Buy a 4-plex with a low rate VA mortgage updated

 Everett real estate, investment property, King County property, Seattle Homes for Sale, Snohomish Property, VA mortgages  No Responses »
Feb 052012
 

The VA mortgage is the best mortgage on the market. Given the low market value of real estate now is the time to buy investment property. If you qualify for a VA mortgage this is a great time to use it. If you use a VA mortgage you must be an owner occupant. The VA mortgage allows you can buy a 4plex with zero down and have the other 3 rents make your full payment. Here’s how it works. Now to make your VA mortgage w the property must be in King county or Snohomish county. Snohomish County has 26- 4plexes priced at or below $481,250 (the VA mortgage limit for King County and Snohomish county) for sale right now. In Snohomish county the prices are a bit lower than King County The rental income is a bit more in King County than Snohomish county. There is another 48- 4plexes for sale in King County again priced at or below $481,250. The price is important for several reasons. One is the potential for appreciation when the market finally recovers. And believe me it will recover. I have been in real estate since 1981 and have seen the market go up and down. Just a few years ago these 4plexes sold for double the current asking price. Rents are way up because of all the foreclosures. The vacancy factors in King and Snohomish counties are very low and some even have waiting lists of applicants. The demand factors working here will compel prices up as soon as we have a responsible administration in Washington, DC. Another reason is the rental income from 3 units needs to equal or exceed the VA mortgage payment. That put a cap on how much you can pay for the property. Make sure that the 4plex you buy has all units with at least 2 bedrooms and 1 bath. The more the better for eventual resale and ease of renting in this competitive market. Fireplaces are an option that younger renters seem to like. Having all appliances and washers and dryers in all units will also increase the asking rent. Here’s how the numbers work. First you need at least a 620 credit score. If you don’t have that contact a good loan officer and see if they can help you get there within a reasonable time frame. Also you will need to have an annual income of at least $42,000. Next, 3 rents should equal ($750 X 3= $2250) enough to cover the full payment. Right now a fixed 30 year VA mortgage is available for around 4%, with an APR of 4.19%. With zero down the full payment (taxes, interest, principle and insurance) works out to around $2150. But that isn’t the whole story. Assuming you are buying an existing 4plex it will have a rental history. If you have a full 2 years on record you can use that to justify up to 95% of the rental income to defer the VA mortgage payment. If you don’t have 2 years then you can only use 75% of the income to cover the mortgage. That is a built in vacancy factor. Even though this is a zero down purchase there will be some out of pocket costs at closing. Assume about $1000 to close. Find a 4plex that does not need a lot of work. They are out there just look. Deferred maintenance in investment property is OK as long as it’s just cosmetic. When you make an offer for any multifamily property expect these conditions: 1) you will not be allowed to inspect the structure until you have a signed around agreement. The tenants have rights that must be respected. 2) When you buy with a VA mortgage you are expected to become an owner occupant. So something will need to be worked out for you to take over one of the apartments. 3) You will need to learn the landlord Tenant law in Washington State. You should also find out if your local city has additional laws concerning the landlord / tenant relationship. 4) You should have a complete structural / pest inspection done by a qualified inspector. Be there when it’s done. Expect minor blemishes no property is without them. If there are major problems you can do one of two things. First is bailout. Or you can negotiate with the sellers to see if they will repair the problems. When you make your offer ask your real estate broker to include a seller concession of 3% of the selling price back to you. This will allow your mortgage broker to offer you a much lower interest rate. A VA mortgage requires a VA appraisal. The VA appraisal can be a major hurdle. The VA is very protective of its buyers. They tend to low ball appraisals. Have your real estate agent do a very through price comparison to determine the market value prior to making the offer. You are responsible for the appraisal so if the property comes in low you will have to pay for it out of pocket. You should hire experienced real estate personal to represent your interests. That will make a complex transaction much easier on you. There is a lot more to this story but the best way to learn about investment property is OJT. If you have questions I will be glad to answer them at 425-346-0830. Remenber the low rates will not last forever so usethat VA mortgage and invest in your future. Jim Johnson MLO 99405 Broker-Pacific Coast Financial Broker- Gilmore Real Estate
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 Posted by JAJohnson at 3:29 pm

How to buy a 4-plex with a VA mortgage

 Everett real estate, Homes for Sale Everett, Real Estate Everett, Seattle Homes for Sale, VA mortgages  No Responses »
Dec 272011
 

How to buy a 4-plex with a VA mortgage

In Everett WA.

