![The First Time Home Buyer’s Chronicles]()
by JONATHAN BODEEN | Sep 17, 2014 | Bodeen Team Blog, Real Estate News
A surly mercenary character on a TV series once said that a doctor should be shot in the leg before he learns to take a bullet out of other people… I suppose so he can empathize with his patient. Well, that may be extreme but there is definitely a hint of wisdom there.
I’ve been practicing Real Estate for three years now, one with my dad here in Arizona, and two years in Idaho before my wife Sarah and I had gone back to school. Soon we will actually be making our first home purchase, and let me tell you, I am definitely feeling the above mentioned shot to the leg!
We are going through a unique first time home buyer’s program called NACA. If you have been following my good father’s Realtory musings for any length of time you probably have seen it espoused on more than one occasion. Here is a quick refresher:
- No PMI (saves a couple hundred bucks a month on your mortgage)
- No down payment
- No (typical) loan closing costs
- Lower than market interest rate (as of the time of this writing it sits at 3.875% Wowsers!)
- Good credit not required
Some may think as I thought when the program was first proselytized to me, “Well this is just way too good to be true.” I do regret to inform you, dear reader, that there is still no free lunch, not now, not ever. There is a cost to the wonderful benefits you see listed above, but not what you might think. What is the cost then?
Time and energy.
You see most loan programs require about a 30-45 day turn-around time plus a few obscure documents such as pay stubs and W2s etc. NACA takes this to a whole new level, taking anywhere from 3-12 months and demanding a wide array of documents you didn’t know you were supposed to have. These include bank statements, letters of explanation for any and all anomalies on your credit report, a detailed list of prior residences and much more.
In short, NACA makes molasses look fast and the lines at the MVD look fun!
I note all of the negatives not to dissuade any from trying the program, but to set up an honest expectation. It truly is a great opportunity for people who currently do not own a home (one of the requirements) and may have other factors inhibiting them from obtaining a traditional loan.
We are in the thick of it now, and it looks like they will officially qualify us in October or November. As a self-employed person, the process actually becomes more sluggish. The simpler your finances, the more simple the process should be, the key word being should.
If you know anyone who might benefit from this program, give us a call or shoot us an email, we can help them get started and counsel them as to what to be prepared for.
www.NACA.com
The Bodeen Team
![HOAs… Love Em or Hate Em?]()
by MICHAEL BODEEN | Sep 15, 2014 | Bodeen Team Blog, Real Estate News
When setting up property search parameters for our buyers on the MLS (Arizona’s Real Estate Listing Service), we are sometimes asked to filter out HOAs (Home Owner Associations). Conversely, every once in a while we’re also asked to make sure that the property includes an HOA. Virtually every time when requested, it’s due to the prior negative experience of the buyer.
I’ve experienced both sides personally and professionally. And you know what? Even though folks feel strongly about HOAs one way or another, they’re not right or wrong — it’s simply a choice that each of us has. The most important thing is to know what you’re getting into and the potential downside.
This week we’ll cover the benefits of an HOA. Next week, we’ll look at the drawbacks. And finally, in the last installment I’ll cover what a buyer should know about the HOA from the perspective of the purchase contract. Just knowing what you’re agreeing to in a purchase contract can save or cost you hundreds of dollars
Benefits of an HOA!
As I see it, the benefits on an HOA are many. Homeowners within a given community pool their funds to pay for a few or many amenities, privileges or restrictions. The minimum responsibility that I’ve seen in an HOA community is for rules enforcement only. Typically the cost of this limited type HOA is $30 to $40 per month.
If for example, your next door neighbor (whether owner or renters) does not maintain their home, doesn’t maintain the lawn or weeds, or leaves a jacked up car in the driveway – all the time, then there is a process to get that taken care of. In some communities, hired HOA staff actually drive the neighborhood daily to look for these rule violations. I’ve heard the term “Gestapo Tactics” when related to this type of oversight. Strict enforcement may be a pain in the you-know-what, but guess what? That community is probably kept pristine. For many, there’s nothing more frustrating than having visual blight in the neighborhood that you see day after day.
The next minimum step up in HOA services and fees is for “common Area Maintenance.” This is where the HOA keeps up with the appearance of the neighborhood by cutting front lawns, keeping trees trimmed and trash picked up.
I can tell you from a buyer perspective when driving through “the hood,” that if there are unsightly yards or houses, or too numerous vehicles around, that is often a turn off, or more appropriately, a turnaround, where I turnaround the car and head to the next home. Just having these community rules alone can be very valuable.
