These 7 Things Are Lowering Your Credit Score and Will Make it Difficult to Buy a House in the Future – Local Records Office

HARRISBURG, PENNSYLENIA – Several factors come into play when calculating your credit score. “According to FICO.com, your credit score is affected by five major elements, in this order of importance: payment history, amounts owed, length of credit history, new credit and types of credit used” say, the pros from ‘Local Records Office’ in Harrisburg, PA.

 

  1. Credit Score Plays a Big Part in Buying a House

 

That said, here are some things you might be doing that could knock your score down a few pegs.

 

  1. Banning Credit From Your Life

 

If you don’t use it, you lose it — your good score, that is. Credit score is a measure of how responsible a borrower you are. If you cut up all of your cards — literally or figuratively — “lenders won’t know what to expect from you should the day come when you want to open up a line of credit” says, ‘Local Records Office’. If you want to minimize the amount of credit in your life, try to use one major credit card for small purchases and pay it off in full monthly to keep your credit active.

 

  1. Closing Old Accounts

 

You might think since you’re happy with your current credit card that you might as well kick your old ones to the curb, but be careful. If you cancel an account that you’ve had open for a long time, you could be damaging the credit history portion of your credit score. Essentially, when you close an account, you erase that account from your history.

These 7 Things Are Lowering Your Credit Score and Will Make it Difficult to Buy a House in the Future – Local Records Office

  1. Opening a New Account

 

Doing this affects the “new credit” portion of your score. Every time you apply for or are awarded a new line of credit, your credit score takes a dip. If you’re planning on applying for a home mortgage or a car loan in the near future, hold off on opening a random charge account. The higher your credit score, the better interest rate you may qualify for, and that could mean thousands in savings over the life of a home loan.

 

  1. Owing Too Much, Even if You Pay on Time Every Month

 

You might think that as long as you pay your bills, you’ll have great credit. “While that is the most important aspect of a credit score, creditors think that if you carry high balances, you’re only one emergency or layoff away from being in financial trouble. It’s important to try to keep your debt utilization ratio low – that’s how much you owe as compared to how much available credit you have” say, the pros from ‘Local Records Office’. Experts say keeping it at 30% or lower is best, so if you have a $1,000 credit limit, you shouldn’t carry more than a $300 balance.

 

  1. Paying a Bill Just One Day Late

 

Once your credit card company flags you for a late payment, you can expect a ding on your credit report. The damage will be greater if you go beyond 30 or 60 days without making a payment, but even one day late can be enough to hurt your score.

If you’re thinking of making any moves when it comes to your credit, do some research first to see how your plans might affect your credit score. You’ll be glad you did.

 

  1. Joint Credit Score

 

There’s no such thing as a joint credit report – for married couples or anyone else. Married or single, you have your own credit report, one that’s linked to your Social Security number. If you’re married, you and your spouse may have a lot of joint accounts, such as mortgage loan, car loans and shared credit card accounts. Those joint items will appear on both your credit reports and will affect both of your scores. But your credit report is yours and yours alone.

 

  1. BONUS – Thinking a Credit Repair’ Company Will Magically Make Your Credit Score Go Higher

 

There’s nothing that a “credit repair” company can do for you that you can’t do yourself. No one can remove accurate information from your credit report. Reputable credit reestablishing services can help you come up with a plan to repay your debts, but the only legitimate way to enhance your credit score is to practice good credit management.

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Home Maintenance Checklist That Go Along Way – Local Records Office

This ultimate checklist created by “Local Records Office” that will insure that you have everything you need to to the best maintenance to your home.

Home Maintenance Checklist That Go Along Way – Local Records Office

HARRISBURG, PA – “When you think of summer cleaning, things like scrubbing floors, sprucing up cabinets and straightening closets come to mind. But spring is also a good time to perform routine home maintenance”, say, the pros at ‘Local Records Office’. Ignore these crucial home upkeep tasks at your peril. Fail to clean the gutters, for example, and you could end up with a flood in your basement. People know they should perform these routine maintenance chores, but do they actually follow through?

