2 phone calls.

2 different out of town investors.

One coming to town.

One just left.

Both to visit their new, sure-fire, can’t lose real estate investments.

The one coming will be here on Saturday.  Driving in from over 1000 miles away.  And have closed on a house in Toledo that they have never seen, never been to, and have never even seen recent photos of.    It last sold for $70,000 many, many years ago.   They paid $15,000 cash for it at an auction.   Given the neighborhood and the amount of vandalism and property theft in 5 year sitting empty houses . . . I hope that they find it intact.

But they may find it “stripped, clipped, and ripped” and in need of $30,000 in repairs.

Which will mean that their investment is now worthless.

The other call?

This owner had just gotten home.

After driving to Toledo full of hope and expectation.   For she was the “winner” of 3 lots – also bought at auction – with no due diligence, inspection, or planning.

They are inner city lots – abandoned by their former owners for taxes.   Some enterprising entrepreneur bought it at the tax sale for $5.00.

That’s correct . . . $5.

This investor paid $2000 for 3 lots – so the Toledoan didn’t lose money.  He or she made a 400% rate of return.  And that’s slightly more than Huntington is paying today . . . .

The new investor?   I carefully and nicely explained to her the new reality:

-The lots were worth nothing.

-The lots are now worth nothing.

-Her $2000 is gone.

-Rather than lose more money in commissions or building costs or something crazy – just walk away.

That $2000 is a great lesson.    A wonderful lesson.   And if you have the right perspective it’s a far cheaper lesson than the $15,000 one the other investors are going to get this weekend when they pull into Toledo.

Do not buy real estate at auction on the internet in Toledo.

Not unless you want a very expensive lesson.

The one in which I tell you all the terrible ways that your loan/loan application/deal can implode?

Well it was true.

And it is accurate.

But it was not very, how can I put this?   It was not very “PROACTIVE”.

Helpful would be a better word.

So I want to be helpful.

And you can therefore download a free copy of my newest, latest, greatest Special Report right HERE. 

And it will proactively, and helpfully tell you what you can do to AVOID having your deal/loan/closing implode.

Because I always try to be helpful!

And the language is simple and plain:

“Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30  years in federal prison or $1,000,000 fine, or both.  It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.”

But the use of the FBI logo – that’s new!

But unlike the FBI warning that auto-plays before every DVD you own . . . . this one has teeth.  And real meaning.  Because the real price of mortgage fraud is HUGE in Ohio.

If you read the form – and believe me, most people read NONE of what they sign at typical real estate closings . . . . there are 3 choices to make.  Simple choices.  Choices you could make and not even think about . . . . but think about these.

Because someday someone will lose a house, lose a job, and or lose their freedom over what box they blithely or fraudulently checked off right here!

“The borrower must then select the occupancy for the specific property that is being financed:

• Primary Residence – Occupied by Borrower(s) within sixty (60) days of closing as stated in the Security Instrument I/we excuted.
• Second Home – To be occupied by the Borrower(s) as a second home (vacation, etc) while maintaining principal residence elsewhere.
• Investment Property – Not occupied by Borrower.   Purchased as an investment to be held or rented.”

Sounds innocent.   I am sure than an innocent mistake here will be forgiven . . . right?

No.

Right after this you see this language:

“I/we acknowledge it is illegal for a person(s) to make a false statement regarding occupancy of property being financed in a loan and credit application and that we are subject to prosecution under Section 1001, 1010 and 1014 under Title 18 of the United States Code”

Opportunity:  Federally insured mortgage.

Opportunity:  Federally regulated PMI coverage.

Opportunity: Federally funded/provided/controlled REO property.

Risk: Fines and Jail.

Your intent, memory, confusion, etc. will not matter.   Making a single false statement will matter.

Apply the “sunlight” standard to this and all other real estate matters.  Do it in the bright light of day – out in the sunshine.  Don’t shade the truth.  Don’t guess.  Don’t think about being clever.

If you are living in the house . . . you are an owner who is an occupant.

If you are “living in the house” and you keep another address you are not.

Lying on loan applications and HUD-1′s and occupancy certifications has always been both wrong illegal.

