All Forum Posts by: Brian Sparr

Hi @Daniel Winsor -

You should be able to do some quick math to determine if a refi makes sense ... find out from the lender what the total cost of the refi is going to be (points + origination fees + appraisal + etc) and divide that by the monthly P+I savings you'll gain with the lower rate.  That'll tell you how many months it's going to take for you to recoup the cost of the refi.  If you believe you're going to hang onto the property for longer than the recoup period, it's worth considering.

Depending on what your current rate is, some lenders might offer you a no-cost refi.  It's not truly a "no-cost," but, rather, it's the lender using a higher interest rate than what you qualify for to offset any of your out-of-pocket expenses.  For example (and these numbers are made up), say your current rate is 5% and you qualify for 4% today ... the lender would offer you the choice of doing 4% and paying for all of the expenses or 4.5% and you don't pay a dime.

When it comes to sitting on the sideline waiting for prices to drop, just keep in mind that you need to balance the price drop with the risk of interest rates rising.  The back-of-the-napkin math is that for every 1% interest rates rise, a buyer loses roughly 10% of their purchasing power.  For example, say you qualify for a $1M loan today at a 4% rate (PI = $4774) ... well, if rates go to 5% (and nothing else in your life changes), you'll only qualify for a $900k loan (PI = $4831).

If cash flow is what you're focused on, just make sure you're watching rates at the same time as prices when you're looking into that crystal ball...

Just to echo what @Chris Mason said, at least in my part of the SF Bay Area, I've never seen solar add value, interest or excitement to a property for a potential buyer.  In fact, when the system isn't fully paid off, it tends to create the opposite effect and deters more buyers than it ever attracts.  

I have clients that bought in Alamo and the property came with fully paid off solar and the sellers told us how their average electricity bill was sub-$20/mo ... for my clients, this was nice but played zero role in either deciding to make an offer on the place or what price to offer.

@Pedro Salcedo

The idea of using the listing agent to represent you as a buyer sounds appealing - maybe a better chance of getting your offer accepted and possibly a cost savings if they reduce their commission; however, keep in mind the type of relationship you've created with that agent.  You're not married to them ... you're not even dating them ... you're having a one night stand - and they know it.  If they can't keep you in this deal, they know you're gone and off to the next listing agent.  So, what happens when the inspections come back ugly?  Do they downplay it?  Or, the appraisal is $20k below the purchase price?  Are they going to negotiate on your behalf or the sellers?  Remember, they're married to the sellers...

If you've got an agent that you're committed to, there'll be no doubt as to which party they are fighting for.  They'll know that if this isn't the right property for you, that's ok because, together, you'll find a better one.

The really good agents will talk you out of way more properties than they ever recommend for you.  You're not going to get that kind of guidance, though, if all you do is bounce from one listing agent to the next.

Hi @Peter Kozlowski - check out Thrive REIA ... meetings are typically held in Walnut Creek and generally have a really good turnout and quality guests/speakers.

Hi @Pedro Salcedo - congrats on the graduation!

1) Short Answer: I've found Bank of America to always be one of the most competitive - when they're not the lowest, they'll often match the lowest if you have it in writing.  Long Answer: when buying in a competitive market, there's more to it than just a low interest rate!  My experience with BofA (and a number of other large national lenders) is that they tell you they can close the purchase loan in 30 days, but, in reality, it's going to be closer to 45+.  If you're going up against cash buyers or other lenders that are closing in 10-14 days, your 30+ day offer is immediately at a disadvantage.  Also, understand that not all loan officers are created equal - BofA might offer you the best rate, but you can have vastly different experiences depending on which BofA rep you're working with.  For me personally, I'd rather work with a local lender who's capable of closing in 14 days or less and that has a reputation for closing on time (or early) even if it costs me a fractionally higher rate.  If the listing agent you're submitting your offer to is any good, your lender's reputation is being factored in alongside your price and other terms.  The BofA and Quickens of the world are not making your offer look more attractive.

2) Foreclosures have been pretty much non-existent for the last few years in the markets that I work in, so it's been awhile since I've done much research on this ... however, when I did, RealtyTrac and ForeclosureRadar were the main players.