 

“Almost no one does, in my experience,” says Dean Bennett, president of Dean Bennett Design and Construction in Harrisburg, Pennsylvania, whose company gets called in to make repairs after a crisis. He says “a lot of it is selective memory,” where people think they recently changed the furnace filter when actually they did it two years ago. “There’s kind of an amnesia about things like that,” he adds.

 

The Only Home Maintenance Checklist You Will Need Created by the Pros at Local Records Office

 

The most important maintenance chores are those related to drainage. Failing to keep water out of your house could result in mold, rot and foundation problems. “That’s most of your big bills – water coming in,” Bennett says.

Home Maintenance Checklist That Go Along Way – Local Records Office3

Tasks vary by location. In coastal areas, spring maintenance chores include preparing hurricane shutters and checking generators. In the North and Midwest, spring is the time to assess damage caused by bad weather during the winter and make repairs to protect against next year’s snow.

Here are 12 home maintenance tasks you should do this spring to save money later:

 

Clean the gutters. Make sure they don’t have holes and all the downspouts are still attached and taking water away from the house. “Gutters are one of the most valuable and affordable methods for homeowners to protect their homes from the elements,” says Allison Hester, editor of eClean Magazine, an online trade publication for the home cleaner industry. “By channeling water off the roof and directing it to a location away from the home, properly working gutters help protect the home’s shingles, wood under the eaves, siding, flooring and landscaping from a whole host of problems and expensive repairs.” Clogged gutters can also cause mosquito infestations, mold and mildew from decomposed leaves and other problems.

 

The good news is cleaning gutters is an easy job. You can do it yourself in an hour or hire someone to do it for about $35 to $40.

 

Seal holes where insects and varmints can get in. That includes openings around the foundation, especially entry points for wires and pipes. A spray can of foam, which you can buy for about $6, will handle most holes, Bennett says.

Home Maintenance Checklist That Go Along Way – Local Records Office

To prevent insects from getting into your house, you should keep moisture away from the foundation and eliminate sources of standing water, according to the Local Records Office. Termite’s cause $5 billion in property damage every year in the U.S., according to the NPMA. These destructive insects need moisture to survive, which is why the NPMA advises fixing leaking faucets, pipes and air conditioning units; repairing fascia, soffits and rotted shingles; trimming tree branches away from the house and replacing weather stripping around windows and loose mortar around basement foundations.

 

Get your air conditioning system ready. You can hire a service company or do it yourself. Change or wash the filters, which should be done monthly. Clean the coils and wash the condenser outside, if needed. Trim away any shrubs from the unit, and make sure its drain line isn’t clogged. While you’re at it, change your furnace filter so it’s ready for fall.

 

Clean your roof. Most people are better off hiring a professional for this chore, but it’s important. “Those ugly black streaks on asphalt shingles are doing a lot more harm than simply looking unattractive,” Hester says. The stains are caused by algae that feed on the limestone filler in shingles, “so those black stains are essentially eating your roof,” she says. The algae spread quickly before the wind blows them to neighboring roofs.

 

Power wash driveways and walkways. You can rent a power washer for about $30 if you want to do this yourself, Bennett says. The biggest benefit is removing mildew and discoloration. He advises caution before power washing decks because the force of the water may damage the wood fibers, don’t forget to check for water damage too.

 

Make sure your windows are sealed. “You want to keep water out and cool air in. You may need to replace caulking or weather sealing to accomplish this” says the company, Local Records Office.

Home Maintenance Checklist That Go Along Way – Local Records Office2

Clean your refrigerator coils and dryer vent. The Electrical Safety Foundation International notes that these chores not only improve the efficiency of the appliances, but also guard against electrical hazards.

 

Check smoke and carbon monoxide detectors. There should be at least one of each detector on every level of your house, and they should be working. Be sure to replace batteries, if necessary.

