MAKE THE JUMP INTO REAL ESTATE 2016
If you are interested in real estate then you and I have something in common. Knowledge is power and power is money and the more people you know who have the knowledge, the more profit is available to you.
In today’s podcast, we shared with you some strategies on how a few successful real estate investors started from scratch and built real estate portfolios that set them free financially because they did some things not everyone would do so they could enjoy things others could only dream of doing.
We covered some important steps to take BEFORE you take the leap into investing in real estate so that you can land a profit …so you don’t jump from the plane and forget your parachute.
Tom King shared some of his wisdom on properties and how you can calculate an estimated value inexpensively BEFORE you physically do an inspection on the home.
If you do not find the answers you are seeking from this blog post or podcast, please let me know your questions and contact info and I will try and help you find answers and solutions. Jo Garner (901) 482-0354 jo@192.232.195.219
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Good morning Memphis and hello to all of you joining us across the 50 great states in the nation. You’re on Real Estate Mortgage Shoppe. I’m your host and mortgage expert, Jo Garner. You can connect with me at www.JoGarner.com. If you’re on twitter, you can give us YOUR input at #JoGarner or just shoot us an email at jo@192.232.195.219 While we are live January 9th 2016 you can join us live by calling 901 535-9732 and outside the Memphis area call 800 474-9732. Today, you’re in for a little adventure because Tom King and I are suited up with our parachutes and ready for some skydiving into 2016. Our general topic is “Making The Jump Into Real Estate 2016…Buy Real Estate & Wait…Don’t Wait To Buy Real Estate.”
During the show today we are going to share with you some strategies on how some successful real estate investors started from scratch and built real estate portfolios that have set them free financially because they did some things not everyone would do so they could enjoy things others could only dream of doing.
We are going to go over some important steps to take BEFORE you take the leap into investing in real estate so that you can land a profit …so you don’t jump from the plane and forget your parachute and some tips on restructuring financing ATER you have made the jump.
Tom King will be sharing some of his wisdom on properties and estimating their value. Tom King, it is always fun having you in the studio. Tom is a VERY experienced appraiser and has just received his 40-year realtor emeritus award. He has been an appraiser for over 40 years. He is also a VERY experienced skydiver and has made hundreds of jumps and some base jumps too. (Jo asked Tom, “What do you say to people who ask you why you would jump from a perfectly good plane?” (Tom to answer however he wants –for example Because the door was open) <Tom introduces himself and talks about the types of clients he serves as an appraiser and makes some skydiving comments>
(Jo) The mortgage rates did a little skydiving this week—more like downward diving to a 2-month low. Normally, when we have a strong jobs report the prices on mortgages go up but not this week. Investors are jumping out of the stock market and diving into buying bonds for fear of the fallout that might occur from the significant losses in global stock prices and the free fall in oil prices. Investors were buying bonds and since mortgage rates are tied to the yield on the 10- year bond, as the bond yields dropped this week, so did the mortgage rates. 30YR FIXED – 4.00%; FHA/VA – 3.75%; 15 YEAR FIXED – 3.25%; 5 YEAR ARMS – 2.75 – 3.25% depending on the lender
<Tom makes some comments about the rates>
(Jo) Tom, I love to hear some of your skydiving stories—you’re such a swashbuckling adventurous adrenaline seeker. I’ve actually gotten interested in skydiving since meeting you. You must be one of those people who gets it on the first try because I read somewhere that “if at first you don’t succeed….skydiving is probably NOT for you.”
<Tom comments on some specific types of appraisals he does>
(Jo) No one is perfect and we all make mistakes so when you make the jump to invest in real estate…for your primary residence, a vacation home or rental property, make sure you have experienced experts on your team to help you avoid some costly pitfalls.
