All Forum Posts by: Cynthia Elder

Hi James,

Thank you for the comment!  The market here is crazy but going very well!  For the inspections, you are correct.  I almost never allow my client to waive inspections all together.  Because you're right there could be something very costly and detrimental to the usability and value of the home.  But what I do, do, is do a modified as is inspection contingency where the buyer makes it clear to the seller that they plan to do inspections but state that they wont nickel and dime them throughout the process.

Investor: Good morning and happy investing everyone! I have recently been running into several "multiple offer" situations and have been losing out on some great deals. Anyone have any advice on how I should handle this?

Cynthia Elder - Real Estate Agent: Hi Investor, I have a few clients that have been running into the same issue. Whenever we ask how many offers the seller has received the resounding answer is typically three and the property has only been on the market a few hours.

Investor: I've heard this too. That they have multiple offers, repeatedly. So much so I feel that they may be bluffing just to get me to offer more money. How do we verify that this is true?

Cynthia Elder - Real Estate Agent: In a competitive fast moving market you may run the risk of losing out on a deal by waiting for verification of the other offers. In most cases they won't choose to provide you with this. They typically, do not have to, unless you're requesting an escalation clause with your offer. In this case, you would ask for proof of the highest offer that they used to escalate your offer.

Investor: I haven't done an escalation clause before. What is it?

Cynthia Elder - Real Estate Agent: Its a tool you can use when you want to win an offer but don't want to pay more than a certain amount. This is something you can use when you want to offer top dollar but don't want to pay way above what others are offering. However, I will tell you the benefits and downfalls of this strategy. The benefit is that you win an offer by outbidding your fellow man, while not overpaying by an extravagant amount. The downfall of it can be two-fold you can offer more than the home appraises for and may have to come out of pocket for the difference. Also, some sellers don't like the extra thought that has to go into accepting your offer over another. They prefer to deal with exact numbers, exact close dates, and exact uncomplicated ways of financing the purchase of their home.

Investor: So what do you think is the best strategy when dealing a "multiple offer" situation?

Cynthia Elder - Real Estate Agent: I think the best strategy is to make your offer as simple to understand as possible. Give your highest and best purchase price, exact close date, waive or modify the inspection contingency, and the simplest form of financing available to you. Having some cash in the game doesn't hurt either.

The National Association of Realtors is requesting the FHA to more heavily scrutinize the loans they issue in order to protect communities from absentee landlords and to push for more involvement of other local area entities in the decision of who to issue loans to.

Check out some of the language below in the NAR's request. I'd love to hear your thoughts!

" Arrange loan sales in small, manageable numbers in limited geographical
areas, utilizing the expertise of local businesses, including contractors, real
estate brokerage firms and property managers, and non-profits.
 Set aside pools of loan sales for non-profits and other community partners
while prioritizing sales of open loan pools to entities with demonstrated
interest in a given community.
 Review investor-purchaser plans for conflicts of interest that could lead to harmful outcomes, such as an
investor’s financial interest or other business connection to a large-scale rental housing entity or home auction
platform.
 Compel investors to prioritize sales to owner-occupants following foreclosure in order to promote
neighborhood stabilization and support prosperity in the respective community.
 Require that the secondary sale of any loan by an initial investor-purchaser to another investor must prioritize
home sales to owner-occupiers.
 Ensure the release of performance and outcome data for each pool of loan sales, as well as the demographic data
on the sales."

July 11, 2019Brandon Ivey

JPMorgan Chase is preparing to issue its second jumbo mortgage-backed security of the year with mortgages that have relatively high loan-to-value ratios. In 2018, Chase only issued one deal with such loans.

The average combined LTV ratio on the planned $385.28 million issuance is 87.9%. Mortgages with such high LTV ratios are uncommon in the jumbo MBS market. According to Inside Nonconforming Markets, the average combined LTV ratio on prime jumbo MBS issued in the first quarter of 2019 was 72.6%.

DBRS, which placed preliminary AAA ratings on the MBS, noted that there are compensating factors for the higher LTV ratios. "The high LTV attribute of this portfolio is mitigated by certain strengths, such as high FICO, low debt-to-income ratio, robust income and reserves, as well as other default drivers," the rating service said.

