Benefits of a Pre-Approval

Prequal LetterNot only is getting a pre-approval/ prequalification letter beneficial to you so you can determine the loan amount that you will be approved for, but it also demonstrates to brokers and realtors that as an investor, you are able to purchase a property and eager to do so.  They will have a bigger desire to work with you over someone who has not been pre-approved/ pre-qualified.  A pre-approval/ prequalification letter states that you qualify for a particular loan amount by a specific lender.

How has getting a pre-approval/ prequalification letter helped you in your real estate investing?

To get a free pre-approval/ prequalification letter for your next rehab investment property, call ReCasa Financial Group today at 614.221.6770.

Millennials Expected to Change Homebuying Game in 2015

Millennial HomebuyersMillennials are expected to play a large part in the housing market recovery in 2015.  HouseHunt.com reported that in 2015, millennials will account for 65% of first time homebuyer sales, meaning, those who have lived at home for many years, will now be ready to move into their own home.   This group of homebuyers is expected to purchase more homes than Generation X (those born between the early 1960s to early 1980s) during 2015.

Read about millennials in 2014 here:
https://getrealestatefacts.wordpress.com/2014/11/18/young-home-buyers-are-renting/

As real estate investors, expect to have a larger audience with a higher demand for properties within the next 5 years.   When thinking about rehabbing for millennials, it is important to know what they are looking for in a home, as they have different desires compared to homebuyers in the past.  A majority of millennials prefer:

  • To be close to jobs, shopping centers, night life, and good school districts.
  • Modern and open spaces allowing the entertaining of guests.
  • Small single floor homes with hardwood, tile or laminate instead of carpet.
  • Energy efficient features including solar power.
  • The ability to easily access services while not spending too much on the home, rather being able to save money especially on utilities.

The purchase price plays a large impact on homebuying for millennials as they are known to have a large amount of debt including student loans.  When working with realtors to market to millennials, remember to include these amenities and make the property listing mobile friendly.

Millennials grew up around technology advances, and due to that, they resort to various social media sites and websites sites for information, before turning to family and friends for feedback.  They will also most likely do their own research before reaching out to a real estate agent.

What additional tips do you have regarding rehabbing for millennial homebuyers?

Insurance Essentials for Real Estate Investors

Below is a helpful piece written by our guest blogger, Patrick Nelson of Dennis & Nelson Insurance, regarding important types of insurance that all successful real estate investors should consider.

Insurance Essentials for Real Estate Investors
By: Patrick Nelson of Dennis & Nelson Insurance

Investors in real estate have some unique exposures that need to be specifically addressed with insurance policies tailored for your situation.  Whether you intend to rent them out, or flip them, here are some essential insurance coverages you should consider:

General Liability – A commercial general liability policy can cover all the various things you do.  Whether it is premises liability for the properties you own, construction activities at properties you are rehabbing, or activities (and liabilities) you take on when leasing/renting properties.  Make sure you talk to your agent about everything you do in conjunction with your business.

Dwelling Insurance – You need to cover the properties themselves.  Keep in mind that a homeowners insurance policy typically includes coverage for other structures (detached garages, sheds etc) and personal property (stoves, refrigerators, furniture etc) but a dwelling policy typically does NOT include coverage automatically.  If any of your properties have detached structures, they most likely will need to be listed (and valued) on the policy separately.  If you have any furnished properties or provide appliances, you’ll also need to separately list an amount for those as well.  Built-ins, furnaces and such are usually considered a part of the dwelling, but it’s worth asking to make sure.  Also, make sure you understand whether your dwelling policy values your property at cash value or replacement cost.  It makes a big difference, so be sure to understand what you are buying.

Builder’s Risk – If you take on rehabbing projects yourself, then you’ll want to have a builder’s risk policy in place.  This will protect any construction materials you have on premises.  Since they are not yet part of the dwelling and they don’t fall under the definition of “contents” you’ll need a separate policy for that.

Life Insurance – The name of the game in real estate is leverage.  You probably have loans on many of your properties, and you are experienced at juggling your capital needs to make the most of your opportunities.  Your spouse, heirs or court appointed executors may not have the experience required to keep all those balls in the air, however.  Having a life insurance policy in place to cover the loans on your assets will make settling your affairs much easier.

Also, if you own properties with a partner or as part of a corporate structure, it might not be in the best interest of your business partners to have to liquidate properties in order to compensate your heirs.  A properly structured life insurance policy can solve that problem.

Some other coverages you should or may want to consider:

Ordinance or Law – If your community has strict building codes, you will want to make sure your dwelling policy provides this coverage.  In some communities, partial damage to a home can cause it to have to be brought to 100% of the building codes.  This can add thousands of dollars to a project and even mean having to tear out things that are perfectly fine, in order to bring them up to code.

Directors & Officers – If you have a sophisticated corporate structure and have a “Board of Directors”, you should consider purchasing a policy to protect your Board from lawsuits with a “D&O” policy.

Umbrella Coverage / Excess Liability – If you have extensive assets to protect you may want to consider buying umbrella insurance.  The standard commercial general liability policy usually provides $1 million of coverage.  Sometimes this can be increased to $2 million or more.  An Umbrella policy can provide an extra level of protection on top of your commercial liability policy.  Common amounts are $1, $2, and $5 million and amounts over that can be negotiated if needed.

