Good morning, Memphis! Good morning to IHEART listeners across the country. You’re listening to the Real Estate Mortgage Shoppe program. I’m your host, Jo Garner, mortgage professional with Evolve Bank and Trust. Today we’re talking about “Structuring Your Mortgage For Cash Flow & Converting Your Home To A Rental Property.” Around the coffee table we have our property management expert, Bonita Elam of Enterprise Property Management.
Bonita has about a minute to introduce herself and talk about what she does at Enterprise Property Management
Jo asked Bonita what is happening in the real estate market—specifically in the Memphis and Mid-South area
Real Estate sales and leasing are up dramatically over last year. Here are the facts from the Memphis Association of Realtors:
Bright Spots
Year-to-date total home sales were up 22 percent from 2012.
Year-to-date monthly sales volume increased 36.8 percent to $267 million.
February’s average sales price of $117,016 represented a 14.7 percent increase from 2012.
Year-to-date new home sales increased 9.6 percent from 2012.
via MAARdata & MAAR MLS data, February 2013
The rental market has seen a similar increase in activity. We are finding that most homes in our inventory are renting in less than 60 days and at rates higher than what we have seen in previous years. In our opinion, prospective tenants are entertaining the idea of paying more in rent for a nicer home than what they are renting now- something we have not seen in many years. This is great news for people who have not been able to sell their home for whatever reason, and are considering the idea of renting out their home so that they can move on to their next location. We want to encourage those people to give us a call today and bring us any questions they may have about renting their home versus selling it. So, give us a call right now at 901 535 WREC. Also, stay with us the entire hour, because we will unveil an online contest where one lucky winner will receive 6 months of free management fees on their rental property. More about that later, but for now, call us with your rental property questions at 901 535 WREC. Jo says—“That number again is 901 535 9732
Jo starts her topic The 30-year fixed-rate mortgage rose to 3.71 percent compared with 3.6 percent last week. This is the 2nd week in a row that rates have been climbing. The 15-year fixed-rate mortgage rose to 2.92 percent this week, compared with 2.82 percent last week. Here’s some advice: If the deal works for you today, DO IT TODAY. My experienced assistant, Susan Belew and I would like VERY much to help you nail down a low interest rate while the opportunity is still there. You can call us directly off the air at 901 482 0354. That number again is 901 482 0354. Or catch us on our blog at www.mortgageloansblog.com
The clock is ticking on real estate financing options right now. click the alarm clock sound http://www.youtube.com/watch?v=HALcQIMJtNE If you are planning on using the government FHA loan program, you better get your home purchase contract signed and have the lender order your FHA case number for the loan BEFORE June 1st or you will be paying the monthly mortgage insurance for the life of the loan if you are putting less than 10% down on your home purchase.
Mortgage rates are still below where they were last spring but don’t miss the boat. If you haven’t talked with a mortgage officer and gone over refinancing options for YOUR mortgage, please just take a few minutes to call me at 901 482 0354. In just a matter of minutes Susan and I can ask you a few questions, do some market research on your home value and give you some money-saving financial scenarios to compare.
For those of you with conventional Fannie Mae or Freddie Mac loans you may be qualified for the special HARP program that requires no appraisal value. If you have an FHA loan, you can refinance with NO appraisal at all. USDA –Rural Housing loans just launched their PILOT refinance program with no appraisal needed.
We have down payment assistance for qualified homebuyers even up to $15,000 if you need it. If you want to put a LOT of money down to avoid costly mortgage insurance, I can help you get in with very little of you own money whether you are buying a primary residence, 2nd home or investment property. If you are a real estate investor or if you own your own business, you KNOW the value of having your money working for you MAKING your money every day. The less you pay down on a real estate purchase of your own money, the more of your money stays out there where you have it earning for you.
If you have a real estate or financing challenge where you are looking for solutions, give us a call on the air 901 535 WREC. That number again is 901 535 9732. Let’s come up with a solution. Someone listening to this show may have the solution for you. If you are listening and know a proven solution for a caller’s challenge, we want to hear from you too.
Bonita Elam is with Enterprise Property Management. What if you need to move from your home but can’t sell it for the price you need to sell it? What solutions have you offered YOUR customers in that situation?