Every good skydiver knows that to soar safely and enjoy the ride, you need to spend some time preparing for your jump and make sure the pilot and the people packing your chute are experienced with a reputation for getting it right the first time. The same principals are true in the real estate marketplace. As a loan officer, my advice to my clients is to know what your comfort level is going to be on a house payment and on the amount of money you’re going to put down. People tend to crinkle up their nose when I mention budget, but it doesn’t have to be that hard. Call me off the air, email me or come by and see me and I can show you a really cool way to determine what you really make and how you really spend it. Then, we know where to make adjustments. These automated underwriting software systems can sometimes approve borrowers up to 45% or even 65% on the income-to-debt scale. But if you can keep the note on your primary residence under 28% of your gross income and your total debt including the house note UNDER 40%–even in the 35% range, you are going to be more comfortable paying the note.
On rental property, knowing how much to pay for the house and how low to keep the note is directly tied to the reasonable amount of rent you can collect each month on that property and how much you need to reserve for repairs like in the case of an older home. A good realtor with experience primarily with investors can advise you. You can get a lot of information from other knowledgeable investors at Memphis Investors Group, a non-profit real estate investment club that meets once a month on the 2nd Thursday night 6p to 9pm at the Hilton at Ridgeway and I-40 in Memphis. It’s $20 to get in and tell them Jo Garner sent you. If you are outside the Memphis area, google or call your real estate association to find reputable real estate clubs in YOUR area. Our call me personally after the show and I am happy to help you find the connections you need. If you want to look at refinancing or purchasing a home, comparing special programs, talk with me personally. If you aren’t talking to me personally, you aren’t working with me. And I WANT to work with you, so call me directly at 901 482-0354 901 482-0354 or connect with me at www.JOGarner.com
(Jo) Tom, we’re talking about MAKE THE JUMP INTO REAL ESTATE 2016-BUY REAL ESTATE & WAIT-DON’T WAIT TO BUY REAL ESTATE. You’re a skydiver and a real estate appraiser. What do you see these two topics having in common? Tom launches his topic>
2nd segment after 9:15 break: It’s time for the Look Back Memphis Trivia Contest. The Look Back Memphis Trivia Contest today is being brought to you by our own Tom King, who LOVES Memphis trivia and is a personal friend of Memphis notable historian, Jimmy Ogle. Our Look Back Memphis Trivia Contest is sponsored by John and Jennifer Lawhon of Lawhon Landscape (901) 754-7474 the Lawhon’s can help you plan your landscaping even if you’re on a budget –even if you have a BIG, BIG project. The Lawhons are giving away a $25 gift card to the first person with the correct trivia answer. If you know the answer to one of our trivia questions, call us at 901 535 WREC 901 535-9732.
Tom poses the trivia question and then gives hints
QUESTION: Who made the first legal base jump in the United States and where?
ANSWER: CARL BOENISH IN MEMPHIS, TN. HE JUMPED OFF THE FIRST TENNESSEE BANK BUILDING IN THE EARLY 1980’S FOR THE COTTON CARNIVAL
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QUESTIONS ANSWERED BY TOM KING:
- If I am out looking for houses to buy for my residence or to buy and rent out to tenants, what are some repair items that an appraiser will likely require to be fixed BEFORE closing?
- What are some tools a prospective home-buyer can use to do a preliminary ballpark guess on the value of a home before they get serious about it? How can they determine market rents for the area?
- What type improvements or modifications to a home add the most value? What modifications bring the least value per dollar spent?
QUESTIONS ANSWERED BY JO GARNER-
- Talk about some of successful plans you have seen real estate investors use when they jumped out into building their real estate property portfolio.
- Plan 1- I can think of two real estate investors who started out in their home buying years buying a home to live in and a year later using that house as rental and buying a different home and moving into it and doing this same thing every single year. It was a husband and wife team… the wife was a realtor and her husband was a builder. Then once they built up Income and more money, they bought more rental property and stayed in the house they liked best. I asked them one time how they did a move every single year. She laughed and said, “We just never unpack…and we don’t accumulate stuff that has to be packed.” She said she always made sure she could enjoy her rocking chair by the fire place and on the front porch though.