 

Fertilize the lawn. About $30 will cover enough fertilizer for 10,000 square feet, Bennett says. If you don’t have one already, you’ll also want to buy a basic push fertilizer spreader, which you can pick up for about $35.

 

Restain and seal wood decks. Rescuing your deck from the elements is not a task you should overlook. “Outdoor wood decks get hammered by the elements, including snow and rain in the winter and harsh sunlight in the summer,” says John Bodrozic, co-founder of HomeZada, an online home management tool. “These temperature cycles and absorption cause the wood to wear out quicker than if you regularly seal them. This can lead to rotting decks and an expensive replacement.”

Declutter. We all have too much stuff. Get rid of items you don’t use, including the stuff you have stored in the garage or basement because you “might” need it sometime.

 

Organize your paperwork. Not being able to find an important document when you need it can cost you. Get rid of the paperwork you don’t need while filing the paperwork you want to keep so you know where it is when you need it.

 

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59 Illegal Aliens Were Arrested by Custom Boarder Patrol in Texas

Border Patrol Claims to Have Rescued 59 Trapped Illegal Immigrants in Texas local records office

The Border Patrol (CBP) said on Monday it had rescued 59 undocumented immigrants in the first two weeks of the month when they were brought into dangerous locations.

Forty-eight of those allegedly rescued immigrants were caught inside a refrigerated container.

The fact, according to Border Patrol, occurred last day 2 on Interstate 35 in Texas during the inspection of the refrigerated container. The 48 immigrants were nationals of Mexico, Honduras and Guatemala.

Border Patrol Claims to Rescue Over 50 Illegal Immigrants

The driver of the truck carrying the container was a US citizen and was arrested. According to ICE, these immigrants were in danger because of the low temperatures inside the container and because it could not be opened from the inside.

Another 6 immigrants were rescued on the 5th of the interior of two wooden cabinets. The incident occurred on the 5th of this month, also during an inspection at an immigration checkpoint on Highway 35.

In this case, the vehicle was a van . Border Patrol said the lockers were locked with the six immigrants inside.

Also in this case the immigrants were nationals of Mexico, Honduras and Guatemala and the driver was a citizen of the United States who ended up arrested.

Read complete story here

By Simply Doing These Simple Things I’ve Been Getting So Much Real Estate Business – Local Records Office

LOCAL RECORDS OFFICE – LOS ANGELES, CA – When I first started in the business I loved doing fix and flips, but wasn’t so keen on selling houses to strangers. I sold enough houses to get by, and focused on the flips since those were much more fun. I always thought it would be smart to buy rental properties, but I was young and not very good at saving money.

 

Then in 2008, I started selling REOs and completing broker price opinions for banks. I loved the REO side of selling houses and I have become very successful at it the last few years. I am a HUD listing broker as well and love HUD, I can’t buy HUD homes myself, but I have a great article on how investors can great deals ion HUD homes here. I think the reason I love REO is because I can communicate through email and I am a natural introvert (another popular forum discussion). With REO came more money, more savings and a desire to grow that money into something more. I did a lot of research on franchises, business, the stock market, bonds and decided rental properties were the best investment out there.

 

When I was doing fix and flips with my father, we bought most of our properties at the public trustee auction and it did not matter if we had our Real Estate license or not. When we sold our homes, we saved 3% on each transaction, because we did not have to pay a listing agent a commission.   When I started buying rental properties for myself in 2010, I bought everything off MLS and saved a commission on each purchase.   We are buying more flips off the MLS now as well, we are now saving a commission on the buy side and the sell side.

By Simply Doing These Simple Things I_ve Been Getting So Much Real Estate Business – Local Records Office 1

Even though we save a ton of money on commissions by being agent that is not the biggest advantage to having a Real Estate license. The biggest advantage is having a huge advantage buying properties over those that do not have a license.