Townhouse/Condo HOA’s are especially important because of the close proximity that people live near each other. Often these HOA’s are more costly because they may also include a monthly water, sewer, trash fee and cable charged by the association besides the maintenance of the community pool and the community gate or guard gate. Yes, you will pay for someone to keep the pool and spa clean and heated in winter even though you don’t use it, but many folks enjoy the fact that they have access to these amenities year round and don’t have to pay for it on their own property.
Don’t like the way the community is being run? Well, you can make your voice heard at a monthly HOA meeting, and you can even run for a position on the HOA board. Warning though, this is not for the faint of heart.
(Click Here for Part 2)
– Mike Bodeen
![Wisdom from the Greatest Generation]()
by MICHAEL BODEEN | Sep 8, 2014 | Bodeen Team Blog, Real Estate News
I’m a boomer. Always have been. Always will be until I shed this mortal shell. There’s more of us boomers in our country than any other age demographic. You’re a boomer too if you’re currently between the age of 50-68. We’ve got changes ahead, but you’ve probably already figured that out. If you’re beyond boomer, perhaps you’ll nod affirmatively at what I’m sharing. If you’re not there yet, read on, it may do you well.
My parents were part of the greatest generation our country and perhaps this planet has ever known, but that’s just opinion, and worth little to nothing. I miss them more and more as each year rolls around. You may have had an entirely different growing up experience than I’ve had and I get that. But where we go from here is all that matters, because it’s all we got left.
From 1969 until 2004, my parents lived in a very nice Cape Cod style home in a suburban community called Marinwood. Their home was paid for, as in no mortgage. Dad was a butcher and a part owner of a small mom and pop grocery store near San Rafael, north of San Francisco, not far from where Robin Williams lived (and died) in Tiburon on the bay. In comparison, we lived on the “other side of the tracks” but in Marin County, that is way upscale compared to most anything else in the world.
Dad worked hard – very hard. His hard work and frugality (in a good sense) enabled him to retire and live well till he was 93. He was also healthy in body, soul and spirit. He lived an honorable life. Mom was, for the most part a “stay at home” mom. She passed away at the age of 78. She had smoked most of her life and it did indeed catch up with her. I think dad mourned mom’s passing for the rest of his life. Their relationship matured and blossomed after dad retired.
As I’ve now crested 60, I’ve been more considering the things that are of importance in life, which by the way, is not Fox or CNN news, or the Diamondbacks…now the Cardinals and ASU football, that may be a different story;-)
So what’s the real estate point of all this Mike? Crimeny man, would you just land the plane?!
The point is, that I believe a big part of dad’s success and health, was that he didn’t have a mortgage. He was able to save. (Mike, could you please define that word?) And then he invested, very conservatively – a little here, a little there. Fortunately for him, he had trusted advisors who did him well.
The point is, is that I (and most boomers) don’t own our homes outright. I’ve chosen instead to enjoy a nicer, larger home and having a mortgage has enabled me to do this. But you know, Karen and I are currently rethinking our life strategy and we’re definitely warming to the idea of modest and smaller versus “the nicer and bigger.”
What do you think?
![Flip or Flop?!]()
by MICHAEL BODEEN | Sep 2, 2014 | Bodeen Team Blog, Real Estate News
A number of clients and friends have asked me over the years my opinion on house flipping. “Can I actually make money doing it?” they ask. The short answer is yes you can. However, the process is NOT for the faint of heart.
By the way, what is house flipping? Very simply, flipping is (usually) the process of buying then quickly selling a home to make a profit. The idea is that one day the buyer acquires the property, quickly fixes it up, then puts it right back on the market (the flip) to sell. If you’re going to consider this endeavor, consider the following:
First, it’s imperative that the house you buy to flip is either priced well below the market and/or significantly distressed. It may take you weeks or months to find the right home to do it assuming you’re checking the market daily. You or your Realtor professional should have a good eye for the right property. As with all real estate value, location is hugely important.
From an investment standpoint, it’s best that you have cash or access to cash without having to get a new loan. There are hard money loans available (high interest – short term loans) but buyer beware, this is not recommended for most borrowers and the borrowing costs will eat into your profit.
Second, you need to know the current condition of the property you’re buying which may include more than just a typical home inspection. Make sure there are no hidden physical flaws. If you’re not well versed on the cost of renovating, it’s best that you have your contractor with you to examine the house as well. Actually it’s ALWAYS a good idea to have a second set of eyes to view your property. Also, make sure you get title insurance. Good title companies can also reduce these costs if you’re an investor and then you sell within 2-5 years. But you need to ask.
Once you’ve examined the house and know what you’re getting into, you need to determine the cost of flipping it which includes not just the physical remodeling, but also your closing and carrying costs (mortgage if any, taxes, insurance, hoa fees, utilities, title insurance, escrow fees, Realtor commission, etc). All of these costs and more go against your ultimate profit. You need to figure these costs for as long as it takes to sell the house. Your time estimate for this should be conservative.