Question For Bonita Elam:
1. What are some ways which homeowners can be protected by using professional property management?
At Enterprise, we understand that this house is not just a house- it is most likely a home that the homeowner has lived in and loves, therefore we offer more than mere property management services
Any effective property management company needs to offer:
Transparency – ask any question anytime and get pictures of their property at any time
Accurate and honest rent appraisals set to provide maximize cash-flow for the owner, not simply priced to appease.
Full range of inspections, quarterly, at renewal, at move out and on demand, should the homeowner be concerned about a particular matter
Electronic Access to account information 24/7 like we have via www.epmleasing.com and our management software, Property Boss. Access to statements and management activity.
Regular updates keeping the homeowner aware of risks in owning property, changes to law, and the implications thereof,
References of the positive past experience by past tenants and homeowners (verifiable by online testimonies and available customer experience, should they want to contact a current homeowner to ask questions)
Very thorough tenant screening,
Strong initial credit check, employment and rental history,
2. I heard you guys at Enterprise Property Management have a contest running right now for your clients.
Enterprise Property Management is excited to present our 2013 contest to homeowners on the fence about renting out their homes through a professional management company. Our goal with this contest is to encourage homeowners to contact us and tell us about their situation to see if we can help. For one lucky homeowner, we will manage their home for 6 months for free, after the tenant has been placed. The name will be drawn at random and the homeowner will need to have placed their home with Enterprise in order to receive the credit to their account. For more information, visit our website at www.propertymanagementmemphis.com and enter your name, phone number and email. This contest only lasts for 30 days, so you have to contact us before June 19. That website again is www.propertymanagementmemphis.com, and click on the contest link shown there. Good luck, and we look forward to hearing from you!!!
3. “Bonita, Enterprise Property Management has been around over 10 years helping investors across the country and investors local to Memphis with property management services on the properties they own here in the Memphis MSA. Most of these investors are people who want to build their wealth owning real estate but don’t have time or resources to manage their OWN real estate investments. But today we’re talking about people who are converting their primary residence to a rental unit and moving to another home.
How do you overcome the homeowner’s fear that someone will come in and trash their house and not pay rent?
4. How do you determine how much a home will lease for?
a) years of experience and knowledge of the Memphis rental market become invaluable. As you have experienced yourself, there have been a lot of changes during the last decade in the real estate market. Establishing a rent range for a home is not a one-time occurrence. As the local market, the national market and the economy changes so does the rental value of a home. During the years of 2004 and 2006, the market was strong and so were the rents. We all have seen the news and experienced the downward trends in the real estate market which started in 2007 and continue to today.
b) We employ a number of home evaluation tools along with our own market knowledge to establish a “true rent range” when a particular home is ready to be placed on the market. Since there is no scientific method to precisely predict what a home will lease for, we use these tools to provide a rental range for our owners. Again it is our goal to lease the home for the most rent is the shortest time possible. This may require some flexibility on the part of the homeowner.
5. What does a owner need to do to prepare to lease their home?
a) painting. We know that you really love the purple bedroom and lime green bath that you just painted last month, but prospective tenants are most likely not going to.
b) An inspection is performed before we list the property to identify what items need to be addressed other than normal home and carpet cleaning. This inspection is also valuable in determining the rent range.
c) Photos are taken of the interior and exterior. These are used for marketing purposes as well as to note the condition of the home prior to it being leased.
Questions for Jo Garner to answer:
1. What if your borrower owns his primary residence and wants to buy and move to his dream home but can’t sell his current home? What financing solutions to offer someone like him?
There have been SO many cases like that over the last few years. Most of the time the homeowner wants to use the equity from the old home to put down on the new home but if the old one doesn’t sell right way, then where do they get the large down payment they want to keep payments low on the NEW home? You can use a combination loan scenario.
I have multiple customers in that situation and the solutions vary from a temporary loan on their CURRENT home to a different program using a piggy-back loan on the NEW home.
I have a customer who owns his home with a lot of equity in another state, but he needs to move to the Memphis area right away and plans to stay here for several years. The ideal situation for him would be if he could sell his house and take the large amount of profit he gets from all the equity built up and put that money down on the NEW house so he can enjoy very low payments on the NEW house.
But, alas, so goes the plans of mice and men—he has not been able to sell his current home for the amount he thinks he can get later. How can we get him the cash to put down on the NEW house before he sells the OLD one?