 

Saving Money on Commissions

 

I will take you through an example of how much we save on a typical flip. The savings is similar on a long-term rental purchase, except there won’t be any commission on the sale since we are holding the property. Let’s assume we purchased a flip on an REO property for $100,000, fixed it up and then sold it for $170,000.   The bank offered a 3% commission to the Real Estate agent that represented the buyer on this property. Sometimes banks do not like it when the buyer is also the Real Estate agent and they may have stipulations they won’t pay a commission in these instances.   We use an LLC to purchase our flips and my dad will usually sign for the LLC and I will be the agent on the deal. That way the agent is different than the end purchaser and the bank will pay a commission.

 

On the purchase end we can structure the deal so we get paid $3,000 for our commission or we will waive our commission and pay $3,000 less for the property. The benefit to getting the $3,000 is the extra cash in our pockets for repairs or other investments. The benefit to reducing the price is, we won’t have to count the commission as income and pay taxes on it. It saves money in the long run to reduce the price if that is an option.   However, many brokers will only allow agents to take no commissions on one or two deals a year. We can do it as much as we want, since we are on a 100% split and the monthly fee brokerages may allow you to make as many no commission deals as you want as well.

 

On the sell side we save the 3% as well since we are the listing agents and do not have to pay someone else to sell the property for us. Again, commission are negotiable and you may be charged more or less for an agent to sell your home.   Three percent of $180k is $5,400 that we save by not hiring another agent. We structure this as a no commission deal, since we will not have to pay taxes on the income again.   Total savings is $8,400 on this one deal alone. We flip about ten homes a year, and it is easy to see we save a lot of money by being agents.

 

Finding Deals

 

The biggest reason I would suggest every Real Estate investor get their license is because of the advantage it provides when finding deals. I still buy most of my long-term rentals off of MLS and we buy flips on MLS as well. We purchase short sales, a few REOs and even a few fair market sales off the MLS system. As an agent I have access to MLS and an investor without their license does not. Most properties listed in MLS are listed on other sites like Zillow, Realtor.com and others, but the information is not as accurate or updated as quickly.

 

If I were not an agent, my time frame for making an offer would be much longer. I would have to do more work to find new listings on Zillow or another website. Once I found a great deal, I would have to contact my agent. I would have to wait for them to find time to set up the showing and show me the property. Then I would have to wait for them to write the contract and I would have to come in and sign the contract, before it was submitted. I have to hope they understand they importance of time and getting that offer in ASAP. Even if they are a super fast, great agent, it may take them half a day or an entire day to get all that done. Someone else could have already submitted an offer and had it accepted before my offer was submitted.

Knowledge of the Market

 

As a Real Estate agent MLS also provides me with a wealth of sold information. I can look up sales from 10 years ago if I want to, as long as the sale was completed through MLS. MLS is a great tool for me to determine value quickly, and easily.   I am also constantly around houses as a Realtor, I am constantly determining values for my sellers and buyers and I almost always know the market without having to pull up sold info. Knowing values is the most important thing for a Real Estate investor to know an being a Real Estate agent gives me a huge advantage.

 

Connections in the Business

 

As a Real Estate agent I am constantly talking to lenders, other agents, title companies, buyers and sellers. I found my portfolio lender, because other agents referred me to them. My portfolio lender is awesome and will give me as many loans as I want as long as I qualify. That may change at some point, but without them I would be struggling to finance properties, especially now that I have 10 mortgages.

 

Other agents have referred me to sellers looking to get out of their homes, because they know we buy flips. I know the best title companies, the best lenders and the best Realtors. I also know which companies and Realtors to steer clear of, because they may kill a deal with their incompetence.

 

Disadvantages to Being an Agent

 

There are some disadvantages to having a Real Estate license and being an investor.

 

The biggest one for me, is I am limited to what houses I can purchase, but this won’t apply to 99% of agents. Since I am a HUD broker I cannot buy any HUD homes no matter who has them listed. None of my immediate family or any agents and their immediate family can buy a HUD home either. Bank of America will not allow me to buy any of their listings or even short sales because I list REO for them. There are a few other companies I work with that have the same policies and I can never buy an REO that I have listed. It is a clear conflict of interest for me to purchase I home I listed that I determined value on for the banks.