- The other investor I still work with started out in the military. Every time he was stationed somewhere he bought a house and when he moved, kept it for rental. Now he owns over a dozen income-producing properties. But you don’t have to be a realtor or a soldier to do this plan. You just have to be willing to move often.
- Plan 2- Have a steady paying job with a good income, enough to qualify for your current home and a payment on your first rental property. Have a healthy credit line in place to use for picking occasional really good deals that you can buy quickly for cash, fix up and resell right away. Pocket your profit and use the rest to pay off your credit line so it can be ready to do the next deal. Use the credit line like a launching pad then pay if off and use it again and again. If you are serious about jumping out in 2016 and starting to build your real estate portfolio, you want to be able to buy the properties and not resell them but KEEP them for rentals at enough of a bargain that you have a healthy positive cash flow on it up front. You wouldn’t buy a business that was going to lose you money—buy a rental property where you can make a positive cash flow right at the beginning so your rentals make enough money to support your continued buying of more rental property . AND as a second strategy to use occasionally, have that credit line in place to use and reuse for your quick buy, fix up and sell properties.
- Plan B Investors I have worked with who have made a good profit from their real estate buying, whether they are wholesalers who just buy at a large discount, or rehabbers who buy wholesale and resell immediately to other investors, or real estate investors who slowly over time acquire their real estate homes, most all of the succesful ones I know have surrounded themselves with knowledgeable experts who help them develop best-practices and avoid costly mistakes. Make sure the people who are working with you are reputable and experienced-people like realtors, mortgage professionals, appraisers, home inspectors, title companies and on and on. Check their Better Business Bureau rating.
- Talk about the types of loans you offer real estate investors.
- Tom, some of the more experienced real estate investors use a combination of different types of loans, credit lines from banks, owner-financing, lease-to-purchase plans, self-directed IRAs, private investor money. But two of the most popular mortgage programs for buying real estate with a fixed, low-interest rate over a 15, 20 or 30 year term are the Fannie Mae and Freddie Mac mortgage programs. If you are buying rental property Fannie Mae will allow you up to 10 financed properties. You can own 100 properties but only a max of 10 financed properties, NOT including commercial buildings or properties with over 5 or more units. If you are buying a home for your primary residence, there is NO LIMIT on how many financed properties you can own. BUT, if you have over 10 financed properties and you have found a property that you would like to keep and use for rental for the long term but want a low fixed rate, call me.
- Many times I will meet with my regular real estate investor clients to explore restructuring their existing financing to produce more positive cash flow for them. This week I talked with a gentleman who already had 10 financed properties but he really wanted to buy a house to use as a rental property that was a keeper. He wanted the rate to be low and to be fixed so that as rents begin to go up, his cash flow would increase too. We ended up putting together a deal so that he could refinance one of his other rentals…let’s call it Property A that had a small loan on it and lot of equity. We put together a cash out refinance to pay off the small first on that property…Property A… and used the cash out over the amount owed to pay off completely a mortgage secured on a different rental…Property B… that he owned, leaving that property free and clear. That left him with only 9 financed property. Now we were in a position to give him a mortgage on Property C—the new property he wanted to buy with low-interest rate Fannie Mae loan. Viola! And the sweet part of the deal was that the two mortgages we were paying off on Property A and B had high interest rates that we replaced with the new refinance loan at a much lower interest rate.
- There are so many different scenarios that we do with investors to help them get where they want to be financially. One thing I would like to remind some of our real estate investors out there. If you want to refinance or restructure some of your mortgages to shorten the term or lower the mortgage rate and you have been told by a lender that you cannot refinance using the special HARP program (the one without the full appraisal) because it is not your primary residence, you need to call me. Some lenders sell their loans to other companies and because of that they have stricter lending rules over and above the normal lending guidelines. If you have been told no that you can’t use the HARP program just because it is an investment property, call me personally after this show at 901 482-0354 (901) 482-0354 or connect with me at JoGarner.com We can do the FHA Streamline loan –going from one FHA loan to a lower interest rate FHA loan on investment property too.