It’s now going to involve the FBI.

My take-aways and how they will impact the real estate industry and Perrysburg market:

1. Mobile – whether it’s mobile advertising, mobile video taking, mobile presentation of offers/contracts is accelerating.  I now assume buyers and sellers have internet enabled mobile devices.  How mobile are things going?  I am now taking earnest money and rent payments on my iPhone.  This tool is how . . .  

2. Perrysburg is a great place to call home and to travel from – DTW is so close and yet we don’t have to deal with Detroit congestion.  We have it good.

3. We have multiple offers on great listings.   Many markets have multiple offers on EVERY listing.

4. Video.  Google’s full integration of social media into search is intersecting with the multiplicity of video cameras extant (they are on just about every phone now) and driving video/YouTube stats into the upper atmosphere.

5. No one at any of my meetings/conferences/confabs talked about interest rates, overcoming buyer interest rate problems, finding creative financing solutions.  I guess that when interest rates are about 3% no one has any interest rate ideas.

6. Unoccupied homes are the poison in the market . . . in any market.  1.5% empty is supposed equilibrium.  We “should” hit that in 2 years nationally.  Perrysburg?  Less than 1% by my guess.

7. Facebook is getting more and more business savvy – and they will need to leverage a lot of advertising dollars to support their IPO valuation.   Look for more FB products, ads, services, and tie-ins.  Especially in my industry – real estate as Farmville gets old after a while.

8. Did I mention that it’s great to live in Perrysburg?  It is.  Travel is nice – for a while.  But what a blessing to have a great home town in the great state of Ohio in the greatest country in the world.

“REO” is of course banked owned foreclosed property.

And it’s strange how things sometimes run in streaks.

Today – I wrote an offer on very sharp 43551 REO listing.

Showed one.

Listed one.

That’s all normal . . . here is what is interesting:

1. A new RIVER ROAD REO property (30571 East River Rd.)  On the water.  That does not happen every day – in fact it’s incredibly rare.  $175k.  2500 sq. feet.  Township with Rossford Schools.  Last sold for $100k more . . .

2. A “builder’s own home” type REO listing.  We are putting new carpeting in it as I write this – with a 3 car garage, finished basement, and all the bling/bling you would expect.  $180s’ with close to 3000 sq. feet – and I think it’s worth LOTS more . . .it’s open this Sunday from 1 to 3.  507 Harrison Dr. in Shawnee Trace.  It just might be underpriced by $30k . . . at least!

There are a lot of them!

They come here to buy.

They come here because Perrysburg real estate is a very safe buy.

They come here because of the schools, the lifestyle, and obviously the employment.

And they buy a lot of real estate -  MSNBC.com reports that foreign buyers bought over $80 billion in US property in 2010.  That was up from $66 billion in 2009.

I have sold property in and around Perrysburg to buyers from the Ukraine, Poland, Russia, France, Great Brittan, China, Vietnam, Australia, Japan, Saudi Arabia, Syria, Egypt, Italy, and Canada (is Canada that foreign?).

What are foreign buyers looking for in Perrysburg?  The exact same thing that any buyer is -  a good deal, a great floor plan, a nice lot, and no surprises.

When many foreign buyers look at our prices and values I believe that they inwardly, secretly chuckle at how cheap our prices are and how large our lots are.

The best thing to do is look at a map – maps are my favorite tool!

Here’s one view of the flow of “Euro Buyers” into the US, courtesy of Trulia.com

One thing to think about – the three largest home sales EVER in America were all to . . .  foreign buyers.  This is one, in California.  It sold for $100,000,000.  To a Russian.

I talked to a friend of mine who knows the Russian speaking Realtor who wrote the contract for Yuri Milner, the Google/Hedge Fund type investor.  I think that he was sad – he will never, ever in all of his career close on a deal that large again.  Must be sad to realize that!

It needs some “work” done on it.

It needs some home improvement . . .

You get it under contract and then either discover this fact or are made aware of it by your home inspector.

What NOT to do:

-Demand that the seller reduce the price or put a new roof on . . . if the seller is the bank that has foreclosed on the home and is offering it for sale.

