Real Estate Investing 101

Greater Phoenix Rental Market Showing Strength

I was in a workshop with Cromford Report guru Mike Orr a couple days ago. He mentioned ARMLS data shows strength in the Greater Phoenix rental market. Specifically, he said the active rental listings during 2009 hovered between 8000 & 9500 rental listings. Today’s ARMLS numbers for all types of rentals popped up at 6339.

Mind you, not all rentals are on ARMLS. Many rentals are advertised using other media, yet I believe the ARMLS numbers show a trend. I have put called into AZCentral.com and Rent.com to see if they have similar figures. When I get them I’ll update this post.

In the meantime, let’s look at some ARMLS single family home rental numbers; The data is pretty telling. The table below shows the number of active rental listings as of this post,  as well as the number of signed contracts year-to-date in 2010.

NOTE: ALL DATA IS FOR SINGLE FAMILY HOMES ONLY.

City	# of Active SFH Rental Listings on 2/26/2010	Signed SFH Rental Contracts Jan/Feb 2010
Valley Wide	3352	3263
Phoenix	670	668
Chandler	142	266
Glendale	136	177
Peoria	143	156
Anthem	51	71
Scottsdale	623	280

As you can see,  the number of active listings is about 50% of the signed contracts numbers. This indicates the inventory is turning over approximately every 2 months.

Chandler and Anthem are showing great strength with the inventory turn over in the 1 month range while Scottsdale is relatively sluggish with a turnover rate of approximately 4 months.

Provided that the ARMLS numbers represent a general market trend, landlords are seeing good news for the future. Add to this the number of home owners being displaced by foreclosure or short sales and the 2010 rental market is looking good.

If you would like us to run this data report for you, we’d be delighted. We can provide results by city or zip code.

Best to you,

Gene Urban & Ron Urban
The Urban Team at Realty Executives
602-234-5777

Information is deemed reliable, but not guaranteed. Data provided by ARMLS.

Can I Buy A Home With An IRS Tax Lien, Maybe

We've seen a few deals come by where an IRS tax lien showed up during our due diligence.  Our mortgage friend, Ron Hall, from BNC National Bank just sent us this article that explores this subject. If you have more questions, give Ron a call at 623-293-6970 or pop him an email at rhall@bncnationalbank.com. Here is what Ron has to say:

Many home buyers and real estate professionals find out they are dealing with a tax lien and assume that this buyer is done and move on to the next client.

I am here to tell you that is a HUGE mistake. In FHA lending the rule of thumb is that if the collection can affect title it has to be paid off, well that’s a guideline not a rule.

A couple of things come into play that most people are not aware of: First, is there a payment arrangement? In this case can you show that you have set up a payment plan with the IRS and have made those payments in a timely manner? The gold standard here is 12 months of canceled checks as proof.  If the answer to that is yes the second and very little known tool is… Will the IRS subordinate the lien to the mortgage? We’ll most of the time that answer is YES. Think about it for a minute, you owe the tax guy some money, you want to buy a home, so you ask the IRS to subordinate the lien so that you can accumulate an asset that they can collect against in the future if you default. Is there really a downside for them?

Hope this info helps provide some options and clarity to those who face buying a home with an IRS tax lien.

Gene Urban
www.UrbanTeamAz.com
602-234-5777

Information is deemed accurate but not guaranteed.

Flipping Homes Just Got Easier With New FHA Guidelines

Good news for residential real estate investors who are flipping properties. Last Friday FHA issued a waiver on the 90 day flipping rule. In the past, a real estate investor had to let a property "season" for a minimum of 90 days before they could sell it to a buyer using an FHA loan product. Since many of the flips were in the under $150,000 range, FHA buyers were a big part of the market.Under the new FHA guidelines, the waiver of the 90 day rule allows an investor to put the property on the market immediately with the following restrictions.

1. Waiver takes effect February 1, 2010 and will last for one year unless extended.
2. Investors are now exempt from the 90 day seasoning rule.
3. All transactions must be arms-length.
4. No identity of interest can exist between the buyer and seller.

There are a few more considerations in the guidelines. We understand that homes marketed for more than 20% of purchase price will need to substantiate the increased value. So keep all your receipts for costs incurred in the renovation.

Investors should also understand that appraisers will still evaluate the price of the home based on current market value. We advise performing a detailed evaluation of the neighborhood you are investing in and plan your expenditures wisely. You don't want to do all this work only to find you have overbuilt for the neighborhood.

Best to you and thanks for following us on Real Estate Investing 101.

Gene Urban and Ron Urban
The Urban Team at Realty Executives
602-234-5777

our other sites:

www.SearchforHomesinPhoenix.com -- The best real estate search site for Greater Phoenix

www.UrbanLifeBlog.com -- Downtown and Central Phoenix Information

www.Short-Sale-Phoenix.com -- Everything you wanted to know about short sales.

Should I Buy A Foreclosure or a Short Sale?

Many investors are asking the big question... should l be looking at buying foreclosures or short sales.