 

  • I have to disclose I am Realtor when I market to sellers. I don’t think this is a big disadvantage, but some people on the forums think they get a better response if they are not an agent.

 

  • Some people feel a code of ethics is too restricting for Real Estate investing, I do not feel this way. If you are a Real Estate agent, it is easier for buyers or sellers to file a complaint against you with Real Estate commission or whatever body governs Real Estate in your area.

 

  • The biggest reason most do not get their license is the cost and time it takes. Getting a license is not easy in most states, it takes hours and hours of classes and tests and the tests are not easy. Once an agent has their license, they have to take continuing education, keep insurance, pay for MLS, pay board dues, pay to hang their license or split their commission.

 

 

Conclusion

 

It can cost thousands of dollars a year to be a licensed Real Estate agent, but one or tow deals a year will easily make up for that money. Not only are you saving commissions, but the biggest advantage is the deal you get, because you were faster than everyone else. To a flipper, one deal can mean $20k, $30k, $40k or more in profits. To an investor buying long-term rentals, one deal can mean thousands of dollars a year in cash flow.

8 Steps That Guarantee You To Be a Real Estate General Contractor

LOCAL RECORDS OFFICE – I’m closing on a triplex (two 2bed/1bath units and one 1bed/1bath) on Monday that needs renovation and I’ve decided to GC this project on my own. The Local Records Office in Norwalk, CA sat down and started getting my thoughts together about a calendar and timeline and I realized that this process would make a great article for anyone doing their first renovation or anyone who wanted to get more organized. My golden rule for renovations is to make a realistic budget and timeline and stick to them.

Here are the 8 steps I follow when renovating a property:

Step 1: Demo

Maybe the most critical step because having a clean working environment will actually save time and money. Have your demo crew take down walls and get everything out of your way before making any improvements. Also, have them remove any trees or bushes that are in the way of progress. Then have the demo crew remove all of the trash and debris.

(Note: A beginner mistake is to perform these steps room by room or unit by unit but that actually ends up costing more time and money when contractors have to return so whenever possible have the contractors perform their task for the entire project before moving to the next step.)

Step 2: Waterproof Building Envelope

Another critical step because nothing would be worse than renovating a property only to have some or all of the renovations ruined after the first rainy day. In this step, I focus on making the property is completely protected against the elements. This includes fixing or replacing the roof, the gutters, the windows, the window capping, masonry work, gradation issues, sidewalks, basement, parging, and foundation work. Make sure that by the end of this step the building is 100% waterproof.

Step 3: Preliminary Framing

Now that the property is a blank pallet and watertight you can begin any structural or light framing you are doing on the project. Not every project requires this step but if you are moving or installing walls now is the time to build them. Also, use this opportunity to repair or replace joists and sub-flooring if necessary.

Step 4: HVAC, Plumbing, and Electrical

In the next phase the heating, cooling, electrical, gas and plumbing systems are put in place. Here are some common tasks that occur during this phase of the renovation:

The HVAC contractor will run the ductwork so it can properly be distributed to each

  • Floor
  • Plumbing lines are installed
  • Water lines for kitchens and baths are installed
  • The main electric panel is replaced or cleaned up
  • Electrical wiring is repaired/replaced
  • Switches and outlets are changed/upgraded

After all of the ducts and lines are installed your framing contractor will return for some secondary framing. All this entails is dry-walling and boxing in the ducts/lines that were just installed.

Step 5: Insulation and Drywall

The next step requires the installation of insulation and drywall. Make sure that the drywall contractor hangs, tapes, spackles, and sands the drywall and leaves it ready for the painter to begin painting. Painters can sand and prep the walls but they are usually more expensive than dry-wallers so try to have the dry-wallers do most of the wall prep.

