Buying

203K better than Credit Cards!

I get calls from a lot of people wanting to buy a fixer upper. They’re usually motivated by buying something on the cheap and then investing a good deal of themselves into the property to enhance its value. And that concept works— (drumroll….) when there is enough time and skill to get the work done AND enough money to buy the materials. (I can’t tell you how many houses I walk through where it’s obvious that the people had good intentions but just ran out of money.) It’s easy to do. Fixin’ up houses take chunk money. A hundered here and a hundred there can work for small stuff, but when it comes to buying furnances, roofs, siding, kitchen cabinets, appliances, carpet, hardwood flooring, etc., etc., etc. you need chunk money. and if you don’t have the cash on hand then the project stalls out or the cost gets put on credit cards. Neither strategy works and inevitably puts people in a real bind.

A far better solution is to start out with a 203K loan. The 203K is a government loan, a FHA product. It provides the funds to both buy a property and to fix it up. The total loan amount is capped at $295,550 and the required cash down payment is just 3.5% of the total. The money is parceled out as the work is being done. And the interest rate is (right now) somewhere around 3-4%. Now, that sure beats paying credit card interest rates or letting your project (and the home of your dreams) die a slow death.

Be smart- do it right! If you’d like to get all the details, call me.

Looking for a house to flip?

I just closed two house purchases for two successful fix n’ flip artists. It got me to thinkin’ why these two particular individuals are so successful- while others seem to never get off the ground.

You know, I get a LOT of calls from people looking for “good deals” on houses to fix n’ flip. For the most part, the callers fall into one of two categories.

1) There are the guys n’ gals who talk to me on a regular basis, and then we select the properties with the best potential and we go look at them— inside and out, in bad weather and good, whenever. Assuming they can do a decent job of estimating costs and getting the work done, they are the successful ones.

2) Then there are the people who say, “when you find a good deal call me.” Sorry, but like I said, I get a LOT of calls for these properties. So why would I want to work with someone who doesn’t want to get off the couch and dig in and do the work necessary to be a successful fix n’ flipper? (Btw, the people in this category are not usually the successful ones.)

‘Nuff said. If you want to be a successful fix n’ flipper then you really need to put in the time so that you buy right. It all starts there. And btw, we’re a team.

Have questions about how to do successful fix n’ flips— call me!

Closing Costs Are a Mystery

Most weeks, I glance through the Sunday newspaper just to see what the “mainstream media” is talking about. This past Sunday the Indianapolis Star (courtesy of USA Today) carried an article titled, “Closing Costs Are a Mystery to Millennials.” Based on my experience in the real world, I’d agree and extend that to most everyone else too. The article was right though, as most first time home buyers have no idea that they not only have to come up with enough cash for a down payment, but for closing costs as well.

When most first time buyers think of closing costs, they think in hundreds, when in fact, closing costs typically run more like $4000 on the average deal. These costs are tightly regulated. (If health care costs were this tightly regulated, your health insurance premium would be about a quarter of what they are now.) Because they are tightly regulated there isn’t a great deal of difference from one lender to another. The costs tend to run in a fairly narrow range. Many of the costs are fixed, meaning they don’t change much from one deal to another. A cost for an appraisal, title search, credit report, county recording fees, etc. doesn’t change whether someone is buying a $50,000 house or a $400,000 house. And most of the variable costs aren’t determined by the lender you choose- think homeowners insurance, title insurance, real estate taxes, PMI, and homeowners association dues. All of these costs are determined by some entity other than your lender (and aren’t affected by your choice of lender either).

Because of the variable costs, closing costs do go up as the price of a home goes up. But, even the least expensive of homes is going to have closing costs running in excess of $3000. And the average priced house is likely to have net closing costs in the $4-5,000 range. Buyers need to plan accordingly. Now, there is one strategy that can come to the rescue of buyers with just enough cash for a down payment, and that is to negotiate to have the seller pay the buyer’s closing costs. There are some pro’s and con’s to this strategy, and they depend on one’s unique individual situation. This is something that I review with buyers as they put their home buying plan together. Let’s talk and be sure to take the mystery out of closing costs!