          Right now you can buy a 4plex with a zero down VA mortgage and have the 3 rents make your full payment.  Here’s how it works.

Snohomish County has 11 4plexes priced at or below $375,000 for sale right now. There are another 21 4plexes for sale in King County again priced at or below $375,000. The price is important for several reasons. One is the potential for appreciation when the market finally recovers. And believe me it will recover. I have been in real estate since 1981 and have seen the market go up and down. The demand factors working here will compel prices up as soon as we have a responsible administration in Washington, DC. Another reason is the rental income from 3 units needs to equal or exceed the VA mortgage payment. That put a cap on how much you can pay for the property.

Make sure that the 4plex you buy has all units with at least 2 bedrooms and 1 bath. The more the better for eventual resale and ease of renting in this competitive market.

Here’s how the numbers work. First you need at least a 620 credit score. If you don’t have that contact a good loan officer and see if they can help you get there within a reasonable time frame.  Also you will need to have an annual income of at least $42,000. Next, 3 rents should equal ($750 X 3= $2250) enough to cover the full payment. Right now a fixed 30 year VA mortgage is available for around 4%, with an APR of 4.19%. With zero down the full payment (taxes, interest, principle and insurance) works out to around $2150. But that isn’t the whole story. Assuming you are buying an existing 4plex it will have a rental history. If you have a full 2 years on record you can use that to justify up to 95% of the rental income to defer the VA mortgage payment. If you don’t have 2 years then you can only use 75% of the income to cover the mortgage. That is a built in vacancy factor.  Even though this is a zero down purchase there will be some out of pocket costs at closing. Assume about $1000 to close.

Find a 4plex that doesn’t need a lot of work. They are out there just look. Deferred maintenance is OK as long as it’s just cosmetic. When you make an offer for any multifamily property expect these conditions: 1) you will not be allowed to inspect the structure until you have a signed around agreement. The tenants have rights that must be respected. 2) When you buy with a VA mortgage you are expected to become an owner occupant. So something will need to be worked out for you to take over one of the apartments. 3) You will need to learn the landlord Tenant law in Washington State. You should also find out if your local city has additional laws concerning the landlord / tenant relationship. 4) You should have a complete structural / pest inspection done by a qualified inspector. Be there when it’s done. Expect minor blemishes no property is without them. If there are major problems you can do one of two things. First is bailout. Or you can negotiate with the sellers to see if they will repair the problems.

A VA mortgage requires a VA appraisal. The VA appraisal can be a major hurdle.  The VA is very protective of its buyers. They tend to lowball appraisals. Have your real estate agent do a very through price comparison to determine the market value prior to making the offer. You are responsible for the appraisal so if the property comes in low you will have to pay for it out of pocket.

There is a lot more to this story but I think OJT is appropriate. If you have questions I will be glad to answer them at 425-346-0830. So use that VA mortgage and invest in your future.

Jim Johnson MLO 99405

Broker-Pacific Coast Financial

Broker- Gilmore Real Estate

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 Posted by JAJohnson at 11:40 am  Tagged with: , ,

Everett Real Estate the Hits just keep on Rolling

 Everett real estate, Homes for Sale Everett  No Responses »
Feb 252010
 
Zillow Home Value Index

Experts wrong again and again and again

Homes for sale in Everett and Everett real estate in general just took another “unexpected” drop. Are you getting as tired of the “experts” being wrong, wrong, wrong again and again as I am. This broken record is not unexpected to me. For almost a full year the number of sales of new homes has dropped. There was a minor blip in October / November 2009 from the new home tax credit but all that did was suck purchases from December and January and put them into October/November. Month after month the “experts” have been wrong. I am whining but why can’t I get a job where I can be paid well and be wrong over and over. In my business and I am sure yours too, you get paid to be right.

