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

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

Seattle Lagging Economy and Everett Real Estate

 Everett real estate, Homes for Sale Everett, Real Estate Everett, Seattle Mortgage Companies  No Responses »
Jan 182010
 

Will Everett Real Estate Experience the Same Lagging Economic Effect?

In Snohomish county and real estate in Everett only one home in 53 has received a notice of default. Seattle is doing much better at 1 in 80. The national average is 1 in 45. The usual rate for real estate in Everett is 1 to 1.5 in every 100 homes.

Everyone who pays any attention knows that the Seattle Metropolitan Area has a lagging economy. Our economy lags by 4-8 months versus the rest of the nation. What does that portend for the next year or so?

God I hate to have nothing but bad news to talk about

Foreclosures or “Notice of Defaults” have increased, as Seattle mortgage companies well know, by about 60% in 2009 over 2008. But the Seattle and Everett real estate markets still haven’t seen the worst of it yet. So while we haven’t completely caught up we seem to be working at it. My guess is that the value of homes for sale in Everett will face downward pressure for the next 12 to 18 months.

Because foreclosed homes are almost always sold at a discount, sometimes a huge discount, they will continue to exert a downward pressure on prices. I have addressed how we could mitigate that pressure by changing the way appraisals are done, see my blog post, that isn’t going to help until enacted.

The foreclosure pressure is not letting up soon. We can expect from 3,000,000 to 3,500,000 homes enter foreclosure in 2010. Do you want to ask my why? I can say in with 3 words, JOBS, JOBS, and more JOBS”. And it not just the loss of jobs but the loss of high paying jobs. When you go from $75,000 per year to $55,000 it hurts your ability to pay mortgage loans. What tells us that is the fastest growing sector of foreclosures is the 30 year fixed rate mortgage. The very one that used to be the bed rock of real estate in Everett and the rest of the nation.

I may be getting strident here. But I want you to know if you don’t do something about this our nation may be damaged for an entire generation.

Now so you realize that I am not calling the sky is falling. Here is a bit of good news 3 States have foreclosure rates of more than 10% and they are Nevada, Arizona and Florida. In Washington, Clark and Pierce were the only counties in which more than 2 percent of homes were sent a notice of default last year.

We desperately need quality leadership at the state and federal level. I believe that we need leaders who have experience in business. I want to see Everett real estate recover its value.

Jim Johnson and comments are always welcome.

Twitt
 Posted by JAJohnson at 8:38 am

Value of Real Estate in Everett Affected by Govt Program

 Real Estate Everett, VA mortgages  5 Responses »
Jan 162010
 

1 In 4 Out of work affects value of Everett Houses

How do Everett houses keep there value when 1 in 4 out of work? The value of real estate in Everett is hurt when 22% are unemployed. I have been shouting this for months.. Mr. Obama we need JOBS.

Today the White House breathlessly announced that a $2,300,000,000 “Green Jobs” program that will create approximately 17,000 subsidized TEMPORARY JOBS.

Well let’s see $2,300,000,000 divided by 17,000 equals $135,295.19 per TEMPOARY JOB.

Heck of a deal Mr. Obama.

These TEMPORARY JOBS he has created will be in wind and solar industries. These industries have to have a 30% subsidy to get even close to being economically viable. NONE of the technology is invented yet. Without a staggering improvement in technology they can’t compete in the market place. This is unsustainable.

The stupidity of the Obama administration is appalling. If he really wanted to create jobs he could start with simply drilling for the oil we will need for any recovery that might take hold, even in this political environment. In just a year or two when (if) a recovery starts, unless we drill now we will see $6 and $7 a gallon gasoline. Then when that happens any recovery is dead before it even starts.

How are we going to pay our mortgages in Everett? How will we keep the value of real estate in Everett from falling thru the floor? If 22% or about 1 in 4 is out of work how does that affect the value of houses in Everett?

Now you have idiots like the Governor of Wisconsin, a state I used to live in. Wisconsin Gov. Doyle says a clean energy bill will mean thousands of green jobs and result in energy savings for consumers and business. This guy takes you for a complete fool. He says that this Clean Energy Bill will create 15,000 green jobs by 2025. What we do until then is a mystery to me.