Some 77.1% of loans in the deal were originated by United Shore Financial Services, the owner of United Wholesale Mortgage. United Shore was also the top contributor to the two previous high-LTV-ratio jumbo MBS from Chase.

Courtesy of Inside Mortgage Finance 

June 26, 2019

George Brooks

The Department of Veterans Affairs will now guarantee no-downpayment loans above the Fannie Mae/Freddie Mac conforming loan limit under the Blue Water Navy Vietnam Veterans Act, signed into law by President Trump Tuesday night.

H.R. 299 eliminates the cap on VA home loans, which means that qualified homebuyers can now borrow above the agency's standard loan limit of $484,350 for most counties in 2019 with no downpayment requirements.

The U.S. Senate unanimously approved the measure earlier this month after a federal court ruled the VA is required to provide health coverage to veterans exposed to Agent Orange during the war. Prior to the bill's enactment, coverage was available only to those who were exposed to Agent Orange on land.

The Blue Water bill initially sought to raise the funding fee on VA loans to pay for the proposed extension of VA health benefits to former Navy personnel who served on ships off the coast of Vietnam.

However, housing and industry trade groups and veterans organizations lobbied against the proposed increase. They argued that VA loan guarantee fees should be based on the risk of the loan made, not the costs of other VA programs or benefits. So, as a way to generate additional revenue, policymakers decided to eliminate the loan cap.

Article from Inside Mortgage Finance

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The U.S. rental vacancy rate edged slightly higher to 7.1 percent in 2018 Q3, but this is still below the 7.5 percent vacancy rate in 2017 Q3. The U.S. rental vacancy rate averaged 9.6 percent from 2000 Q1 through 2011 Q4, so rental vacancy rates are still trending below historical levels. Low vacancy rates indicate that the multi-family real estate market still has a growth potential in several metros in 2019.

Multi-family housing starts appeared to have rebounded in 2018. Multi-family housing starts fell to 376,000 in 2017, or 29 percent of housing starts, but rose again to 376,000 units in 2018, accounting for 30 percent of total housing starts of 1.245 million. The construction of multi-family housing peaked during 2015 and 2016, with multi-family housing starts of 393,000/394,000 units on a seasonally adjusted annualized rate (SAAR) basis, accounting for 36/33 percent of total housing starts (1-family and multi-family) in 2015/2016.

Multi-family housing starts fell to a seasonally adjusted annual rate of 320,000 in December 2018, as housing starts in the West Region declined by about half from 127,000 (SAAR) to 62,000 (SAAR). However, the drop in December 2018 housing starts should not be taken as an indicator of a long-term trend steep fall in multi-family housing starts, given that the housing authorizations (permits) rose 27 percent in December 2018 to 176,000 from 139,000 in December 2017.

The demand for both multi-family homes (usually apartments for rent) and 1-family units (usually for home purchase) is expected to remain strong because housing construction for 1-family and multi-family units is still behind the demand arising from household formation and demand for replacement housing. As of 2018 Q4, seasonally adjusted annualized level of housing starts totaled 1.17 million, while building permits totaled 1.30 million, both of which are below the 1.5 million net new households were formed during November 2017- September 2018, according to data from the U.S. Census Bureau’s Current Population Survey. In addition, there is demand for about 400,000 to 500,000 housing units to replace damaged or lost housing stock.[1] So supply is still broadly behind demand for both 1-family and multi-family units, though the tightness of supply varies across metro areas.

Supply for both 1-unit and multi-family homes is tight in many of the 75 largest metros. Over the past three years, the ratio of the number of payroll employment created in 2018 Q4 from 2015 Q4 to the total number of 1-family and multifamily housing permits issued during 2016 Q1 – 2018 Q4 has exceeded the ideal ratio of two. In Worcester, MA, there were 18 jobs generated for every housing permit issued during the past three years. In Pittsburgh, PA, there were about six jobs per housing permit issued. Total housing starts lag behind job creation in many California metro areas: San Jose-Sunnyvale -Sta. Clara, CA (4.2); San Francisco-Oakland-Hayward (3.4); Riverside-San Jose-San Bernardino (3.3); Fresno, CA (3.3); San Diego-Carlsbad (2.9), Los Angeles-Long Beach-Anaheim (2.8); and Sacramento-Roseville-Arden-Arcade (2.6).

