Good morning, Memphis. It’s a beautiful Saturday. Get up and at ’em! You are on the Real Estate Mortgage Shoppe program with me Jo Garner, Mortgage Officer with Evolve Bank and Trust. Sitting around the table with you today we also have Richard Scarbrough, Investor and broker with First National Realty and Kevin Perk , investor and blogger with Kevron Properties and www.smarterlandlording.com

Our topic today? “How To Find And Keep Good Tenants.” Want to join us around the coffee table? We can talk about WHATEVER you would like to discuss regarding your real estate or your financing

Its starting to feel like the Twilight Zone but mortgage rates dropped AGAIN this week. I felt like Rod Serling was on the microphone yesterday when the rates dropped again saying, ” You are now entering…the twilight zone”

The Job Report was less than stellar -a real disappointment to the rest of the economy—but for mortgage rates and for people buying houses and refinancing them? Well the news was worth cheering.

The 30 yr fixed rate mortgages closed yesterday at 3.75% to 3.875% The 15 yr rate fell from 3.125% to 3% . The 5-1 ARM is now around 2.625% to 3.25% .
Do you see now why it seems like we have somehow stepped over into the Twilight Zone?

Just to give you a comparison of where we were in 2006 compared to, say last week. Rates are about HALF what they were at the peak of the housing bubble in mid-2006 when the median house price was about $250,000 dollars and the average interest rate was about 6.75% for a 30-year term.
A person who bought a home in 2006 with 20% down would have made payments of $1,300 a month. Today, a person who buys the same house at the current median price of home of about $162,000, would pay less than half that amount, about $600 a month. Its time to buy houses and its time to refinance some.
My very capable assistant Susan Belew and I are taking rain checks on lunch invitations (and some breakfast and suppertime invitations too). Our team is working from early in the morning to late at night making sure our customers are getting their purchase loans and refinance loans to the closing table. If you need a preapproval letter to purchase a home or you want to see what you would save by refinancing your mortgage, please call us directly off the air at (901) 482 0354. Our direct number again is (901) 482 0354.
If your mortgage rate is 5% or above, you may be very surprised to find out how much money you can save per month or by shortening the term or BOTH.
One thing creating a lot of mortgage activity is the special government HARP refinance program that does not require an appraisal. This is great for homeowners who are underwater on their loans but still making their payments on time.
Since there is no appraisal, the low current value on your home is not an issue. Fannie Mae or Freddie Mac the agencies who back most of the mortgage loans, will need to have been backing your loan since prior to May 31, 2009. Call Susan and me directly off the air and we will be happy to give you a free evaluation on what options could be a money-saver for you (901) 482 0354. or go to my blog: www.mortgageloansblog.com
There are some other options for getting your home refinanced without an appraisal . I am happy to share them with you.
We have Richard Scarbrough and Kevin Perk here to get us started. I know the sweet spot in managing real estate is finding a great tenant who will pay you on time and take care of your property. How do we find good tenants and, once we have them, how do we KEEP them?
Question 1 for Richard and Kevin: Once you know what type tenants want to rent where your rental property is located, you need to have a marketing plan geared to that tenant base and how they want to communicate. It may be the internet, it may be ads in the newspaper, or a weekly paper, yard signs, handing out flyers, text messaging. What are some of the things you do Richard or Kevin?

To get them to find you, one needs to have a marketing plan geared to their tenant base and how they want to communicate. It may be the internet, it may be ads in the newspaper, or a weekly paper, yard signs, handing out flyers, text messaging. What are some of the things you do Richard or Kevin?

Question 2 for Richard and Kevin: What type questions do you ask a prospective tenant to help determine if they will be right for you and your property?

Question 3: You have a saying to not step over dollars to pick up dimes. What are some things you do to insure a good tenant stays in your property?

Question 1: for Jo Garner: So many people do not realize that this new government HARP no-appraisal refinance program will also work for investment properties. What are some of the guidelines for using the HARP no-appraisal refinance program to help underwater rental property owners?

Question 2 for Jo Garner : In some cases a tenant may want to buy the rental property where they live. If I wanted to sell my investment property to the tenant, how could you best help them?
Most tenants are first-time homeowners, so we may look first at how to qualify them for the loan.

Most of the first-time homebuyer loans depend heavily on the owner-seller to pay for the buyer’s closing cost and prepaid taxes and insurance up to 6% of the price or less depending on which loan program.

Tell story of Mr. H. who was looking qualified for the THDA Great Start program for first time homeowners . He did not have very much money so he really needed the down payment assistance program. But later in the process we discovered that our borrower was married to his wife who owned a home in another state.

Even though she did not live with our borrower and our borrower had never owned a home, he was disqualified from the Tennessee down payment assistance program because if you are married and your spouse has owned property within the last 3 yrs where he or she has resided, then you do not get first time homeowner status either . It was looking fairly bleak.
Here’s what we did to get our customer approved for the loan. We called up Mr. Israel Henry who heads the Shelby County Down Payment Assistance program. He allowed our borrower Mr. H to provide a copy of just the divorce petition and a copy of both spouses’ tax returns to prove the wife was living apart from our borrower. Mr. Henry of Shelby County Down Payment Assistance, in that case, did not consider the wife not being a first-time homeowner and approved our borrower for down payment assistance.

