Real Estate Buzz Worthy

Cash Flow in San Diego?…Yes!

Andrew M. Arroyo — Wed, 16 Nov 2011 00:38:44 +0000

What’s Right with the Real Estate Market? | Part 3

2-4 Unit Investment Properties

One of the bright spots in the dark days of this real estate market correction is multi-unit properties. They have not escaped the price declines over the past few years but unlike single family homes or condominiums they produce more income that can be applied to the mortgage payment. Purchasing as an investment or an alternative to a first home, multi-unit properties are offering buyers an opportunity not seen in San Diego for many, many years.

I wanted to let you actually SEE the numbers so below is a table with payments for various purchase prices based on 25% down, the amount required for an investment purchase. The payments below include principal, interest, and taxes (Insurance not included). Following that is another table with some example properties listed FOR SALE at the time of this post.

Purchase Price	Down Payment	Payment @ 5%	Payment @ 6%	Payment @ 7%
$300,000	25% – $75,000	1550	1650	1850
$400,000	25% – $100,000	2100	2300	2500
$500,000	25% – $125,000	2600	2800	3100
$600,000	25% – $150,000	3100	3400	3700
$700,000	25% – $175,000	3500	3800	4200

Example Properties – Active Listings at the time of this post.

Location	List Price	# of Units	Unit 1 Rent	Unit2 Rent	Unit 3 Rent	Income
CollegeArea	$261,600	2	$1,000.00	$900.00		$1,900.00
Chula Vista	$432,000	2	$1,650.00	$1,650.00		$3,300.00
Hillcrest	$629,000	2	$2,700.00	$1,200.00		$3,900.00
PacificBeach	$525,000	4	$1050.00	$800.00	$800.00×2	$3,450.00

You can see based on the income produced from the properties above that they will cover your mortgage payments and in some cases offer some cash flow. If you are thinking about purchasing an investment property don’t forget to look at 2-4 unit properties, there are over 225 properties for sale under 1 million and 124 of those are under $600,000. Now is a great time for qualified buyers to take advantage of low interest rates and prices.

-Part 3 of a 5 part series -

What’s Right with the Real Estate Market | Part 2

Andrew M. Arroyo — Wed, 16 Nov 2011 00:36:10 +0000

Part 2 | Cheap Money – Interest Rates & Loans

Interest rates come in a close 2^nd after pricing in our quest to find “What’s right with the real estate market”. When you apply for a loan the amount you pay to borrow the money from a bank, the interest rate, has NEVER BEEN LOWER than it is currently. As you can see from the chart below, interest rates have been falling for the past 2 decades.

We are at levels that we’ve never seen before and we don’t know how long they will stay this low. There are many variables in the economy that determine the cost to borrow money and rates can move rapidly in either direction. We should recognize that being able to lock in a loan at these low levels is a positive. We should also recognize that the combination of lower prices and ultra-low interest rates is offering an opportunity not seen in San Diego for many years.

A small increase in the interest rates can increase your payments by a couple hundred dollars a month and prevent you from having a mortgage payment that “won’t keep you up at night”. So, when you’re making a list of Pros & Cons you now have at least 2 for the Pro side – Prices & Rates.

-Part 2 of a 5 part series-

Multifamily Apartments San Diego

Andrew M. Arroyo — Wed, 16 Nov 2011 00:24:08 +0000

2-4 Unit Properties with Great Income

7% + Cash on Cash Return

I hope you were able to stay dry and warm over our rainy weekend. Since I was stuck inside I took some office time and did a little digging through the 2-4 unit property listings. The goal of the search was to find properties that offer a better than average rental income versus the asking price. There were a dozen properties that made the cut so I wanted to share them with you. - Jason Riehl

The numbers below show potential gross returns before any expenses and property taxes. This list gives an investor somewhere to start their research.

Chula Vista 91910
Property Asking Price: $469,000
Number of Units: 4
Stated income: $3,800 mo/$45,600 yr
Potential Annual Return%: 8%

La Mesa 91942
Property Asking Price: $499,000
Number of Units: 4
Stated income: $4,025 mo/$48,300 yr
Potential Annual Return%: 8%

South Park 92102
Property Asking Price: $639,000
Number of Units: 4
Stated income: $5,175 mo/$62,100 yr
Potential Annual Return%: 8-10%

North Park 92104
Property Asking Price: $349,000
Number of Units:2
Stated income: $2,550 mo/$30,600 yr
Potential Annual Return%: 7-9%

North Park 92104
Property Asking Price: $460,000
Number of Units:2
Stated income: $3,300 / $39,600 yr
Potential Annual Return%: 7-9%

Hillcrest 92104
Property Asking Price: $689,999
Number of Units: 4
Stated income: $4725 mo/$56,700 yr
Potential Annual Return: 7-9%

San Diego 92105
Property Asking Price: $265,000
Number of Units: 2
Stated income: $2,100 mo/$25,200 yr
Potential Annual Return%: 8-10%

San Diego 92105
Property Asking Price: $269,000
Number of Units:2
Stated income: $2,200 mo/$26,400 yr
Potential Annual Return%: 8-10%

San Diego 92105
Property Asking Price: $390,000
Number of Units: 3
Stated income: $3,130 mo/$37,560 yr
Potential Annual Return%: 8-10%

Old Town 91110
Property Asking Price: $385,000
Number of Units: 2
Stated income: $2,345 mo/$28,140 yr
Potential Annual Return%: 7%

Logan Heights 92113
Property Asking Price: $339,000
Number of Units:3
Stated income: $3,100 mo / $37,200 yr
Potential Annual Return%: 9-11%

Downtown 92113
Property Asking Price: $665,000
Number of Units: 4
Stated income: $5,300 mo/$63,600 yr
Potential Annual Return%: 8-10%

La Jolla Farms Dream Home | San Diego Architecture

Andrew M. Arroyo — Wed, 16 Nov 2011 00:15:13 +0000

Short video from DomusStudio architecture about their remodel of a beautiful 26,000 sq ft ocean front La Jolla residence.