- REAL ESTATE TIP OF THE WEEK Tom King shares a tip of the week (about 1.5 min) Jo shares tip about the special niche refinance that can get real estate investors their cash back quickly after paying their cash or using a credit line not secured on the subject property.
Announcements: This Wednesday January 13th 2016, 9A-10A CT will present editor and professional writer, Bradley Harris on “Structure..Integrity..Certainty..Knowledge: The Power of the Well-Written Employee Handbook” BradleyHarrisGoodbook@gmail.com. Talk Shoppe offers networking and education to anyone interested in real estate or business every Wednesday 9A-10A at University of Phoenix in Memphis 65 Germantown Court 1st floor across from Germantown Parkway from the Ag Center. Talk Shoppe events are free for the next two months thanks to our sponsors Some of our financial supporters are Gwen Christensen of Builders Floors and Interiors at www.buildersfloorsandinteriors.com and Tim and Katie Gilliland of BackupRX www.BackupRX.com . For more about Talk Shoppe, go to www.TalkShoppe.com
AND Thank you to Sauce Marketing our webmaster for www.JoGarner.com
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FOR THIS PODCAST OF REAL ESTATE MORTGAGE SHOPPE AND MORE, GO TO JOGARNER.COM
Call me and let’s MAKE YOUR PLAN, WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.
QUOTE CORNER: from Instagram-In the end we only regret the chances we didn’t take.
From Stephen If at first you don’t succeed, skydiving is NOT for you.
This next one was coined right here on Real Estate Mortgage Shoppe from Tom King “ If someone tells you that you can’t make a skydiving jump without a parachute, they’re wrong. You can make that jump at least once”
Transitional Music: “Jump” Van Halen; “Live Like You Were Dying” by Tim McGraw; “Fly Like An Eagle” by the Steve Miller Band; “Memphis” by Johnny Rivers
REJOINERS: Clint Cooper, Redeemers Group www.redeemersgroup.com
Nancy Beaudoin, Auburn, Maine
Mary Lou Nowak, Home Helpers (901) 414-9696
ABOUT TOM KING
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Tom is a well- respected and sought after appraiser in Memphis, Tennessee. He is a second generation appraiser with 40 years experience. He has been elected to the Memphis Area Association of Realtors Board of Directors three times.
Tom is a certified residential appraiser in Tennessee. He have appraised over 20,000 homes in his career. A graduate from the University of Tennessee with a degree in real estate, Tom is also a Certified Relocation Professional (CRP). Tom also has vast experience in dealing with the county and state boards of equalization and in valuations of property for tax appeal purposes. (901) 487-6989
ABOUT JO GARNER-MORTGAGE LOAN OFFICER:
www.JoGarner.com (901) 482 0354 jo@192.232.195.219 twitter @jogarner
Jo describes her job description:
Jo describes her job description: “As a mortgage loan officer, my job is to give my client the benefits they want from their financing terms– listening to my client and determine what’s of the most value to THEM– What is their comfort level on a house payment, how much are they comfortable paying down, what type of financing do they need to get the house they want to buy or refinance. Different clients have different priorities in life—some are buying their first home with very little down payment funds. Some are recovering from medical challenges, divorces or preparing to send children to college and some are embarking on a long term goal of buying properties to build rental income. Whatever their personal priorities are, my job is to put together a mortgage with comfortable terms that will help them achieve their goals.”
Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country. She offers conventional, FHA, VA or other loan programs for refinancing and purchases.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 20 years. She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 20 years. Her goal is to offer excellent, affordable service to her customers, tailoring the loan programs to the specific needs of her clients.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.com She was also the editor of Power Shoppe, a free weekly e-zine designed for real estate professionals and others indirectly connected to the real estate industry and currently publishes on her blog