The answer is not cut and dry. However, in many cases short sales may be the right choice for three reasons. First, they are priced similarly to foreclosures. Second, at this time there are more short sales to choose from than foreclosures. Third, they are often better condition since the home owner usually lives in the home and can augment your inspection with full property disclosures.

The third factor is important since most investors are not general contractors and have to pay retail or near retail for fixing up a property. The lack of disclosures and AS IS condition of a foreclosure can lead to some ugly post close of escrow problems. This simple factor can make a big difference to your bottom line. 

The BIG downside to short sales is time. It still takes a long time to close escrow on a short sale. The other caution is the seller's lender may come up with some surprise fees at the end like back HOA dues.

We all know investing in real estate is a gamble. That's part of the fun for many hard core investors... throw the dice and see what come up.  Short sales are simply one of the games you can choose to play.

We have a lot more information about short sales on our dedicated short sale web site... www.Short-Sale-Phoenix.com. 

Best to you,

Gene Urban & Ron Urban
The Urban Team at Realty Executives Phoenix
602-234-5777

Urban Team Launches New Real Estate Search Site for Greater Phoenix

Greetings on a rainy Monday in Phoenix. Rain is such an uncommon event here it is worth noting.

We, The Urban Team, are excited to announce our latest specialty web site for people searching for homes, condos, land, and investment property in the Greater Phoenix area. WWW.SearchForHomesInPhoenix/com not only features the spectacular Diverse Solutions search tool, it has a bevy of specialty pre-built searches designed to save you time.

Among the many specialty searches are:

• Search by zip code.
• Search by subdivision (Many of the most popular subdivisions are included)
• Search for foreclosures and bank owned properties.
• Find short sale homes, condos, land.

Don't forget to look at our Tips for Better Home Searching page too. It has info for both investors and regular home hunters.

Have a great day and even more fun as you search and find the best homes in the Phoenix Arizona market.

Ron Urban & Gene Urban
The Urban Team at Realty Executives
602-234-5777

Short Sales In Phoenix... Questions, Answers, Negotiation Help

Short sales are quickly becoming one of the main options investors have when buying a property in the Greater Phoenix and Scottsdale real estate market. In response, the Urban Team has launched a short sale specific web site. We'll tell you a bit more about that in a minute. Let's take a look at short sales first.

Some ask why short sales are becoming more prevalent when they have a reputation for being difficult to buy or sell. In the Valley of the Sun, the answer is pretty simple.

According to the Attorney General's office, 82% of Maricopa country homeowners with mortgages are upside down. If you are upside down on your mortgage, you have few options to sell your home. You can find a cash buyer who doesn't mind overpaying a lot (good luck with that one), you can sell your home and pay off the balance due on your mortgage (provided you have a lot of cash lying around) or you can do a short sale.

The good news is that short sales are getting easier to buy and sell. Many of the lenders have their act together and actually make decisions in under 60 days. What a concept!  In addition, new short sale guidelines are coming down the pike from Treasury that sound pretty good and will help the process immeasurably. We'll let you know when and what they do.

I just pulled some stats on the active listings in a few parts of towns and the data is pretty clear that short sales are on the rise. A couple months ago short sales comprised about 10% of the listings in Phoenix; Today the number is 31%. If we look at the NW Valley we see even higher numbers with short sales coming in at 35% of the active listings. Conversely, bank owned homes in the NW valley are way down with only 16% of the listings being REO properties. 

If you would like to learn more about short sales, the process and such, we have created a site just for you. Shot-Sale-Phoenix.com has lots of current information including: FAQ's, what goes into a short sale package, negotiating short sales, buyer questions as we ll as answers to those selling by short sale.

If there are areas of interest or questions not covered on the site, please let us know and we'll go hunting and foraging for the info.

Best to you on this beautiful November day.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

What are Real Estate Investors Buying In Phoenix These Days?

This isn't an information post, rather I am trying to gather info from real estate investors as to what they are currently buying. So, all you investor types, can you give me a bit of feedback on what your current strategies are? If you are in the rental side of the business, how are vacancy rates effecting you? Are any of you trying to do flips? Where do you, the real people living and breathing real estate investing see as the short term opportunities?  Long term?

I will gather data and information from as many sources as possible and be back to you with the results. Just toss me an email at gene@urbanteamaz.com with your expert opinion and we'll see what the pros have to say.

Best to you,

Gene Urban

Estimating Repairs on Foreclosure Properties

The following article on estimating repairs on bank owned or foreclosure properties came our way from the good people at Advantage Inspection Service. These are the guys we use for our personal property inspections.

Since many of our readers are buying homes in “AS IS” condition, we thought this info would be valuable and important. Enjoy.
____________________________________________________________________________________

In 2009, 36.8% of all closed residential sales in the Greater Phoenix Area were lender-owned properties!
We all know that bank owned and foreclosure property sales are clipping along at a furious pace right now. Many consumers are caught up in the perception that they will undoubtedly save mountains of money if they buy a distressed property. Experienced brokers and agents know that this is not always the case. Repair costs can grow rapidly and turn a “great deal” into a time consuming frustration. Estimating repair needs and costs is crucial.