For this gentleman, his sales price was $195K. If he could have sold his OLD home for the price he wanted, he would have put about $85K as a down payment on the NEW home. That way he would only have to borrow $90K on the NEW house and at the low rate of 3.5% his p&I payment would only be $404/mo –very manageable for him. Since he has NOT been able to sell his old home, we gave him the first mortgage of $90K that he wanted on the NEW house and we gave him a piggy-back 2nd loan of $85,500 interest-only at about 3% so that when the OLD house sells he can use the money from the equity to pay off the piggy-back 2nd and Voila! He is back to the low $404/mo payment he originally wanted with just the $90K first mortgage on the NEW home.
Another solution would have been to let us put an equity line of credit on the old home BEFORE he put it up for sale. When he sold his OLD house he could use the money he got from the sale to pay off the new equity line and any other financing on that property. So there are a NUMBER of ways you can achieve your goal on these type transactions.
2. What mortgage terms can you give to a real estate investor for purchasing a rental home?
For people buying property to rent out for investment, on a single-family home, if the investor owns less than 4 financed properties, they can purchase with 20% down payment or they can refinance up to 75% loan-to-value. If they cash out mortgage companies usually stipulate a max loan-to-value of no more than 65%.
The lending rules are different for real estate investors owning over 4 financed properties. If they own between 5 and 10 financed properties, not many companies will offer a cash out refinance, but the investor should be able to refinance their existing loan for at least 70% of the value of the home. They can purchase another rental property too as long as they do not exceed 10 financed properties in their name. Borrowers who own more between 5 and 10 financed properties are also required to show a lot more money left in reserve for emergencies than if they owned 4 financed properties or less.
If the borrower is trying to buy or refinance their primary residence there is no limit on the number of other financed properties.
3.. Can a real estate investor refinance his rental property using the special HARP refinance and the FHA streamline without an appraisal value and getting into the deal with very little money down?
4.. Where can investors find the funds to use for down payment?
Real Estate Tip of The Week: My business coach, Mark van Stolk of Calaveras Coaching reminds me often of Yogi Berra’s famous saying, “If you don’t know where you are going, you’ll end up somewhere else.” That is true for real estate investors too. Determine what you want to accomplish with your real estate investing. Do you want to buy 3 or 4 houses and hold them several years as rentals? Or do you want to buy, fix up and sell 2 or 3 a year and still buy 3 or 4 to hold for rental? The biggest advantage to the popular Fannie Mae or Freddie Mac conventional loan for residential real estate investors is that it has a low fixed interest rate stretched out up to 30 years, making the payment extremely low, extremely stable with an extremely good positive cash flow to you as the investor. The downside? Fannie and Freddie will only finance for investors who own no more than 10 financed properties. Closing costs are higher on these loans than the variable rate bank credit lines.
If you have an investment partner or if you are married to your investment partner, and you plan on acquiring up to 20 buy-hold-and-rent properties, then let one partner buy up to 10 properties just in their name with the financing just in their name. Then you buy 10 properties just in your name with financing just in your name. That way, between you and our business partner, you can acquire up to 20 properties to hold long term instead of only 10. Other types of loans on other properties count as financed properties so try and keep those properties with bank credit lines solely in the name of your business and not your name so that you and your partner can accumulate the 20 rentals without running into the limit from Fannie or Freddie.
Jo’s 2 announcements: Talk Shoppe offers free education and networking for anyone interested in real estate or business. This Wednesday at DeVry University from 9A to 10A # 1 New York Times and Wall Street Journal best-selling author George Lucas will be presenting “Winning In The Win-Lose Game Of Competitive Negotiations” George Lucas is with US Learning and wrote the book “The One-Minute Negotiator” The Talk Shoppe events are free. For more information about Talk Shoppe go to www.TalkShoppe.BIZ
Next Saturday on the Real Estate Mortgage Shoppe program, Attorney Ron Cohen of Premium Title Group will be offering helpful information about Condominium, Planned Unit Development and Co-op property ownership. Do you know someone with questions about condos or other jointly owned property? Join us next Saturday 9A to 10A CST right here on News Radio 600 WREC
Transitional Music: “Superstition” by Stevie Wonder; “Moving Out” by Billy Joel; “Our House” by Madness
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 in Memphis, TN. 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. She hosts the Real Estate Mortgage Shoppe program on News Radio AM 600 WREC in Memphis and on IHEART radio 9A to 10A CST every Saturday.