-Go to the house before the closing and start putting your own new roof on.

BOTH of these two tactics have just been tried by “my” buyers.

All I can do after that has occurred is try to manage the triage of tragedy that will result.

A better idea:

1. Add the estimated repair costs onto your mortgage up front – when we are bidding on the house.

2. Add the repairs yourself – after the closing – with cash/credit/pop bottle money.

3. Ask, nicely, the nice seller to do the work before the closing, in a nice manner.   We all know that the buyer is “in charge” right now . . . but nice buyers get better houses.  With prettier things added.  My mother taught me that kindness is never out of style in the Midwest.

4. Attempt to add a repair escrow to your mortgage loan and offer.   This is easy to do with the right credit/loan/lender/loan officer.   This is impossible to do with the wrong loan/hopes.  You want a new roof, new finished basement, and a $7000 appliance allowance?  On your FHA loan?  Not going to happen.  This is easier to do with a conventional loan.  It’s possible to do with an FHA loan . . . but that takes it to a “203k” loan product which would often be the basis of an entirely new offer on a house or condo.

5. Buying a HUD home with a loan?  HUD will usually have a “repair escrow” amount priced into the house.  That’s not money they are going to give you . . . rather it’s money that YOU can borrow and that HUD will loan you if you use an FHA mortgage.   It gets complicated . . . so see me if/when you want to try this.

and planning . . .

and looking . . .

to buy houses.

All well and good.

But for many the operative question is “what interest rates are out there”?

Today’s rates:

1. 30 Year Fixed money is going to cost you 4.125%

2. 15 Year Fixed money is going to cost you 3.375%

3. FHA money is going to cost you 4.00%

4. VA money – 4.00% also

5. Rural money?  None to be had – waiting for more.

6. You want to buy an investment property?  20% down required. 

Notes:  Sellers can contribute 6% back to buyers on FHA loans and 8% back on VA loans and 3% to 6% on conventional loans.

Here is the trend chart, used by permission of mortgage-x.com . . .

These are really historical lows.   I can imagine only a few instances where a buyer will want/need an ARM . . . .  so buyer beware!  And what you REALLY need to be aware and beware of is the dizzying array of constantly changing rules and strictures on loan underwriting and loan approvals and loan appraisals – each deal is both harder to close and taking more time to close.

But they are back on the market after the prior buyer’s other deal did not close.

And they are a GREAT INVESTMENT!

They are just like Perrysburg 4 unit apartments, except located in Sylvania right off of McCord north of Sylvania Ave.

1. Fully Leased.

2. Great rents.

3. Many long-term tenants.

4. Excellent schools to draw renters in.

5. $3600 to $4600 monthly rental income per building.

Oh . . . and these 4 great 4 unit apartments (they feel more like condos – and one building has units with basements and fireplaces and attached garages) are being offered with OWNER FINANCING.

Since there is no mortgage . . . my out of state client said “why not”?

More details if you email or call me!

You can see my flyer here:

Sylvania 4 Apartment Buildings

Disclaimer:  no snarky comments or inferences in this post should be construed as anything but an endorsement for my Dentist – Dr. Christopher Clark.  I like him.  He is incredibly talented.  He knows the ins/outs and tools/tactics to do any dental procedure with elan and skill and care.

But . . . sometimes selling a house in Perrysburg today IS like going to your dentist and getting root canal.  Which I just did with Dr. Clark.

It takes time.

It takes multiple appointments.

It takes effort.

It takes reasonable skill and training.

The dentist has to have the right tools and facilities.

The dentist has to have the right support staff.

You want your dentist to be . . . actually working full time in and on dentistry.  

All of these things are similar in my pursuit of helping clients sell their real estate and my dentists skill and care at removing dental problems.

(But . . . I sadly note . . . that I cannot give you laughing gas or an anesthetic shot to make your pain fade for a couple of hours).

As with the average root canal . . . in selling a home today there is perhaps going to be some pain involved.

Some emotional conflict.

Some stress and or trepidation.

But . . . if it has to be done and needs to be done and the situation and circumstances tell you to get it done . . .  what else can you do?

You get it done.