Tips For Buying An Investment Property

Thinking of becoming a Landlord?  With current real estate prices and interest rates so low, many are saying, "Yes" to that question.

But what should one consider before jumping into such a commitment?  Below are a few thoughts:

Location, location, location.
Does the area where you are looking to purchase in have a high number of steady jobs?  Or is it near a University where you could get a steady stream of student renters?  Does the amount of rent you need coming in fit with the area, or would you need to charge too high of a rent for the area in order to cover your expenses?  Answering these questions BEFORE you purchase can save you a lot of months of no income on your new rental property while trying to figure out where to get a renter or how much rent you can charge to fit the area.


Who will take your maintenance calls in the middle of the night?
If you don't want tenants to be calling you personally with every question, concern, or maintenance need, you may want to consider hiring a Property Management company.  Remember to add the cost of such into your expenses, however, when thinking about how much rent you will need to charge to cover your expenses.


Do you know how to legally screen tenants and how much deposit money you can legally charge?
Again, the hiring of a professional Property Management company could help you in your beginning years as you learn the legalities of being a Landlord or if you don't want the hassle of screening, or of sometimes evicting, tenants.

Being a Landlord can be financially rewarding, however, knowing the Laws and Rights of both Landlord and Tenant before you purchase is not just wise, but will keep you out of a lot of trouble.  And thinking about all the expenses that come with owning an income producing property before you purchase, will help you avoid surprises in your budgets.

For a current list of possible income producing properties in Santa Clarita, read HERE or contact me directly for your own tailored list which can be automated and updated daily and delivered right to your own email box:
LeeAnn Bell 661-309-2364

LeeAnnRealtor@yahoo.com
DRE License #01260650

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(c) 2011 LeeAnn Bell, REALTOR(R)

FHA Mortgage Information for Condominiums

Have you as a Buyer, been looking at condominiums to purchase only to hear your REALTOR(R) state, "That Condo Complex is not FHA Approved*?". 

Or have you as a Seller, been told by your REALTOR(R) that, "You are not getting a Buyer for your unit because your complex is not FHA Approved*" ?

I have made these statements to every single condo client in 2011, and to some in 2010, when Buyers did not have 20% of the Purchase Price as a Down Payment to make, and so I have seen firsthand the frustration this is causing both Buyers and Sellers.   And my clients are not the only ones frustrated, as evidenced in the below LA Times Article:

New FHA certification rules hamper condo sales, refinancings

The rule revisions, aimed at averting losses from delinquencies and foreclosures, have led to thousands of common-interest developments becoming ineligible for FHA mortgages.

October 23, 2011|By Kenneth R. Harney

Reporting from Washington — Is a little-publicized switch in federal mortgage policy causing huge problems for condominium sellers, buyers and homeowner association boards across the country — even depressing prices and blocking refinancings?

Individual owners and realty agents are emphatic that the answer is yes. They say a series of rule revisions by the Federal Housing Administration has caused thousands of common-interest developments to become ineligible for FHA mortgages. This has abruptly shut off loan money for would-be buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments — sometimes 20% or higher versus the FHA's 3.5% minimum — that they often cannot afford.

For its part, FHA says the rule changes it has adopted, which focus on budgets, insurance and financial reserves, have been prudent and are designed to avert losses from delinquencies and foreclosures. But the agency confirms that thousands of developments have failed to obtain or apply for required recertifications under the new rules. Out of approximately 25,000 common-interest developments nationwide with expiration dates for FHA eligibility between last December and Sept. 30 of this year, only 2,100 — just 8.4% — have been approved or recertified by the agency, according to Lemar Wooley, an agency spokesman.

"This has been a nightmare," said Ryan O'Quinn, a homeowner in a town house community in Calabasas. O'Quinn, a member of the board of directors of his homeowner association, has been trying to sell his condo since May. He has had multiple offers and been in escrow four times — twice with the same purchaser — but because the community's eligibility has lapsed, buyers who need FHA financing have been rejected by lenders.

...Critics say that FHA did not consult adequately with the condo industry before changing its rules — a charge FHA denies — and contend that the agency did not think through some of its policies. Andrew Fortin, government affairs director of the Community Associations Institute, said the rule that is hampering Robinson's refinancing — that no more than 15% of the units in a development be 30 days or more delinquent on their association dues — is often impossible for volunteer boards of directors in large projects to keep track of, much less to certify to FHA.

Even worse, according to other critics, the new rules put board members into legal jeopardy by requiring them to sign certifications attesting that the governing documents comply with all local statutes and that they have no knowledge of situations that could cause any owner to become delinquent at some later date. The mandatory certification carries a maximum penalty of $1 million in fines and 30 years' imprisonment if found to be incorrect. Large numbers of association boards have balked at this requirement, critics say, leading to the drastic drop in certification requests and eligibility.

Bottom line for owners, sellers and buyers: If an FHA loan figures in your plans, first check with the association board. If the development isn't certified, you are cut off — at least for now — from some of the most favorable mortgage terms in the marketplace. 

(Full/Originiall Article can be read HERE)

If you are looking to purchase or sell a property in an HOA Community in Santa Clarita, contact me to see if the complex is FHA compliant at:

LeeAnn Bell 661-309-2364 or
LeeAnnRealtor@yahoo.com

And remember to ask me about some of the risks associated with purchasing a unit in a complex that in not FHA Compliant (some are reported HERE).

 * To be FHA Approved a Complex must comply with the following:

- No more than 10 percent of the units may be owned by one investor; 

- No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payments;

- At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units;
- Mortgagees must review the homeowners’ association budget (the actual budget for established projects or the projected budget for new projects) for all projects. This review must determine that the budget is adequate and:
• Includes allocations/line items to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project;
• Provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget; and
• Provides adequate funding for insurance coverage and deductibles (see Section VI, Insurance Requirements). 

These requirements AND MORE found at  www.hud.gov under question
"2) How can I get a Condominium approved?" 

Information provided as a courtesy by:

LeeAnn Bell, REALTOR(R)

DRE License #01260650
Verification of all information should be obtained by appropriate professionals.  

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Here is what a recent client had to say about working with me: 

Given the difficulties this sale presented (the foundation was cracked) you offered every option, answered all questions, and explained all paperwork immediately.  I would not hesitate to refer you to my family and friends.

- Gary R.

LeeAnn Bell, REALTOR(R) since 1998

661-309-2364

LeeAnnRealtor@yahoo.com
Kellar-Davis, Inc.
A Professional Real Estate Corporation
16670 Soledad Cyn Rd., Santa Clarita, CA  91387

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(c) 2010 LeeAnn Bell, All Rights Reserved
DRE License #01260650
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