3) Full disclosure - I'm an agent, so my response to this will be biased ... I'll let somebody else handle this part :)

Hi @Joshua Biondi -

If you're wanting people to submit an application and pay you a fee before they've ever stepped foot inside the property, I'm going to guess that your virtual tour will need to be pretty impressive.  The best on the market, that I'm aware of, is a Matterport 3D tour.

Do a search in your local market for real estate photographers that agents are using when they need to market a listing - depending on your market, I'm guessing you'll find a handful of photographers that offer the Matterport tour as part of one of their packages.  There's a good chance they bundle in a single-property website as part of that package, too.  If they do, you're all set - you'll have photos, a 3D tour and a hosted website done for you.

Good luck!

Hi @Scott Raley - actually, I've lived in Walnut Creek for the past 15 years and run a small team that focuses on the East Bay (Contra Costa and Alameda County to be specific) ... I've somewhat recently moved to the Raleigh metro and practice here, too.  My examples are taken from direct experience and active clients today.

Hi @Sam Bernard -

I, obviously, can't speak to the author's intentions, but I'll give you my perspective (and, for what it's worth, I'm an ex-Trulia employee from the early days)...

The short version is because realtor.com started out as a network for members of NAR ... nearly every MLS in the country provides it with a direct feed of their listings - this gives them 100% listing coverage for each of those markets with the most up-to-date information.

When Trulia and Zillow launched, no MLS would work with them. They had to build relationships directly with agents, brokers and franchises in order to get the listing info. This meant they rarely had even 80% listing coverage in any of the major markets and the data was being pulled from secondary systems that agents would forget to update, so the data wasn't always accurate. Fast-forward to today, though, and things have greatly changed and improved for them.

Hi @Ryrob Thomas -

Here's my take on it...

1) Yes, but that's a good thing. When the owner-occupancy levels get too low in a complex, lenders stop providing funding for those deals ... if financing becomes unavailable for a complex, values will plummet - I saw this happen in a Walnut Creek complex back in 2009. Understand, though, that if there are no rental restrictions when you buy and you immediately rent it out, you will be allowed to continue renting it if/when the HOA institutes a rental restriction down the road. (At least, I've never heard of an HOA not allowing you to continue renting it out...)

2) Not always true.  A number of the East Bay towns have seen significant increases in new apartment and condo complexes being built, yet rents have continued to rise for all of the rentals.  Sure, the newer units will rent for more, but it doesn't imply the rent will drop for older units.

3) Absolutely - and this is where the Bay Area, in particular, gets hurt. I've got a client, similar to you, looking to invest in the Concord market - as of two days ago, the median age of active condos on the market was 1972 and has a $400+/mo HOA fee. Compare that to the other market I work in (Raleigh, NC metro) where we have a client just offer on a unit built in 2016 with a $75/mo HOA fee.

4) Yes, it's true that single-family homes tend to appreciate more than condos/townhouses do in the same market; however, that shouldn't matter to you.  If the single-family market numbers don't work for you, then it doesn't really matter how much they appreciate.  Focus, instead, on what you can make work ... that might be condos in the Bay Area versus single-family homes in a different market.  And, in that case, you're not just looking at appreciation of single-family vs condo ... instead, you're looking at appreciation of single-family in market X vs condo in Bay Area.  And all of that just turns into a big guessing game, anyways!

Unless you've got a lot of cash, your numbers are going to be tight (if not negative) in most parts of the Bay Area - the idea of putting 20-25% down and getting it to cash flow on day 1 is very unlikely ... it's why we're working with a lot of Bay Area people looking to invest out of state right now.

Hi @Sunil Kumar -

1) Yes, I'd highly recommend you have the property checked - in addition to termites, the inspector will also be looking for dry rot, fungus and signs of other wood destroying pests.  Unless you know what to look for and you're making it a point to checking the crawl space along with doors, windows, kitchens, bathrooms, decks and trim on a fairly regular basis, you could be exposing yourself to some big repair bills down the road that could have been easily prevented.

2) Yes, it's quite possible that the termites could be treated with a spray ... just depends on the exact issue.

3) My recommendation would be to consider the following ... if you haven't had the building inspected in a while (which it sounds like you haven't), I'd do everything right now ... bring the building into good standing as it relates to wood/pest issues.  Then, moving forward, just make it a part of your move-out process for each unit.

Good luck!