Step 6: Paint, Lighting, HVAC, Plumbing, Kitchens, Baths

This phase of the renovation covers interior paint, lighting installation, HVAC, and finalizing the plumbing. This is the home stretch and a great deal of work is done in this step. Common tasks include:

  • Prime and paint interior walls
  • Install kitchen cabinets
  • Order/install counters
  • Install new interior doors
  • Order/install flooring
  • Install trim/molding
  • Install light fixtures, switches cover plates and outlet cover plates
  • Make sure the HVAC system is installed and fully-functional
  • Install sinks, vanities, toilets and kitchen/bath fixtures

Step 7: Interior Punch list

If you’ve made this far take a deep breath because you are almost done! The interior punch list phase is the time when you go around and put the finishing touches on your renovation project.

Common punch list tasks include installing HVAC trim covers, outlet light switch covers, doorknobs, cabinet handles, touching up paint and all of the small items that really make the project look great. Make a list and go down item-by-item and cross them off as they are complete.

Step 8: Exterior

The final step is the exterior renovation. This step includes exterior landscaping, exterior paint touch up, mailbox installation, property address number installation, flower boxes, window shutters, door hardware and any other item dealing with exterior curb appeal.

Congratulations you’re done! As you can tell overseeing your own renovation project really isn’t that scary if you are super organized and stick to a timeline. Follow these steps and over time you will streamline your process and become more efficient. Best of luck and make sure to let me know how it goes.

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The House That the Dealer Abandoned – Local Records Office

LOS ANGELES – Once upon a time there was this 3 bedroom, 1 bathroom rancher set back from a busy road in an extremely desirable area of town. The home, purchased for $289,000 two years before at the peak of the market, was barely worth what the owners had paid for it. But the owners, a lovely husband and wife, had found themselves having to move away and sell the home.

 

The realtor, wanting her clients to come out ahead on the deal after they paid her commission initially listed the home for $329,000 at the start of 2010.

 

For Sale

 

This home, with its striking red door, caught our attention the minute the “For Sale” sign went up but we didn’t pay much attention to it until a few months later we noticed the sign said “Price Reduced!”

 

We pulled over so I could call the realtor. The realtor explained that the property was now reduced to $319,000. We made arrangements to see the property the next morning.

 

We went and viewed the home, and while it is in good condition, showed very well and was one of the lowest priced homes in the area, it’s only a 3 bedrooms and 1 bathroom home. Having a second bathroom is pretty important in this market. But the price, for that area, was interesting. I asked a lot of questions and discovered that the sellers would probably go to $305,000 because the realtor had agreed to cut her commission so they could still make money on the deal. Turns out, she’s the one that sold them the home at the peak of the market.

 

I told the realtor we could probably do something around the $300,000 mark – maybe $305,000 – if the seller would be willing to carry a second mortgage on the property for us.

 

After a long chat, we left, and she agreed to contact me about the second mortgage option.

 

A few days later, I actually sent HER an email to follow up because I hadn’t heard from her. She said that VTB’s are hard for people to understand. I wasn’t sure if that meant that the sellers wouldn’t do it or if she had even talked with them about the option. Either way, it didn’t sound like $300,000 was a go for them.

 

The market really started to move in late March and early April but still, the home sat there. On April 8th, the price dropped to $309,900. I didn’t hear from the realtor before the price dropped but I didn’t think anything of it since I had made it clear that I was only going to play at $300,000.

 

How the Realtor Lost the Deal

 

Here’s the kicker though … and here’s where the real estate agent really failed to make this deal happen:

In May the list price dropped down to $299,000.

My phone didn’t ring. My inbox didn’t fill up with emails from her. I didn’t hear a thing. Of course, we follow the market closely so we knew it had dropped, but most folks wouldn’t know that. Yet, she never bothered to call. She had my business card; we had exchanged phone calls and emails. She should have had my contact information. But I didn’t hear a single thing from her.

 

By this time we had our hands full with 3 other deals so I wasn’t about to chase this one down. Instead, we kept an eye on it.