The value of real estate in Everett will remain stagnate for the foreseeable future. Everett homes will not appreciate in value without more jobs, it’s that simple.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 5:59 pm

Liars Poker for Real Estate in Everett

 Real Estate Everett  1 Response »
Jan 102010
 

Or

How to spend $159,574.47 per Loan Modification

And still fail to save homes from foreclosure

Catchy title that isn’t it? What do I mean by liars poker for real estate in Everett? Have you ever played liars poker? It’s just like liars dice in the movie Pirates of the Caribbean. It is a game of lying and bluffing.

Well the federally funded Home Affordable Modification Program isn’t working like it’s supposed to (what a surprise) and the government is letting homeowners who lie about their incomes off the hook. Just like during the housing boom lying is rewarded. Until recently if you grossly understated your income to get a mortgage modification you were disqualified and had to start the lengthy process over. Now the Obama administration allows you to understate your income by up to 25% to get a loan mod. That is not a rounding error that is lying plain and simple. So the same people who lied to get their mortgage now get to lie to get a loan mod.

And who do you think is paying for that loan mod? You are, you and I and every one who pays taxes. Now how does that impact real estate in Everett, you ask? Well is this the kind of person you want your tax dollars to help? Fraud and deceit will distort values of all homes for sale Everett. They drive up costs and eventually end up back on the market on a short sale that will drive your homes value downward. It is far better to just get it over with. If they lied to get the home why reward them when they lie to get you to subsidize it so they get to keep it?

But we get back to the real problem, JOBS. I have been shouting this for months now – without jobs these problems will only get worse.

Let’s go back to loan modifications and why they will not work. Loan mods are patently unfair. Why does my neighbor get to cut a better deal and then I have to pay for?

The federal government has printed another $75,000,000,000 to pay for loan modifications. So far 4.7% of the approximately 10,000,000 mortgages eligible for a loan mod actually have a permanent new loan. Let’s do the math.

4.7% of 10,000,000 equals 470,000 new loans. If that cost $75,000,000,000 then we have spent $159,574.47 for each loan. That is a typical result from Washington DC. Why aren’t you outraged?

Hey how that is hope and change working out for you now?

I have a suggestion for you. Vote them out next election, I mean every single tax and spend incumbent. If the politician voted for spending vote them out. Vote them out. If you want real estate in Everett or anywhere else to recover its value get rid of these fools in Washington.

Jim Johnson and comments are always welcome

Twitt
 Posted by JAJohnson at 11:28 am

Everett Real Estate Takes Another Hit

 Everett real estate, Real Estate Everett  7 Responses »
Jan 092010
 

$255,882.35 per job for the first year alone

You say you want to buy Everett real estate, you say you want to sell Everett real estate? Well you can’t do it without jobs. The Senate is going to take up another huge jobs creation bill later this month. This one is titled “Jobs for Main Street Act” and it costs $174,000,000,000. This is on top of the $787,000,000,000 economic recovery plan of nearly a year ago that was ineffective at producing jobs. That means we have or are going to spend $961,000,000,000. Just to have a 10.1% unemployment rate (or 17%+ depending on how you count it). That means we could have taken 25,000,000 unemployed people and just given then $38,440 each. They could have spent that money right back into our economy and that would have stimulated the economy right out of the recesssion.

Here’s what the Democrats claim this will do: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers. What they don’t tell you is this. None of these make work jobs will have funding past the first year. After the first year the individual states will have to pay for these jobs. That means your state taxes will skyrocket. They claim they will create 680,000 jobs. Well lets see $174,000,000,000 divided by 680,000 equals $255,882.35 PER JOB.

Everett real estate will not have a market because there will not be many buyers. “Why don’t we just put everyone in the United States on the federal government payroll and call it a day?” counters Rep. Jerry Lewis, R-Calif.

Here is more of the shell game Washington would like to foist over on you. A job-creating tax credit for small businesses has support among some Democrats in the Senate, even though critics fear it may be too complex to work. What they again don’t tell you is this. First they tax all business, then they give a tax credit back to some businesses. But the credit is complex and of VERY limited use. You see here is the bureaucrats solution. We tax you then we give you back a portion your own money so you can hire someone. The credit is a one time thing but the tax if forever. Then over time we keep the tax and spend your money just where it helps the brueaucrats most – for reelection.

So the market for Everett real estate and real estate in general who knows what will happen.

Twitt
 Posted by JAJohnson at 8:37 am
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