What to do if you’re Facing a Short Sale

Andrew M. Arroyo — Sat, 15 Oct 2011 23:26:24 +0000

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

Consider loan modification first

If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as: Refinancing your loan at a lower interest rate; providing a different payment plan to help you get caught up; or providing a forbearance period if your situation is temporary. When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if:

Your property is worth less than the total mortgage you owe on it.
You have a financial hardship, such as a job loss or major medical bills.
You have contacted your lender and it is willing to entertain a short sale.

Hire a qualified Realtor®

The first step to a short sale is to hire a qualified real estate professional. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. A qualified real estate professional can:

Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
Help you set an appropriate listing price for your home, market the home, and get it sold.
Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
Ease the process of working with your lender or lenders.
Negotiate the contract with the buyers.
Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

Begin gathering documentation before any offers come in

Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include:

A hardship letter detailing your financial situation and why you need the short sale
A copy of the purchase contract and listing agreement
Proof of your income and assets
Copies of your federal income tax returns for the past two years

Prepare for a waiting period

Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:

If you have only one mortgage, the review can take about two months.
With a first and second mortgage with the same lender, the review can take about three months.
With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

Don’t expect a short sale to solve your financial problems

Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

World’s Tallest Skyscrapers

Andrew M. Arroyo — Mon, 10 Oct 2011 23:30:06 +0000

What’s Right with the Real Estate Market?

Andrew M. Arroyo — Fri, 16 Sep 2011 18:45:42 +0000

Is Opportunity Knocking?

It seems all we hear about is how bad the real estate market is…short sale, foreclosure, prices down, sue your bank, I’ll never buy a house again, etc…ugh! It’s true there are plenty of “negative” things going on in the real estate market but we can’t let the “news” blind us from the opportunity that is being presented. SanDiegoCribs.com will have a 5 part series on what’s “right” about the current real estate market and ways both buyers and sellers can take advantage of it.

Part 1 | Housing Prices, Oh how they’ve fallen…

Part 2 | Cheap Money; Interest Rates & Loans

Part 3 | Investment Properties

Part 4 | How current laws help ease the pain of a short sale.

Part 5 | Sellers, is now the time to make your move UP?

In times like these we need to be open-minded and not get caught up in the negative news. You may miss that knock on the door from Mr. Opportunity if you’re not listening so stay tuned!

FHA Loan Limits | Set to Expire

Andrew M. Arroyo — Fri, 09 Sep 2011 20:57:57 +0000

San Diego, Ca | FHA loan limits are set to expire on September 30, 2011

The FHA & GSE loan limits were increased in 2008 as the real estate meltdown began to blossom. The majority of private mortgage companies were in trouble and loans for higher priced properties literally disappeared. In order to fill the void for loans in higher priced market’s the FHA (Federal Housing Association) & GSE (Government-sponsored Enterprise) increased their loan limits.

Loan limits in San Diego county are currently set at 125% of the local area median home price with a cap of $729,750. As of October 1, the new loan limits will drop to 115% of the local area median home price with a cap of $625,000.

Currently, FHA loans make up close to 25% of the loans used to purchase homes in San Diego.
Source: DQNews.com

Unless we see the private mortgage market step up to fill the void, the lower FHA limits could have an effect on the number of higher priced homes purchased in San Diego. The FHA only requires a minimum of 3.5% down payment and it doesn’t seems likely that many private companies will offer the same low down payment (many use 10-20% as the minimum down payment).

San Diego Real Estate Sales | August 2011

Andrew M. Arroyo — Fri, 09 Sep 2011 20:53:18 +0000

San Diego, CA | County Wide Sales Stats for August |

We are through the last month of summer so let’s take a look at the sales in August 2011 compared to August of 2010. The data below covers all of San Diego County’s sales in the month of August for single family homes (detached properties) and condominiums.

Single Family Homes

Date	# of homes sold	Avg. Sale Price	Avg. Price per Sqft	Days on Market
August – 2011	1815	$484,137.00	$237.47	73
August – 2010	1829	$497,068.00	$245.06	66

Condominiums & Town Homes

Date	# of homes sold	Avg. Sale Price	Avg. Price per Sqft	Days on Market
August – 2011	934	$279,918.00	$234.49	82
August – 2010	965	$261.924.00	$229.94	73

Overall, the pace of sales has remained steady compared to the same time last year but the average time on market has increased in both single family homes and condos. We can attribute some of the extended time to the increase in short sales in the San Diego real estate market.

Sales information is taken from Sandicor MLS, it is deemed reliable but not guaranteed.

Short Sales | New Law Increases Seller Protection

Andrew M. Arroyo — Wed, 31 Aug 2011 20:53:34 +0000

SB 458 Law | Increases Seller Protection |

A new law, the SB 458, was passed and signed by Jerry Brown in July, 2011. This law extends the protection of a previous law passed in 2010, the SB 931.

The SB 931 law allows homeowner’s the comfort to Short Sale their property for less than what is owed to the 1^st lien holder and be sure that the mortgage company, by law, could not pursue them to try and recoup the difference between what they owed and what the home sold for. However, this did not apply to the 2^nd lien holders.

Now with the passing of the SB 458 law homeowners have protection from all lien holders (1^st, 2^nd, Jr., & HELOC’s) when they complete a short sale. This applies to 1-4 unit dwellings. This is a win for homeowners who are thinking about short selling their property. Now sellers know that once the deal is done all lien holders will consider the outstanding balance as ‘paid in full’ and the homeowner will not be responsible for anymore payments on the property.