Insuring a real estate investor can be tricky and you need an insurance agency that has experience working with real estate investors.  Dennis & Nelson Insurance Group has extensive experience working with real estate investors.  Call us today at 740-982-3091, 740-450-0200 or 614-222-0911 to schedule an appointment.

 

Dennis and Nelson Insurance

 

www.dennisnelsoninsurance.com

 

Dennis & Nelson Insurance Group is independent and represent numerous insurance companies including Erie, Western Reserve, Progressive, and many more.   

They offer a complete line of insurance products including personal auto, home, umbrella, SR-22 Bonds, Farm, Identity Theft, Flood and Renters, Commercial auto, property, umbrella, Bonding, Workers Compensation, General Liability and medical malpractice.  They also offer health insurance (individual & group), employee voluntary benefits, Medicare Supplemental, Disability, Long-Term Care, Term and Whole Life, Annuities, Financial Services, and IRAs.

Dennis & Nelson Insurance Group also offers insurance to the transportation / trucking industry.  We are truck insurance experts and offer Commercial / Business Auto, Liability, Physical Damage, Cargo and General Liability.  We insure trucking companies and their employed drivers and owned trucks and trailers and we also insure independent truckers.  We insure box trucks, semi trucks, flatbed trucks, front loaders, garbage trucks, pickup trucks, tank trucks, tractors, dump trucks, auto hauler trailers, flatbed trailers and many more.

Is the FHA Lower Annual Insurance Premium for Everyone?

As we mentioned in a previous post, Lower Annual Insurance Premiums on FHA Loans Create Savings for Homebuyers, the Federal Housing Administration (FHA) lowered their annual insurance premiums from 1.35% to 0.85% of the loan amount in an annual basis (from $112.50  per month to $70.83 per month for a $100,000 mortgage), however this loan is not for everyone.

mortgage calculatorSome homebuyers have mortgage insurance premiums that can be canceled in the future and for those, refinancing with a lower annual insurance premium FHA loan may not be the best fit.  If you applied for an FHA loan prior to June 2013, this lower annual insurance premium could create a short term gain but a long term loss.  For these loans, the mortgage insurance premium is cancelable after 5 years, which means you may not want to refinance and get additional years of paying the mortgage insurance premium.  It could lower the monthly mortgage insurance premium bill, but you will be paying more as the term for the premium would be extended for the life of the loan.  Please make sure loan originators are reviewing the entire loan situation.  Some aggressive loan originators may promise lowering payments without looking at your specific situation, sacrificing short term gain for long term cost.

If you applied for an FHA loan in June 2013 or after, this lower annual insurance premium may be able to improve your financing situation.

If you are located in Ohio, Pennsylvania or Indiana, please call us for a free evaluation of your specific situation before you do anything.

ReCasa Financial Group
614-221-6770
www.recasafinancial.com

 

ReCasa Financial Group   614-221-6770
NMLS #9722 OH: MB.803923.000 IN: 08-0038 LB  PA: Licensed by the PA Department of Banking
130 E.  Chestnut Street, Suite 200 Columbus, OH 43215
Graham Montigny   NMLS # 195412   OH LO 002049.000     IN LO 195412     PA LO 35011
Michael Wolf  NMLS # 85452  OH LO 001440.001
Michael Troutman  NMLS # 319798  OH LO 037303.000

Homebuyers are Ready to Buy After Foreclosures and Short Sales

RealtyTrac’s article, 7.3 Million Boomerang Buyers Poised to Recover Homeownership in Next 8 Years, stated:

In 2015, the first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home.

As of August 2014, new changes were made to the mortgage waiting period for foreclosures and short sales for specific situations.

Conventional Loans

  • Foreclosures: 7 years from the foreclosure completion date (some applicants may qualify for a conventional loan only 3 years after with extenuating conditions including wage earner death, illness or job loss)
  • Short Sale/Deed in Lieu-Short Sale:
    • 7 year with less than 10% down of primary residence
    • 4 years with 10% down on the purchase of a primary residence
    • 4 years with 20% down on the purchase of a primary, secondary or investment property purchase
    • 2 years with extenuating circumstances, only with 20% down

FHA Loans

  • Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
  • Short Sale: 3 years from the title transfer date

Department of Veterans Affairs Loans

  • Foreclosure: 2 years from foreclosure completion date and date transferred back to the lender
  • Short Sale: 2 years from previous sale closed date and new owner transfer date

For additional information regarding specific waiting periods for conventional, FHA and/or Department of Veterans Affair loans, visit New Changes to Mortgage Waiting Period.

This is great news for the housing market and real estate investors.  More homebuyers should be ready to purchase over the next 8 years as they slowly come out of the foreclosure or short term window.  These “boomerang” homebuyers are characterized as being Generation X (35-44 year olds) and Baby Boomers.  As investors, it is important to keep the home buying audience in mind to make the property rehab decisions.

How are you preparing for these “boomeranghomebuyers?

Potential Boomerang Buyers by Year