Georgia FHA Home Loans - (& Opinion)

Excuse me, like I said in my other posting about the media loving to bleed the real estate industry and people loving to believe it. Now the National Association of Realtors says we had an .8% seasonal adjustment and the New York Times (go figure) called it the worst decline in 24 years. Here are the links to the articles:

National Association of Realtors

New York Times

I don't know about your market but we've had good, solid, honest real estate investment transactions blowing through our office like the M train into Wall Street for the last 5 or 6 years. I like this blog because we get to play with data from the census bureau and NAR.

"There were 6,480,000 existing-home sales in all of 2006, down 8.4 percent from a record 7,075,000 in 2005.  The second highest total was 6,779,000 in 2004; NAR began tracking home sales in 1968." NAR

To finish off the article in the times I love this line, "Economists say they think the slump in the housing market, which was even more pronounced in new homes than in existing ones, has bottomed out, and they look for a rebound in 2007." NYT

Hmm. Notice anything interesting in the graph? Could it be that the volume of home sales is directly and proportionately inverse to the curve of interest rates? Hello? Rates go down, sales go up ... rates go up, sales go which way? Anybody up there at the NYT bright enough to figure that out?

Okay. I'm better now. 

Talking heads have no experience, no understanding of the industry, are clueless about the nuances and intricacies of the factors governing the ebb and flow of people in and out of markets and still have the power of the pen to dampen an entire market sector. Why? 

My favorite movie quote from recent years is when Will Smith and Tommy Lee Jones as agents J and K respectively in "Men in Black" are talking and J (Slick) says to K, "Why don't we just tell people the aliens are here. People are smart. They can handle it." And K hits the nail dead center on the head when he replies, "A person is smart. People are dumb, panicky animals."

Truth in fiction. We are a part of the blind heard of the media. Not all of us. Not you for sure! I mean you're here participating on Active Rain. But, generally, the media rules the thoughts of Jung's "collective consciousness" of which you and I are part.

That's why we need professional like you to share with us, here, on Active Rain, what is really happening in your neighborhood. We all know that some bubbled, some didn't and some popped. What we don't know is exactly where and how it affected you and how to help you get up out of it. We love you!

Just a side note: We (you) BETTER pay attention to the negative press on this subject because most media outlets slant negative on everything. They especially loathe business minded (free market minded) politicians and military actions even when they are needed. We have a very important election just 2 years ahead of us and I am concerned that the media will be able to influence enough people who know nothing about how small businesses, like yours, keep the world floating and away we'll go with things like tax hikes, increased capital gains, skyrocketing minium wage and more penalties for the middle class. But that's my two cents *while* we're on the subject. Hehe!

I just ran my numbers from 2006. Not satisfactory. But I got really curious about the Summer months where I normally close 35 to 40 loans and see that July dropped down to only 18  units with only 12 being new purchases. From 28 in May to 12 in July cannot be found in my history. It wasn't the rates, they remained steady. It may have been a little due to advertising because I cut my radio budget in March but look at October and I did 39 units with the same advertising. So I did a little research on news reports. 

Wow

It seems that in March FORTUNE had a story that included the words "last dying gasp of the real estate boom". CNN was all over the place about the bursting bubble. Pick just about any media outlet and they were raving about the bursting bubble.

I assign the dismal Summer to media blitzing.  December is always slow, January generally launches an exciting Spring.

During those down months I spent hundreds of hours showing people that Atlanta real estate is UNAFFECTED by the so-called "bubble". I showed them a 70 year chart of national and state specific real estate prices and how Georgia has and continues to outpace the nation just slightly.

I TEACH NO PIE IN THE SKY and that's the state I live in. Everyone can do very well in real estate investing by remaining calm, learning how to read the numbers and turning off THE NEWS! Emotions kill real estate investors.

So, here we are in January of 2007. Nine months after CNN: Money reported on "Welcome To The Dead Zone". Today, what do I see?

TOP 10 CITIES: WHERE TO BUY NOW

So what are they and do you agree?

1. Panama City, Florida
2. Vero Beach, Florida
3. Bridgeport, Connecticut
4. Lakeland, Florida
5. McAllen, Texas
6. San Luis Obispo, California
7. Wilmington, North Carolina
8. Manchester, New Hampshire
9. Fort Collins, Colorado
10. Atlanta, Georgia

I am not disagreeing with this report but I do want to remind you that this is the same media outlet that gave us the 19 deadliest cities to invest in back in May of 2006. After lunch I shall blog again. Let me run the numbers and do the charts on the historical data of these 10 choices compared with the same outlet's Dead Zone and Fastest Growing Counties data as well as the best picks from the Dead Zone article and get back to you.