For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program. You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and real estate, money-saving tips and more.
4. I heard you guys at Enterprise Property Management have a contest running right now for your clients.
Enterprise Property Management is excited to present our 2013 contest to homeowners on the fence about renting out their homes through a professional management company. Our goal with this contest is to encourage homeowners to contact us and tell us about their situation to see if we can help. For one lucky homeowner, we will manage their home for 6 months for free, after the tenant has been placed. The name will be drawn at random and the homeowner will need to have placed their home with Enterprise in order to receive the credit to their account. For more information, visit our website at www.propertymanagementmemphis.com and enter your name, phone number and email. This contest only lasts for 30 days, so you have to contact us before June 19. That website again is www.propertymanagementmemphis.com, and click on the contest link shown there. Good luck, and we look forward to hearing from you!!!
5. “Bonita, Enterprise Property Management has been around over 10 years helping investors across the country and investors local to Memphis with property management services on the properties they own here in the Memphis MSA. Most of these investors are people who want to build their wealth owning real estate but don’t have time or resources to manage their OWN real estate investments. But today we’re talking about people who are converting their primary residence to a rental unit and moving to another home.
How do you overcome the homeowner’s fear that someone will come in and trash their house and not pay rent?
Radio Show for May 18
EPM Segment 1,
Bonita’s introduction (who she is, what she does, what EPM does)
Real Estate sales and leasing are up dramatically over last year. Here are the facts from the Memphis Association of Realtors:
Bright Spots
Year-to-date total home sales were up 22 percent from 2012.
Year-to-date monthly sales volume increased 36.8 percent to $267 million.
February’s average sales price of $117,016 represented a 14.7 percent increase from 2012.
Year-to-date new home sales increased 9.6 percent from 2012.
via MAARdata & MAAR MLS data, February 2013
The rental market has seen a similar increase in activity. We are finding that most homes in our inventory are renting in less than 60 days and at rates higher than what we have seen in previous years. In our opinion, prospective tenants are entertaining the idea of paying more in rent for a nicer home than what they are renting now- something we have not seen in many years. This is great news for people who have not been able to sell their home for whatever reason, and are considering the idea of renting out their home so that they can move on to their next location. We want to encourage those people to give us a call today and bring us any questions they may have about renting their home versus selling it. So, give us a call right now at 901 535 WREC. Also, stay with us the entire hour, because we will unveil an online contest where one lucky winner will receive 6 months of free management fees on their rental property. More about that later, but for now, call us with your rental property questions at 901 535 WREC.
Jo’s segment
EPM Segment 2,
You know Jo, a lot of homeowners are struggling with the concept of how to rent out their home with the high mortgage interest rates that they are paying right now- this is a common mental block for people who want to rent their home, but are afraid they’ll not make enough every month to cover the mortgage on their home. Right now, Enterprise is working with a homeowner who is working with Evolve Bank to realize stronger monthly cash flow AND pay down his house note quicker through utilizing HAARP. That homeowner is refinancing his home to a 15 year mortgage, and will have greater cash flow after the refinance than before. It’s a “no lose” situation, if you ask me. Do you have any thoughts on this?
Jo’s segments or callers
EPM Segment 3,
Enterprise Property Management is excited to present our 2013 contest to homeowners on the fence about renting out their homes through a professional management company. Our goal with this contest is to encourage homeowners to contact us and tell us about their situation to see if we can help. For one lucky homeowner, we will manage their home for 6 months for free, after the tenant has been placed. The name will be drawn at random and the homeowner will need to have placed their home with Enterprise in order to receive the credit to their account. For more information, visit our website at www.propertymanagementmemphis.com and enter your name, phone number and email. This contest only lasts for 30 days, so you have to contact us before June 19. That website again is www.propertymanagementmemphis.com, and click on the contest link shown there. Good luck, and we look forward to hearing from you!!!
Jo’s segments or callers
EPM Segment 4,
What are some ways which homeowners can be protected by using professional property management?