Well new home sales PLUNGED to historic lows in January. Just to show you how wrong the MSM (main stream media) is Bloomberg wrote on February 24th that housing would be up. Here is a quote from the story.

“Purchases increased 3.5 percent to an annual pace of 353,000 new homes, according to the median estimate of 71 economists surveyed by Bloomberg News. Demand slumped 7.6 percent in December, the month after the incentive (the tax credit) was originally scheduled to expire.”

That’s right 71 over paid economists predicted a completely wrong scenario.

What really happened was New Home Sales plunged to 309,000 the lowest level since the US Commerce Department has kept records starting way back in 1963. How does this affect Everett real estate and homes for sale in Everett in general? Well think about this, if you can’t sell or will not buy a home then the economy in general will not recover. If consumer confidence doesn’t go up we will never see the “good times” again.

Right now as I write this Obama and the Liberals are arguing about health care. Mr. Obama stop the BS and get us some Jobs. Nancy Pelosi claims that 4 Million jobs will happen if we just pass the Obamacare health bill. What hogwash! If congress passes a bill that lowers payments for healthcare do you think that will increase the number of jobs?

The litany of bad news goes on and on.

  • Inventories went up to a 9.1 month supply. That’s from an 8.1 month supply in December and a 7.9 month supply in November.
  • In January the median price fell again by 2.4% compared to a year ago. And a year ago was a disaster.
  • In January, new home sales plunged 35% in the Northeast, fell 12% in the West, and decreased 10% in the South; they rose 2% in the Midwest.
  • Investors will note that new home sales, historically, correlate to an economic expansion.
  • The “unexpected” drop in new home sales should (but probably will not) raise questions about the efficacy of Obama’s new home buyer credit. You know the one that robs sales from the near future just to inflate the current numbers.

My friends please vote all incumbents out. Get rid of the incompetents that we have running this government.

How will we improve the market for Everett real estate and homes for sale in general? JOBS, JOBS AND MORE JOBS Mr. Obama.

Jim Johnson and comments are always welcome

Everett Mortgage on Line

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 Posted by JAJohnson at 1:17 pm

Everett Real Estate Federal Tax Credit

 Everett real estate, Homes for Sale Everett  6 Responses »
Feb 222010
 

Another Obama plan that will do nothing for Everett real estate

This information will not have a major impact on homes for sale in Everett and / or Everett real estate in general. The IRS finally got around to clarifying the guidelines for the home buyers tax credits. That’s right the $8000 credit for first time buyers and the $6500 credit for move along buyers.

This is the same credit that many think, myself included, hasn’t made a single additional sale since its inception.

Think about it, if I am on the market for a home for sale in Everett I am going to buy regardless of an $8000 credit. I personally think this credit is just like so many other things the Obama administration has done in that it is completely ineffectual. I think this credit has had no affect on demand for Everett real estate or the prices of homes for sale in Everett.

Because of abuse of the original credit the IRS and Congress revised the program last November. They also extended the credit life and included the $6500 move along portion.

In a few cases IRS and Congress found phony claims and so with typical reaction they punished everyone equally. For a while they didn’t pay legitimate claims. Using a sledge hammer to kill this fly here is what Congress wanted IRS to do. Congress directed the IRS to spell out documentation standards in detail and to install monitoring systems to try to spot fraud upfront. Among the keys to the monitoring system is that all documentation accompanying credit claims must comply with IRS’ detailed rules.

Here is what IRS came up with for anyone claiming the credit:

  • You must fill out the IRS form 5405 (the form is here www.irs.gov). This provides basic information supporting the claim for eligibility, appropriate dates, income information and amount of credit claimed.
  • A copy of the settlement statement called the HUD-1. This proves the transaction actually took place and who was party to it.

There are problems with the HUD-1. IRS wants both the buyer and sellers to sign the HUD-1. In some states that isn’t required. On February 12, 2010 IRS loosened up that requirement and said they will allow whatever the respective state allows. That was very big of them.