In the mean time, if you are in one of those 10 cities, rejoice! For the pen of the media is upon you! 

I must have had at least 200 calls from landlords wanting me to check the credit for their potential clients. And if the number of calls I have received is 200 then the number of times I've had to say, "I am not approved to do this and neither is, to my knowledge, any other bank or broker unless they are certified and licensed as a Credit Reporting Agency." However, here are some companies which offer these services. I know some loan officers will do this for their clients but it is not permissable.

 
In no particular order:

http://www.creditlink.com/
http://www.tsci.com/
http://www.atshome.com/
http://www.tenantscreening.com/
http://www.youcheckcredit.com/tenant_screening.html
http://www.aaacredit.net/services_tenant_screening.html
http://anewtenant.com/
http://www.amerusa-tenant-screening.com/
http://www.credit-reports.com/tenantinfo.html
http://www.citicredit.net/tenant_screening.html
http://www.continfo.com/continfo/tenant_screening
https://www.fabcogroup.com/screenings.htm

I know, I'm a wealth of information. And now I can just give my clients this link and so can you. 

UPDATE: The above links are tenant background and history checking links. 

When a loan officer asks you if a property is in "move in condition" this is NOT what they mean:

Believe it or not we have had applicants for investment grade mortgages tell us that a property like this was "move in ready" and adding "it only needs cosmetic repairs".

WAKE UP!

This property is NOT move in ready. It needs MUCH MORE than a little cosmetic repairs. The kitchen needs to be completely ripped out and replaced.

Last year I purchased a home from a respected member of the community who told me before I viewed it that it only needed cleaned up. Now it wasn't this bad but it needed this same amount of work. I purchased it, rehabbed it and have some great tenants now living in it.

This does not make this a bad purchase opportunity. In fact, I may complete a purchase like this myself. What this does do is disqualify this property for a 100% conventional investment loan. It does not make it a bad purchase.

In fact properties like this can usually be had far below ARV and can be turned into fantastic long term holds.

Just one more clue, investors. Don't drive your Caddy, Mercedes or Beemer to your slum property.

First you don't even want your tenants to know who you are. You want them to know who your management company is. If you have to go in person drive your TRUCK or your BEATER car. I keep one of each.

Wear your Sears work clothes. Seriously. Grey top and grey pants just like dad used to wear when he worked on the house. At least get yourself a pair of coveralls.

There is nothing wrong with not knowing the intricacies of real estate investing but there is something wrong with not eventually learning. Why? It is you, your tenants and the lender who ultimately can lose.

GET EDUCATED! 

Okay - most of the smoke has cleared. The wildfire investor is out of play and you and I can get back to serious, honest, real estate investing. Whether you are a seasoned investor or you are just thinking about investing in real estate you should attend this small audience workshop. The next 2 are already booked but if enough people show interest I will add more times.

There are several workshops and seminars from which to choose but this one is, write this down so you don't forget, free to attend.

NO COST TO YOU

Real Estate Investor QuickStart Workshop

Tuesday, January 23rd, 10:00AM to 12:30PM
The Innova Center
2501 E Piedmont Road
Suite 111 (Conference Room)
Marietta, GA 30062

To reserve your seat call RUSTI at 678-946-0100
Fee for this seminar: WAIVED
Value of this seminar: Priceless!

Topics Include:
Introduction to Real Estate Investing
Funding Your Deals
Finding Distress Sales
Preforeclosures and Short Sales
Acquiring Properties "Subject To"
Tracking Your Progress With Spreadsheets
Managing Cash Flow with No Money Down
Protecting Your Assetts
and much more!

The Workshop requires approximately 2.5 hours of your time. We start at 10AM with coffee, soft drinks and doughnuts or bagels. The next 2.5 hours is fast paced and packed with information. You get a 50 page workbook with information to peruse once you leave and dozens of important tips and links to more information to study when you return to your home or your office. While you are there we create a basic outline for your real estate investment plan. You also get access to private tools we use to calculate whether an investment opportunity makes sense.

More seminar information available HERE

Looking for a Legitimate Source for Extra Income?

You can earn 25% of the sales price as a commission for referring your contacts to our seminars and workshops. In fact, if you ever want to attend free you simply refer 4 paid attendees and you will not only receive the 25% commission you will be entitled to one seat for yourself (non-transferable). To find out more about this opportunity call RUSTI HARRISON at 678-946-0100 and tell her you are interested in being a referal agent for Ken's seminars and workshops.

