December 6, 2011 By

Statewide News Is Much Different Than Porter Ranch and other San Fernando Valley Towns.

 

 

Statewide news of moderate drops in valuation do not reflect accurately what is going on locally in towns throughout San Fernando Valley.

Last month in the Valley the median price of a previously owned home was $350,000, down 9 percent from a year earlier. And it is just 3 percent above the low for this cycle of $339,900 reached in February of 2009.

And 3 percent is not much distance to cover in this market. October’s median fell by that much from September.

October’s numbers also show just how this once high-flying housing investment has tanked, too.

 

The median price, the point at which half the homes cost more and half less, topped out at $655,000 in June of 2007. By October it was 46.6 percent, or $305,000 under that level.

The condo market is faring a little better.

Last month’s condo price settled at $225,000, up 21.6 percent from the low point of $185,000 reached in May of 2009.

But it is 45.8 percent, or $190,000, under the record high $415,000 in February of 2006.

The local market is not mirroring the state activity which has San Francisco to keep to  correction statewide from being so dramatic.

the lesson to be learned if you want to know history of local towns of Porter Ranch, Granada Hills, Chatsworth, Woodland Hills etc, you need to pay attention to local news.

Filed Under: Business, City News, Foreclosure Information, Investment Real Estate, Porter Ranch, Real Estate, San Fernando Valley, Selling a home, Short Sale Information

Porter Ranch Expensive Homes get a Break.

November 28, 2011 By

 

 

More Expensive Home Areas Like Porter Ranch go a Break.

President Obama signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Porter Ranch, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change will enable home buyers to get reasonable loans at rates they can afford. Since over 90% of loans are backed by the U.S government, it is important to see higher loan limits again until the rest of the loan market recovers.

Filed Under: Business, Investment Real Estate, Mortgage, Porter Ranch, Real Estate, San Fernando Valley

Loan Modifications, The Good, Bad and the Ugly

November 8, 2011 By

By Dave Friedman, Realtor and Certified Foreclosure Specialist

With an estimated $7 trillion dollars lost in the real estate market since the “Big Recession”, many Americans want to look at loan modifications. There are limited situations where a loan modification makes sense and may turn out good for the homeowner, which may be construed as good such as when your home is slightly upside down compared to the debt and your interest rates are high. The bad loan modifications have no real principle reduction. The ugly can be a process of applying for a loan modification that drives the homeowner straight into foreclosure with time running out for a short sale.

The Good: If your home is slightly upside down, then it may make sense to obtain a loan modification with lower interest rates such as President Obama’s Home Affordability and Stability Plan. According to the new program that may roll out in the near future there needs to be at least 80% loan debt to value or higher. There have been other similar loan modification programs such as HAMP (home affordability modification program) that are at the option of the banks which has temporarily worked for about 8% of the distressed homeowners. Most of those modifications turn into short sales or foreclosures if the home owner is still struggling financially. If you are not making payments the banks are more motivated to create a loan modification. Many banks do want to see that you are now working with monthly expenses and income within a few hundred dollars of each other. Unemployed need not apply.

The Bad: Some lenders will work with reducing payments based on a lower loan principle which sounds exciting but isn’t. If a home owner has $200,000 of debt over the home value, some banks will make the payments based on a principle reduction of $200,000. When the time comes to sell your home the bank will require you to pay them back the original full principle which is the remaining principle plus the principle reduction of $200,000 out of escrow.

The Ugly: The worst case is a bank sucks the last amount of money from you under the temporary payment plan and then turns down your loan modification. A trial period is frequently required for your loan modification with the criteria listed above. The banks can then turn your permanent loan modification down forcing you into foreclosure with limited time permitted for a short sale if you can not make the loan current. The clock in many cases of when the home is to go to trust deed sale does not stop. It may get postponed by one or two months at a time. This is an abuse of the distressed homeowner when the recommendation should have been a short sale for everyone’s best interest.

Before deciding whether a loan modification is a good option, you need to see if your home is worth less than the loan. If your home is upside down by a large sum to your standards and you have endured a hardship of lower income or increased expenses, then you have two choices to cut off excess home loan debt. A foreclosure will wipe your debt clean when you return the house back to the lender which includes a large credit hit. A short sale is the best tool which will allow the debt to be wiped clean and allowing you back in the home purchasing market (in a few years) at a lower cost than a foreclosure on your credit report.

Many distressed home owners fall into the category of large debt above their home value. Some homeowners are waiting out of fear. There is a window closing by the end of 2012 which waves tax liabilities on the forgiven owner occupied debt. The short sale process is a great opportunity for families to start fresh with no house debt. Be very careful about whether a loan modification is the best solution since your family should not put themselves second to a bank. It is important to discuss your options with a certified short sale and foreclosure specialist such as myself.

Your property sale, purchase, investment or distressed loan resolution will be a comfortable and stress free experience from my over 20 years in the real estate business. You can call me with any Real Estate Questions at 818-Myhouse (694-6873). 818MyHouse.com with Keller Williams Realty – My Experience Turns Your Real Estate Dreams Into Reality.