At Enterprise, we understand that this house is not just a house- it is most likely a home that the homeowner has lived in and loves, therefore we offer more than mere property management services
Any effective property management company needs to offer:
Transparency – ask any question anytime and get pictures of their property at any time
Accurate and honest rent appraisals set to provide maximize cash-flow for the owner, not simply priced to appease.
Full range of inspections, quarterly, at renewal, at move out and on demand, should the homeowner be concerned about a particular matter
Electronic Access to account information 24/7 like we have via www.epmleasing.com and our management software, Property Boss. Access to statements and management activity.
Regular updates keeping the homeowner aware of risks in owning property, changes to law, and the implications thereof,
References of the positive past experience by past tenants and homeowners (verifiable by online testimonies and available customer experience, should they want to contact a current homeowner to ask questions)
Very thorough tenant screening,
Strong initial credit check, employment and rental history,
REMINDER OF CONTEST:
For one lucky homeowner, we will manage their home for 6 months for free, after the tenant has been placed. For more information, visit our website at www.propertymanagementmemphis.com and enter contact information. This contest only lasts for 30 days, so you have to contact us before June 19. That website again is www.propertymanagementmemphis.com, and click on the contest link shown there. Good luck!
If you need any of the contest instructions and restrictions:
This contest is to win residential property management with no management fee for 6 months. All fees will be waived until a tenant moves in, at which point you will receive 6-months property management at no cost to you.
This contest is open to new homeowner agreements only. All homeowner agreements are a minimum of 12-months commitment.
You must be the legal owner of a property located in one of the areas managed by Enterprise Property Management, Inc.
Enterprise Property Management, Inc., has an stringent approval process when considering management of any particular property and reserves the right to decline any management opportunity.
Your property must meet the single family home criteria of homes managed by Enterprise Property Management, Inc.
Enterprise Property Management, Inc., does not manage multi-family properties.
Please call 901-260-0206 EXT to see if your home qualifies. Current zipcodes include: 38002, 38004, 38016, 38017, 38018, 38052, 38053, 38058, 38060, 38103, 38104, 38107, 38111, 38112, 38115, 38117, 38119, 38120, 38122, 38125, 38128, 38133, 38134, 38135, 38138, 38141.
A drawing will take place at random from the first 50 entries, on a first come first served basis, once the minimum of 50 entries is reached.
Homeowners who are registered at the time of signing a homeowner agreement and who consequently win this contest on the drawing day, will receive the 6-months free management applied to their agreement beginning at the next calendar month.
Bankrate.com
Housing starts fell more than analysts expected in April, contributing to a mixed bag of economic and housing news.
Last month’s 853,000-unit annual rate is a 16.5 percent drop from housing starts the month before and below the 945,000-unit annual rate analysts had predicted, according to the Department of Commerce.
Since the beginning of the year, housing has recovered enough that it is helping to boost the economy overall. The economic recovery suffered a setback last week when jobless claims rose at the fastest pace in six months, according to the Labor Department. It also reported that the consumer price index fell 0.4 percent, the biggest drop since December 2008.
But the housing news isn’t all bad: The future for home construction is still on an upswing. Building permits rose 14.3 percent from March to April, to an annual rate of 1.017 million. That’s the highest rate since June 2008. Single-family home permits rose 3 percent, the highest since May 2008.
A report from Realtor.com shows increased buyer activity and interest as the traditional season for home sales gets underway. Nationwide, listing prices of for-sale homes increased 2.63 percent from March to April, inventory increased by 4.12 percent for the month, and days on the market decreased by almost 11 percent from a year earlier.
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The benchmark 30-year fixed-rate mortgage rose to 3.71 percent compared with 3.6 percent last week, according to the Bankrate.com national survey of large lenders. The mortgages in this week’s survey had an average total of 0.34 discount and origination points. One year ago, that rate stood at 3.97 percent. Four weeks ago, it was 3.61 percent.
The 30-year fixed remains lower than this year’s record high of 3.85 percent, reached March 13. Rates have risen for the second week in a row, after having fallen for seven consecutive weeks.
The benchmark 15-year fixed-rate mortgage rose to 2.92 percent this week, compared with 2.82 percent last week, and the benchmark 5/1 adjustable-rate mortgage rose to 2.68 percent from 2.64 percent.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis.aspx#ixzz2TbjQw7Ei
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