So our borrower still was approved for a good loan and what he needed for down payment assistance. The sellers paid the closing costs and prepaid taxes and insurance up to 6% of the price. Shelby County Down Payment Assisance paid Mr Hi’s 3.5% down payment except his minimum investment of $500/

This is just one situation that we see when people move from being a renter to a homeowner.

By the way, if you are a seller and you do not have enough value in the house you are selling to pay the buyer’s closing costs and prepaid taxes and insurance, consider using both down payment programs if the borrower qualifies. Have Tennessee Housing Development Agency pay the down payment for the borrower, and let Shelby County Down Payment Assistance pay for the closing costs and prepaid taxes and insurance up to $3,500. That would be a win /win because you as the seller don’t have to pay for the closing costs and prepaid taxes and your buyer gets in for about $500 or less.

Question 3 for Jo Garner: What kind of financing can you give someone just getting in to buying real estate.
Usually it is a conventional loan with at least 20% down payment or more and a mortgage rate that is 25 basis points or higher than a rate that is for a primary residence. Some days the real estate investor loans are more attractive than others. This week we had just closed the HARP refinance loan for a Mr. P’ primary residence. Today he called back to lock a rate for a different property–an investment rental property of his. Today the rates were a little LOWER for the investment rental house as compared to the rate for his primary residence. Doesn’t happen much but it does happen.

Real Estate Tip of the Week:
When purchasing a home that needs a few repairs, make sure you or the seller have plans for fixing the more important items before closing. If the buyer is paying for the repairs, he needs to verify where he is getting the money to do this. Sometimes you can deposit into escrow 1.5 times the amount the appraiser or contractor says you will need to complete the repairs. Once the repairs are done and inspections cleared, you can recoup your left over balance.

More info covered on the podcast:
Tenants are the life blood of investment real estate. They are your customers. They pay the bill and hopefully provide you a little more so you can eat, fill up the car with gas etc. You want to keep the good ones because tenant turnover is one of an investor’s largest expenses. What happens when a tenant moves out? What are the expenses?

What is a good tenant? It is someone who will pay you on time. It is also someone who will protect and take care of your property. They are out there. The trick is to get them to find you select your rentals.

Decide who you want in a tenant. You can’t discriminate against race, color, creed, religion, sex or familial status but everything else is ok. Do you want smokers? If no 1/3 are out. Want pets? If no 2/3 are out. Richard tell story of daughter and Lawyers.

First thing to know is who is going to be your likely tenant base. Will it be working class folks, high income, low income, young hipsters or families with children? These groups generally live in different locations/neighborhoods. So you need to know your neighborhood. And you need to know, as Chris McClatchey said at MIG last month, how your prospective tenants want to communicate. (If you were not at MIG last month you missed a great program)

To get them to find you, one needs to have a marketing plan geared to their tenant base and how they want to communicate. It may be the internet, it may be ads in the newspaper, or a weekly paper, yard signs, handing out flyers, text messaging. What are some of the things you do Richard or Kevin? Jo you have rentals, what works for you? Have you found that different methods work for your mortgage business? It is the same for real estate. If you use signs, use professional signs so you look professional.

Keep your place nice and clean to attract good tenants. People look at lots of places and they will only remember two, the cleanest and the dirtiest. If you use signs, have curb appeal. The ones that will call you on a junky house you do not want.

When the call comes in, begin the screening, sort of pre-qualify. Jo you know about that right? Ask questions. Why are you moving? When do you need to move? Can you meet me after work? (Discuss these questions and why we ask them.)

Trust but verify. Check credit, criminal, work and rental history. Call and verify. This will stop the “I have to move today!” Tell story of scammers. You can’t go by appearances alone!

How to keep them? Fix stuff fast. Be attentive to their needs. Make them feel secure in your property. Keep your properties clean and looking nice. Be firm but fair.
You want the tenant to stay for years, cuts down on your costs. Don’t step over dollars to pick up dimes.

Memphis Investor Group www.memphisinvestorgroup.com is coming up June 14th. 2012. This month we feature a panel of local investors discussing a fun topic, Hiring and Managing Contractors. These panels are some of our most enlightening and educational programs. Main meeting starts at 6 PM at the Memphis Hilton at Poplar and I-240. We will also be talking about insurance issues and getting started right. Come out at 6 PM this Thursday. For more info go to memphisinvestorsgroup.com

For solutions to your real estate financing, call me, Jo Garner, Mortgage Officer with Evolve Bank & Trust BBB A+ rating (901) 482 0354 www.MoneyShoppe.NET . I want to help you get the best terms on a mortgage refinance or purchase loan. Wherever you are in the country, I can help.