Upcoming In Person Events

Short Sale QuickStart Workshop
Thursday, February 15th, 2:00 PM InnovaCenter - $199 per seat

60 Minutes to Net Positive Cash Flow for RE Investors
Tuesday Evening, February 27th, 7:30 PM InnovaCenter - $199 per seat

De-Frauding Your Deals : A Must Have for Investors and RE Professionals
Tuesday Evening, March 13th, 7:30 PM InnovaCenter - $99 per seat

REI QuickStart Workshop
Thursday, March 15th, 10:00 AM InnovaCenter - Reservations required

ShortSale Quickstart Workshop
Thursday Evening, March 22nd, 7:00 PM InnovaCenter - $199 per seat

Multi-Family Investing : Introduction and Scope
Tuesday, March 27th, InnovaCenter - $199 per seat

About The Speaker

Ken Cook is definitely not your "ordinary guru". In fact if you ask him, he's not a guru at all. He's learned from the mistakes and successes of others while facilitating real estate transactions through his mortgage company and real estate company which are dedicated to real estate investors.

Novation Mortgage is tops in the investor market niche in Georgia. You've heard about them from John Adams as well as other true gurus in the industry. Novation has funded over $150,000,000 since 2001.

Ken and his team recently participated in the Learning Center's Wealth Building Expo along side of Donald Trump, Robert Kyosaki and Suze Orman.

Ken's father, Ken Sr., was a developer and builder (Cobb-Metro Construction and North Georgia Rigging and Construction) through the seventies and eighties in the metro Atlanta area. He and his partners built hundreds of contemporary homes before moving into almost exclusively commercial develpment and construction when they won the contract with Southern Bell (BellSouth) to construct all of their Central Offices in the metro area.

Ken's uncle Ben Hale is a 96 year old real estate guru who is still active in the industry and recently published his first book, available on Amazon.com, entitled Prepare Yourself for Success. Ben has been in the real estate industry since the 1930's. He has been a broker, closing attorney, developer, lender, author, lecturer and radio talk show host.

Ken has another uncle Jim Elkins who has been a real estate investor since the 1960's. Jim is now in his early 80's and is divesting himself of his holdings. Jim acquired many of his properties through tax sales and sheriff's auctions.

I really do not know how to spell it but here is a picture. Most likely it would be spelled "shoo" or "phyew" but it is that sound you make when you just came through a strenuous time. That is how I feel as an investment lender.

Just a few years ago you had to have a credit score of 720, 6 months of reserves for ALL of your debt, full doc income AND twenty percent down to buy an investment property. From about 18 months ago until last month you could get 100% financing with NO documentation and a 620 middle score for an investment property.

Bad idea. If you haven't read Stop The Bleeding please partake.

So here is "some" news on the investment financing front:

Wall Street adopted a ten max financed rule. Rapid Acquistion only applies to Investors with less than 2 years multi-property management experience. It is 2 properties in 6 months or 4 in 2 years.

I do not know of anyone doing the 680 100% NOO anything other than full-doc anymore. The days of the crazy loans are done. Ed Moore with Equibanc told me Wachovia shut them down this morning. That’s the 2nd lender down this week.

The volume/revenue coming in is not enough to keep up with the crazy loans going bad. When you see Top Ten lenders like SunTrust, Bear Sterns, Wachovia, Countrywide, and us start cutting programs/LTV’s you know small lenders are going out. When you see major companies like Own IT and MLN shut their doors you know the crazy loans have to go. We have to get back to doing smart business. If we continue to make these crazy loans the industry will go down the tubes and we could ruin the housing market by flooding the market with foreclosures.  I talk to brokers, account executives, and Loan Officers with other companies daily and have been told on more than one occasion that SunTrust and Bear Sterns both cut all their products to 90% LTV/CLTV max. The trend is some lenders are enforcing the chargeback clause in their Broker Agreement for loans that go bad and/or loan that contain fraud.

I keep a list of tools that I use very often in my business. I work from several locations so some of these are quite valuable to me and may be to you as well.

Instead of spending $50 or more on software to create PDF files when they only need to be read and not edited I use CutePDF. It installs like a printer and when you select PRINT from your menu on whatever application you are using such as Word, Excell, Internet, it will print that document into a PDF:

CutePDF Writer (Freeware) Create professional quality PDF files from almost any printable document. FREE for personal and commercial use! No watermarks! No popup Web advertisements! Now supports 64-bit Windows.

