on market is 174.

There are 14 lots for sale. The average price is $433,428, the price range is from $80,000 – $1,950,000, and the average days on market is 266.

There are 2 condominiums for sale. The average price is $155,200. The price range is from $130,900 – $179,500, and the average days on market is 246.

In Aspen Springs and Sunny Slopes there is 1 home for sale. The average price is $1,275,000. The price range is from $1,275,000 – $1,275,000 and the average days on market is 98.

There are 2 lots for sale. The average price is $1,054,500. The price range is from $159,000 – $1,950,000, and the average days on market is 260.

In the Paradise/ Pinion Ranch/ Rimrock and Swall Meadows areas there is 1 home for sale ( Mammoth Lakes listing service). The average price is $2,999,999, the price range is from $2,999,999 – $2,999,999, and the average days on market is 58.

There are 10 lots for sale. The average price is $515,090. The price range is from $89,900 – $2,990,000, and the average days on market is 670.

In Bishop, there are 26 homes for sale (Bishop Listing Service). The average price is $429,019, and the price range is from $225,000 – $699,000. The average days on market is 83.

There are 13 lots for sale. The average price is $331,908 and the price range is from $95,000 – $1,300,000. The average days on market is 236.

There are 0 commercial business opportunities. The average price is $0 and the price range is from $0 – $0. The average days on market is 0.
Please share your thoughts by leaving a comment or call me, toll-free, at 800-231-0622.
For more information on Mammoth Lakes real estate, please log onto my real estate website at http://www.easternsierraproperties.com.