Oh, and one other cost item that is often overlooked in the final analysis are income taxes. You will pay IRS based on your gain in the home. To defer any capital gain tax, you may want to consider doing an IRC 1031 tax deferred exchange if you’re planning on reinvesting in another investment property. (Have a chat with your CPA or tax attorney in these regards)
Once the home has been rehabbed, it’s ready to put on the market. The price you set should be a price that moves it quickly, even discounted against similar comparable sales. A home that sits on the market unsold will at a minimum be a drain on your profits. A quick sale for a very fair price will get you in and out and ready to embark on the next one!
![A Short Sale Miracle]()
by MICHAEL BODEEN | Aug 25, 2014 | Bodeen Team Blog, Real Estate News
(A Short Sale Miracle Part 2)
Jonathan and I had been working two short sale listings that were under contract. On one, we had lender approval from the two lenders who were on the loan. We had been working on this listing since December 2013. We only needed Freddie Mac approval. (Freddie Mac is the Public-Government run GSA which attempts to keep mortgage money flowing to lenders. It is government regulated)
After months and months of difficult and frustrating work on this Short Sale, Freddie Mac said “No, we’re not doing the deal. Your client (our seller) does not qualify as he doesn’t have a sufficient hardship to qualify!”
We asked the Servicer of the first loan if there was anyway we can make this deal work? No way! Once Freddie Mac says “no” it’s “no!”
So now, we need to let everyone know, including the buyer (buyer’s agent) that we’ve got no deal. Bummer!!! The buyer was not happy, though they were well aware that this deal was a crapshoot to begin with. Still, they had big plans for the home, like even getting married there.
Several weeks go by and the buyer calls me directly – not his agent. He pleads, “Is there not anything we can do to buy this house!?” No, we reply, it’s dead. Then he adds, “I’ll pay more $. “No, we reply, they closed the file and besides, the money was not the issue, but that the seller was not qualified – made too much money.”
At this point, to show him that we’re trying everything we know to make this work, I said, “Okay, I know a guy in our company who does more Short Sales than anyone in town. I’ll call him to see if he’s got a connection at Freddie Mac. I’ll let you know.”
I e-mail my cohort at HomeSmart and cry on his virtual shoulder. He replied, “Mike, Freddie Mac is absolutely the worst, but I’ve got the President’s #. You’re probably out of luck. I called the number once and it went to voice mail and this guy leaves three names and #’s of people to contact if he’s not answering. Here are the three names and #’s.”
I looked at the names and picked the first one thinking, ‘this is a waste of time.’ The phone rang and a live person answered the phone — without going to voice mail! I was so stunned I forgot why I’d called. “Is this Samantha?” I asked?” Yes, how can I help you?” I explained the situation to her while profusely worshipping her for being a live sympathetic ear. She said she would look at the file and call me right back. Oh, I’ve heard that before, I thought. But she did. I was flabbergasted.
Long story short, Samantha checked the file, put a manager on it, and said if we can add $3000 to this deal, we can make it go. The buyer agreed in a heartbeat.
We’re several weeks down the road since then but believe it or not, we’re putting this deal together. I wish I could say it was my knowledge, my persistence and my wherewithal to do all this, but it wasn’t. It was a persistent buyer, a helpful fellow HomeSmart Agent, and a genuine caring lady at Freddie Mac who did the impossible for us. Truly, this was short sale miracle.
(A Short Sale Miracle Part 2)
by JONATHAN BODEEN | Aug 22, 2014 | Bodeen Team Blog, Luxury Communities, North Scottsdale News
Scottsdale has been around for a relatively long time now, and while it still a prestigious place to live, it can be next to impossible to find a new home in the core of the downtown area. That’s why I was excited to read Edward Gately’s article in the Arizona Republic about some fabulous new construction going in downtown. A Canadian company (what’s with Canadians and Scottsdale eh?) is actually going to be building a new 1st class condominium project right in the heart of downtown. Apparently the new condos will come complete with an outdoor organic herb garden and a lap pool, a veritable hipster’s paradise!
The company is called Landmark and the community they are building will be called Aerium. It’s hard to imagine these condos not being a hit, especially with the out of town crowd. Pre-sales will apparently be happening as soon as this fall.
There’s no question this is good for Scottsdale and by association Phoenix as a whole. When foreign companies spend 12 million to invest in our local hotspots, it shows a favorable view from an economic standpoint. Keep em coming Canada!
Read Edward Gately’s article here on AZCentral.com