Multi-family market investment potential in 2019?[2]

Among the largest 75 metro areas[3],vacancy rates are less than five percent and declined in 2018 Q1- Q3 compared to one year ago, indicating significant potential for multi-family commercial investment: Fresno, CA (1.9%); Worcester, MA (3.0%); Cincinnati, OH-KY-IN (3.5%), Denver-Aurora-Lakewood, CO (3.7%), Syracuse, NY (3.8%), Los Angeles-Long Beach-Anaheim (4.0%), Akron, OH (4.1%), Boston-Cambridge-Newton, MA-NH (4.1%), Portland-Vancouver-Hillsboro, OR (4.3%), New York-Newark-Jersey City, NY-NJ-PA (4.6%), Tucson, AZ (4.8%), and Riverside-San Bernardino-Ontario (4.9%).

In the large California and Washington metro areas, vacancy rates have eased, though they are still low —indicating an opportunity for multi-family commercial investments: Seattle-Tacoma-Bellevue (4.7%), San Jose-Sunnyvale-Sta. Clara (4.6%), Sacramento-Roseville-Arden Arcade, CA (3.3%), San Francisco-Oakland-Hayward, CA (5.5%).

In some metro areas, vacancy rates have dropped significantly in 2017 Q1- Q3 indicating that a fast absorption of apartments for rent and strong growth potential for multi-family investment if rates continue to fall. The large drops in vacancy rates in these metro areas indicates a potential for more multi-family investments also if vacancy rates keep falling in the coming months: Birmingham-Hoover, AL (12.3%), San Antonio-New Braunfels, TX (7.2%), Pittsburgh, PA (6.7%), and Kansas City, MO-KS (7.3%).

Vacancy rates are nearing or around 7 percent and are higher compared to one year ago in several “hot” metro areas, indicating a maturing of the investment cycle in these markets given the current level of demand: Dallas-Fort Worth-Arlington, TX (7.1%), Austin-Round Rock, TX (7.1%), Miami-Fort Lauderdale-West Palm Beach, FL (7.1%), Washington-Arlington-Alexandria, DC-MD-VA-WV (6.7%), and Raleigh, NC (7.3%).

Vacancy rates are above 10 percent in these areas and were higher compared to the levels on year ago, indicating low potential for multi-family investment given the current pace of demand: Albany-Schenectady-Troy (10.3%), Greensboro-High Point, NC (10.5%), Tulsa, OK (8.1%), Little Rock-North Little Rock-Conway, AR (11.5%), Toledo, OH (12.6%), Dayton, OH (12.7%) and Oklahoma City (13.1%). These metro areas also have a ratio of jobs to permit to less than 2.

Source: US Census Bureau rental vacancy rates for the 75 largest metro areas, downloaded from Haver Analytics

@AnthonyDooley thanks! I'm getting better at this thing little by little.  Definitely looking forward to my first Investment!

We cannot truly evolve as a society and have consistent societal advances as long as the scarcity mindset is prevalent.  This applies to the wealthy and the poor.  The Dems, Reps, Independent, or Undecided.  People who have extra income will start to spend more because of this mindset.  People who also have extra income, but feel as though they have worked harder for what they have than the others, will feel slighted for their hard work maybe even under-compensated for their hard work and want some sort of balance put in place. 

I believe people who work hard will always work hard or find something to do that challenges them, and people who are less likely to work hard,  who tend to go with the flow,  even those who are plain lazy, will always make the decision to do so.  

I don't think money will fix societal problems.  If any money is given away to anyone it should be for food, education, healthcare, and basic housing.  I believe these things are human rights no matter who you are.  However, it should not be assumed that extra income will automatically be used to acquire better housing or even housing at all.  

Although, I can see something like this creating a lot of social uproar and dissension which is the last thing this country needs.

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