OpenOffice. If you don't love this you really need to quit using computers. Delete Micros___ Office and get Sun MicroSystem's OpenOffice. It is robust, does anything any other major office paskage will do and get this: It's free. It reads documents and files from all of the $1000 packages and creates flyers, spreadsheets, books, and everything else. (Sun is the MS of Unix. They are HUGE and produce excellent products. They have been around since 1982 by the way.)

OpenOffice.org is a multiplatform (runs on Windows) and multilingual office suite and an open-source project. Compatible with all other major office suites, the product is free to download, use, and distribute.

Shrink Pictures. Another one I use often. It's a little slow but say I wanted to add an image to this posting but the image was huge and I need to make it smaller. Opening up my photo software takes some time and eats up a lot of my system resources. So instead of doing that I just go to Shrink Pictures, find the image I want to resize, choose the size I want it to be and presto change-o! Meanwhile I go back to my ActiveRain tab in my Firefox multi-tabbed web browser and continue blogging. When ready for the image I go back to Shrink Pictures, save my resized image to my PhotoBucket account for future use and it's ready to pop into my blog posting:

Welcome to Shrink Pictures.  As an admin of a large Forum, we have a lot of users who have almost no grapics skills or knowledge.  This website was created out of frustration of users asking questions like How do I resize images? How do I make images smaller? and How do I shrink this picture for an avatar?.  So, we created the Shrink Pictures tools that are no more difficult than posting in a Forum and now anyone can Resize Images and Digital Pictures.

Photobucket provides free video and photo sharing. Easily host and link your images and videos to social networks, auction sites, blogs, and message boards. Photobucket is reliable and very easy to use. Give it a try!

Firefox, The award-winning Web browser is now faster, more secure, and fully customizable to your online life. With Firefox 2, we’ve added powerful new features that make your online experience even better. 

Online word processor. I love this one if I'm sitting in the lobby of a hotel where they have internet access I have access to a word processor capable of reading, editing and creating documents online - for my favorite price, FREE!

ajaxWrite is a web-based word processor that can read and write Microsoft Word and other standard document formats. Anytime you need to open, read or write a word processor file, simply point your Firefox browser to www.ajaxwrite.com and in seconds a full-featured program will be available for you to open, edit, print and save.

I have more but I also have a business to run and a seminar to conduct! Maybe I can post more later ... 

We did this before and it was great fun. And we all learned from it so I thought I would do it again. Select the best possible answer for the following statements or questions:

1. The ad reads, "Get Paid For Your Good Credit! Investor with massive assets needs to purchase 1000 homes in 30 days. All you need is a middle credit score of 680 or higher, ability to document your income and assets, and I will pay you $20,000 for each deal."
(A) As long as the person with the good credit knows about the deal there is nothing wrong with this.
(B) What is the phone number, I want to do this!
(C) This is considered a straw purchase and not only has civil penalties but the FBI is looking for these deals.
(D) It is legal in all states except California.

2.  I am a locator and it is getting harder and harder to get paid so my attorney came up with this great idea. I create an LLC and form a partnership with the person selling the home. At the closing table my $50,000 is disbursed into the LLC and nobody should care because the seller is a member of the LLC, too. After the closing we dissolve the LLC and I keep the proceeds. Genius!
(A) You better look good in orange because this is called a shell company and it is most definitely illegal.
(B) It doesn't matter as long as the lender knows about it.
(C) 50k?? Are you kidding? I'm turning in my license and going private!
(D) Honestly, I don't see the problem with this. It's a free market.

3. I work for my brother-in-law and he pays me cash. I have been working for him for almost 2 years, something like 19 months. To get my mortgage I need to show one month's worth of pay stubs and demonstrate 2 years of employment. I'm going to create my paystubs in Excel to look exactly like they would have if that idiot actually had a checking account and then when the mortgage company calls I will be the one answering the phone anyway so I'll just act like I'm him and tell them I've been working here two years. It's the only way I can get my new home.
(A) Lying about the length of employment is wrong but making up paystubs that he should have received anyway is not a problem.
(B) That should be fine just as long as he makes his payments it won't hurt anything.
(C) Falsifying documents is a felony and so is assuming the identity of another person. The FBI calls this "fraud for housing" and it is a big problem in America.
(D) Actually, I ask my clients to do things like this all the time because the market is so slow right now. If houses don't get sold people lose their jobs!

Have fun!