 

But then something sad happened last week … something I have seen happen so many times … the sellers changed real estate agents and the new agent listed the home at $284,000 with the caption “PRICED TO SELL”!

 

Is the Home Sold?

 

So this poor home that we would have considered buying at $300,000 is now probably going to sell for $278,000. And at that price, it’s under it’s market value. But it will sell down there for the simple reason that the market has slowed down again and now everyone looking at it is wondering why it’s been on the market for nearly 6 months when it’s in such a good area!!

 

The sellers are going to take a loss, the realtor that tried to sell it won’t make a penny, and the whole story could have ended differently if only she’d made one single phone call.

 

There’s a Japanese proverb that says, “Money grows on the trees of persistence“. Or, put another way, money rots on the trees of laziness. I can’t say for sure we would have purchased it … but I know Dave, my husband and investing partner, was pretty keen on this home. And if she would have called I can guarantee she would have had an offer in her hand at the very least.

 

Instead she lost the listing, and she lost me. I won’t ever deal with her and I certainly would never recommend anyone I know use her.

 

This is a great failing on her part, and she’s not the first to make this mistake. My Grandma’s words ring through my head reminding me that this home wasn’t meant to be for us which is why she never called. I couldn’t agree more. Even now, at such a low price, I am tempted but not that tempted, for the simple reason that it’s going to be tough to rent out with only one bathroom. So it wasn’t meant to be for me, but who was looking out for the sellers?

 

Follow Up

 

In the short term a single phone call could mean the difference between doing a deal or not doing a deal. In the long run it’s your reputation and your deals at stake.

 

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Should I Work on my Own Home by Doing DIY Projects or Hire a Professional Contractor?

LOCAL RECORDS OFFICE – You don’t need the construction skills of Bob Vila to start working on your own home, yet it’s no secret that you can save money if you do some of the work yourself, of course not all projects could be done by a rookie DIY’er. As a general rule, estimates from contractors in our area run 1/3 for materials and 2/3’s for labor. So theoretically, we save 66% by doing the project ourselves, right?

Doing it Yourself Projects Has It’s Benefits but it Also Has it’s Downside

To decide, consider:

  • Cost of materials: Can materials be purchased at contractor cost or will you pay a hefty up-charge? Is it possible to find materials at salvage or a Habitat-type store to increase your margin of profit?
  • Cost of time: How much longer will this take to DIY? And in real dollars, how much will this add to holding costs? Holding costs include but are not limited to mortgage payments, insurance (generally higher when property is empty and/or under construction), utility bills, and lost rent. If it takes 2 weeks working nights and weekends to complete a project your contractor can finish in 2 days, add 10 days of holding costs.

Great DIY Example

The decision to DIY should be a simple mathematical equation where you:

  • Price materials
  • Estimate the time needed to complete the project
  • Multiply the number of days/weeks by the daily/weekly rate for holding costs, then
  • Subtract that amount from the contractor bid

Of course it’s not that easy… how much fun would that be?

For starters, you may not be delaying completion of the project if other work is going on anyway. Contractor delays are a common problem and if yours has a history of putting off your projects for another day, you might be able to finish sooner than he can anyway. But besides that, there’s value hidden away in DIY projects that can only be mined by rolling up the sleeves and getting your nails encrusted with something icky.

Learning New Skill Will Help You on the Long Run

By learning a new skill, you increase both ability and confidence. You’re also learning to identify quality work, the amount and difficulty of labor, special tools needed for the job, and reasonable time estimates for completion. If you decide to hire someone next time, you’ll have a much better idea what’s involved in the project and if bids are reasonable. That type of knowledge is invaluable to the rehab professional, paying dividends with every new project.

Just Another Opinion

Consider taking on at least one new project with each rehab, even if it’s as simple as replacing a light switch or changing out a doorknob. With experience, you’ll learn which repairs save the most and which are best left to others. During your first few houses, try to be as hands-on as possible and consider it part of your rehab education.