Your first step is a professional home inspection for several reasons. It is likely that the homeowner did not properly maintain the property as finances became strained. In some cases, an angered homeowner may cause both obvious and hidden damage to the property. It is not uncommon to see missing/damaged fixtures, appliances and components at a foreclosure property.

Start estimating. You can take the simple or detailed approach with estimating repair costs. A great first step is to go to www.fixfliprent.com/repairs where they have a free easy to use repair cost estimator. If you want a finely tuned estimate you can look at the Craftsman Book series of software. Trial versions can be found at www.craftsman-book.com/downloads which gives you the ability to estimate construction costs like a pro.

One final note. It is often a challenge to get the utilities turned on before the inspection. Persistence is needed in dealing with the various parties as you arrange for the inspection. Don’t give up and by all means have the home inspected. Who knows how many thousands of dollars it could take to repair an undiscovered defect.

For more information, feel free to give us a call or send an email.

David Swartz
Advantage Inspection Service
602-864-8331
www.azinspec.com

The Urban Team... Featured Real Estate Columnists for Times Publishing

A couple months ago we were contacted by the publisher at Times Publishing to write a specialty column called "After The Bubble." We were asked to research and provide information about some of the great real estate deals in the Greater Phoenix market.

We spit the market into four sections: Great deals in the West Valley, the East Valley, Scottsdale and the luxury market. We scoured the Arizona Regional Multiple Listing Service (ARMLS) looking for recent home sales that were significantly less than what the home sold for a few years back.

The process has been very fun and the research has been surprising at times. You too can see the wild deals we find by picking up a copy of one of the many Times Publishing newspapers including: The Scottsdale Times, Chandler times, Northeast Phoenix Times, Glendale Times, Gilbert Times, Ahwatukee Times or East Mesa Times. The paper can be found in racks at most Grocery Stores, Walgreens and other locations valley wide.

We've included a scan of the column from the September edition. We hope you enjoy and be sure and pick up the October edition coming out soon. If you click on the image you will see it full size.

 Ron Urban & Gene Urban
The Urban Team at Realty Executives
602-234-5777

Why Won't My Lender Work With Me on a Loan Modification or Short Sale?

BREAKING NEWS: The Urban Team has launched a site dedicated to short sales. We have the latest news and information for those needing to know more about short sales in the Phoenix area. Just go to www.short-sale-phoenix.com. 

Yesterday, attorney and mortgage mediation specialist Doug Farnam spoke with us about loan modifications and short sales. Doug is with the Mortgage and Mediation Group at Thomson Conant PLC and works in the trenches on loan mods and short sale negotiations. The theme of his talk was "Why won't the lender work with me on my short sale or loan modification?"

We felt his talk was of great interest to both investor and regular home buyers trying to purchase short sale properties as well as homeowners trying to negotiate a loan modification or short sale.

We learned a great deal during Mr. Farnam's talk, especially about the role of a little known or understood player called the mortgage or loan servicing company. Although I was familiar with the term "mortgage servicing company", I was not aware of their involvement with loan modifications or short sales.

Let's look at what a mortgage servicing company does. According to the people at the financial dictionary, a mortgage/loan servicing company does the following:

The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan.

Some lenders service the loans they sell themselves, however, a large number contract with an outside vendor to perform this function. This is especially true of loans sold in the secondary market.

According to Farnam, some servicing companies have little incentive to help homeowners with short sales or loan modifications. It often depends on whether the loan servicing company provides debt collection as part of their service.

The contract between lenders/investors and servicing companies generally covers fees for processing payments, paying insurance & property taxes and some or all of the foreclosure process. Thus, they may not be contracted to perform the work required for loan modifications or short sales.

This is not true of all servicing companies. Some, like Litton Loan Servicing, do offer debt collection, short sale and loan modification services. However, the logistics, infrastructure, staffing, IT and understanding of the rapidly changing regulations can make the job daunting at best.

I had a nice chat with the people at ILS, Investor Loan Services, this morning. They specialize in servicing real estate loans backed by investors rather than banks. They discussed the many hurdles their industry has faced while trying to deal with the ever rising number of loans in default. One of the problems was simply software. Each bank or investor has their own set of rules on how to handle a loan in default. This requires industry specific software developers to customize modules that drop into the accounting software a servicing company uses. In addition, the Federal Government, Fannie Mae and other involved parties constantly change the regulations creating even more havoc. 

The bottom line, as I am coming to understand things, is banks and their loan servicing companies would love to help homeowners in trouble; They simply lack the resources and even control to do so.

Politicians publicly promise help, yet do not understand the complexities of providing solutions. There are several dozen variables that can impact the success or failure of a loan modification or short sale. Just because Bank of X sold a homeowner the loan doesn't mean they still own the loan and each investor who does chooses how they want to handle loan modification or short sales.  I believe it will continue to be a slow case by case process with more standards of practice coming into play over time.  

Hope this information helps demystify a very confusing problem in our industry.

Gene Urban and Ron Urban
The Urban Team at Realty Executives
602-234-5777