Will this spur more sale of Everett real estate, I doubt  but who knows? Will this improve the outlook for homes for sale in Everett again who knows?

The form 5405 does say that both parties must sign the HUD-1 but IRS is now saying don’t worry be happy.

Nationwide, according to estimates by the National Association of Realtors, about 1.5 million repeat purchasers and 900,000 first-timers are expected to apply for credits this year.

Also don’t forget that if you are a repeat buyer you will need to prove that you lived in the home for 5 continuous years out of the last 8. They say property tax records or hazard insurance records or mortgage interest statements can help that. I say that stuff is open to abuse and doesn’t prove a thing.

I personally don’t think the credit will produce one single extra sale of any home for sale in Everett. I don’t think this credit will produce any measurable effect on Everett real estate at all.

Jim Johnson and comments are always welcome.

Everett mortgage on line.

Twitt
 Posted by JAJohnson at 3:44 pm

Jobs key to Recovering Value of Everett Real Estate

 Everett real estate, Homes for Sale Everett  No Responses »
Feb 202010
 

Again the Law of Unforeseen Consequences strikes at the heart of Government Actions

Or how to not think something through.

More wasted tax dollars and how that affects the market for homes for sale in Everett. Don’t expect the feds to help improve the outlook for homes for sale in Everett or the Everett real estate market in general. To put it politely they can’t find their behind with both hands at the same time.

Let’s take the new the weatherization plan, it’s part of the porkulis or stimulus plan, and your wasted $500,000,000 so far. (PS that’s a drop in the bucket) This is part of the Obama administrations $5,000,000,000 ( 5 BILLION DOLLARS) green jobs program that’s going to create 87,000 new jobs.

Fat chance.

It was going to make 593,000 homes more energy efficient, again fat chance.

Well the General Accounting Office has declared the program woefully behind. In fact about 98.24% behind and it may never catch up. Now how does that affect the market for homes for sale in Everett or Everett real estate in general? It’s those 87,000 green jobs that will not materialize. Or if they do these jobs will be temporary and not really help. I keep harping on this but without real private sector jobs there is no recovery. And “green” jobs that don’t last will not help either anyway.

Now I don’t know about you but if I wanted to weatherstrip my home I wouldn’t need to spend $8432 to do it. Nor would it take 5.9 guys to do it. But consider these statements directly from Joe Biden and Mr. Obama himself. The plan is not to insolate but to weatherize the homes. No new windows or new doors but simple stuff, just caulking and weather stripping only.

If I project to weatherize 593,000 at a cost of $5,000,000,000 then I am going to spend $8432 per home. If I am going to create 87,000 temporary green jobs then I will use 5.9 guys per home. This is typical of a government boondoggle that hasn’t been thought through. And sad to say some of you trust this government to do healthcare properly.

Why has it taken so long to get started you might ask? Again assuming that government can do anything right is an oxymoron. I defy you to name one thing the government does well outside of the military. And even the military has its problems if you are keeping up with current events.

It seems that a depression era law (the Davis-Bacon Act) requires that the Labor Department pays the going wage rate in every single county in America, and that’s about 3000 different counties. So after screwing around for almost a year they are finally starting to work.

If you remember a few months ago I had came out with my ideas on how to curb the bloated governments that are drowning us in red tape. If you recall I wanted term limits on every elected position and a sunset of every law and regulation for city, county, state and federal agencies. Term limits prevent absolute power from corrupting these eminently corruptible politicians. Sunsets would keep unelected bureaucrats from enacting more and more regulations that are killing our entrepreneurial spirit. Like the EPA declaring CO2 to be a greenhouse gas. The same CO2 that is necessary for life on this planet. Unelected bureaucrats are strangling our economy with a blatant power grab. Thank God Texas is fighting back, because Washington State with our political hacks would never do that.

A friend pointed out that if the government has an energy audit on your home they could come along and say your home must be upgraded or we will fine you. Given how starved for new revenue sources that isn’t as farfetched as it sounds.

As I started out I will end. There will be no recovery for Everett real estate nor will the market of homes for sale in Everett recover until we have real private sector jobs.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 9:48 am
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