Filed Under: Foreclosure Information, Investment Real Estate, Porter Ranch, Real Estate, Short Sale Information

Investment Real Estate

June 28, 2011 By

Investment Real Estate- Cash Flow King or Cash Drain?

 By Dave Friedman, Realtor

 

I will be writing a series about the “Real Scoop” on real estate investment choices among houses and duplexes along with the returns and risks. Wealthier neighborhood versus working class neighborhood investment cash flow and risk will be discussed. 

I have gained much experience in understanding property returns and risks over the years from personal and client investments.   

 

Investors with limited experience in real estate should start out with houses or small apartment complexes up to four units.  (Over four units require a commercial loan that is very expensive and harder to qualify)   Commercial property can have higher risks since they are more sensitive to economic downturns. Houses and apartment buildings tend to be more conservative since people need housing.  If you avoid buying during frothy market times or in an over built area, then some wonderful opportunities are available. 

 

Should you purchase in a great area like Pasadena or Porter Ranch rather than in a working class area such as North Hollywood or Van Nuys?  The following are vital to consider when deciding:

 

Investment Returns:                            Pasadena/Porter Ranch    Van Nuys

 

   Cash Flow                                       Low                                 Medium/High                                                                                                                         

    Annual average appreciation          Medium                           Medium/High

Investment Risks:                               Low                                 Medium

    Local unemployment rate               Low/medium                   Medium

     National economy                         Low/medium                   Medium

     Investment Value Change             Low/medium                   Medium/High

    (Volatility)

 

 As you can see in the above chart, nicer neighborhoods offer less volatility
or price gyrations along with lower cash flow returns and higher
capital investment requirements. There is also less wear and tear from tenants.

Working class neighborhoods such as Van Nuys offer the investor higher cash
flows relative to the investment dollar but are subject to higher valuation
volatility.  The reason for volatility in the less expensive areas is because
more investors can afford to move into those investments.

The correct option depends on your goal of appreciation only or a balanced combination of both property appreciation and cash flow. 

Feel free to call me with any  Real Estate Questions at 818-Myhouse (694-6873).  With over 20 years experience in Real Estate I assist with property sales, purchases, investing and resolving distressed loans.  818MyHouse.com with Keller Williams Realty – Experience Turns Real Estate Dreams Into Reality

Filed Under: Investment Real Estate

Can I Afford This House

June 2, 2011 By

By Dave Friedman, Realtor

Whether it is a beautiful Tuscan style home in Northridge or a wonderful Porter Ranch townhome with great canyon views,  how do you know if you can afford that house?  Loan programs have down payment requirements that vary depending on your FICO credit score, money in the bank and income level.   Home buyers should have at a minimum an idea of their maximum down payment and maximum allowed monthly housing expense before shopping for a home.  Ideally, home buyers should be preapproved by a lender so they know exactly how expensive of a home the bank will lend on.  Home sellers expect offers to be accompanied by a pre-approval letter.    The following information will give you a better understanding of lender guidelines.

The federal government has stepped in with low down payment FHA programs for most home buyers that require only 3.5% down.   The down payment minimums for the majority of loans range from 3.5% to 20%.    You want to take into consideration approximately 2%  of the purchase price for closing costs which may be put into the loan or paid at closing.  You should have a reserve of at least 3 months  of home payments in the bank for emergencies.  Once you figure out how much you feel comfortable for a down payment, closing costs and emergency fund,  then the mortgage and related payment affordability based on income can be calculated.

A fairly accurate way of figuring your maximum monthly payment affordability is to take into consideration all monthly debt reported to credit agencies such as car payments and other loan payments.  That total should not exceed 45-50% of your gross monthly income.

The last major piece in determining what loan programs you qualify for is your FICO score or credit rating.  Fico scores that still qualify for some loans can be as low as 500 but require at least 10% down.

The majority of loans require mortgage insurance if the borrower does not put down 20%.  The fee ranges from presently .5% to .9% of the loan amount annually until the loan value drops to a conforming amount relative to the property value.  The good news is the borrower with limited funds may be able to purchase a home when values are low and interest rates are around 5% fixed for 30 years and about 4.35% fixed for 15 years.

The other monthly costs besides mortgage payments and mortgage insurance for down payments under 20% are property taxes and property insurance.  Property Insurance can be figured approximately .34% or .0034 times the purchase price.    Property taxes in Los Angeles County is approximately 1.25% or .0125 times the purchase price.  The last two expenses should be broken down by month so you can see your total housing cost.

The factors of  borrowers’  FICO credit score, cash position and income are key in determining the maximum affordability.  The recession should have reminded us all that maximizing debt to the fullest is not always a great idea.   Can I afford this house should be followed up with do I feel comfortable with this amount of debt and how much can I save with a 15 year loan versus a 30 year loan.

Feel free to call me with any  Real Estate Questions at 818-Myhouse (694-6873).  With over 20 years experience in Real Estate I assist with property sales, purchases, investing and resolving distressed loans. 818MyHouse.com/Keller Williams Realty – Experience turns Real Estate Dreams Into Reality

Filed Under: Business, Investment Real Estate, Real Estate