You Don’t Have to be a Professional Handy-Man to do Great DIY Projects

If you have no handy-man skills whatsoever, you might try working alongside your contractor (if he’ll have you). He may tell you to pound sand (politely of course), but if you have a good working relationship, it’s worth a shot. Later, you may find that hiring reputable contractors for most (if not all) of the work will save enough in holding costs to justify the expense.

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The Smelliest House I Blindly Invested In – Local Records Office

The story of the worst house I’ve came across in my life . . . Some of the articles I have written lately have been on topics of a more serious nature so I thought I would write about an abandoned house that I discovered a few years ago that was so unbelievable…. Well it was unbelievable. I thought I would tell this true story to show the lighter side to the business.

Fishy Smell That Would Give You a Headache

I was out searching for abandoned houses with my cousin, Peter Christenson, one hot summer day in July of 2016. I remember the temperature was over 100 and that meant that any abandoned house we found would be extremely hot inside. Inspecting the upstairs of a 2-story house, with no air conditioning, in the dead of a Texas summer, well that’s just not something they glorify on the infomercials. The house we happened upon is a perfect example of one of those properties you never hear about on TV.

Abandoned House With the Smell of Death

We found a house that we determined was abandoned. When we got about 10 feet from the door, we had to step back because there was one of the most foul, unpleasant odors coming from the inside…And we could smell it from outside. All the windows and doors were closed and it still smelled something awful.

We had to take turns running in the house, while holding our breath, to open a window and then run back out to gasp for fresh air. We both ran in & out of the house for an hour or so and yet the stench was still present. Airing the house out was not working so after another 30 minutes, we decided to run to Home Depot and buy some respirators so we could get in and inspect the house without gagging.

We opened up every closet door, every cabinet door and looked just about anywhere we could think of where the smell could be coming from. The house was totally empty but we began to think that the previous occupants had maybe buried an animal nearby or maybe they had buried a dead body under the house. It was such a horrible smell that our curiosities had us determined to find the source of it all.

Searching for the Smell

After we had searched just about every inch of the house and still came up with nothing, we looked at the ceiling and then we looked over at each other, eye to eye and without saying a word we set out to find the access to the attic. Since I was the lighter of the two of us, he propped me up and I got up through the hole and into the attic. I reached back for Peter and pulled him up through the hole. It was HOT up there! I’m not sure what the temperature was but I am sure it was in excess of 125 degrees.

We slowly started to crawl across the ceiling joists with our spotlights. We got across the main part of the house and came up to a double wall that separated the garage from the rest of the house. The open void between the two walls was about three to four inches of open space. When I got directly over the void and looked down with my spotlight… I froze right there after seeing what the light was revealing. I slowly looked over at my cousin, who had also stopped dead in his tracks. He slowly looked up and over at me and then rolled his eyes back down into the wall void. We had found the source of one of the most god-awful odors we had ever encountered.

It seems the previous occupants wanted to go out while leaving a statement. Something that would really get the attention of anyone that set foot in the house after they left.

Smell We Couldn’t Escape

It got our attention! The occupants had gone through the considerable trouble of getting up in to the attic, crawling across the ceiling joists to get to the void in the wall. At that point, they had actually dumped thousands and thousands of…. FISH! Yes, FISH! Tons of them! None of them were really that big but most of them were the size of Sunfish. We couldn’t believe it. It must have taken them weeks to haul that much fish up into the attic to dump between the walls. That was the only way anyone could have got anything into that space.

We came down out of the attic and went to talk to the neighbors. They told us that the house had been vacant since March and it was July when we discovered the house. That was a good five months for all that fish to fester and bake in the hot Texas heat.

Criminal Charges?

We later learned that the lender had pressed criminal charges against the previous owners because what they had actually done was intentionally destroy the property.

The fish had been in the house long enough for the smell to penetrate every part of it and it was eventually bulldozed because to get the smell out, all the drywall and the wood in the frame would have had to be removed and replaced. I guess the insurance adjuster figured it was a total loss.

Conclusion

Experiences like that, is why I love real estate. There are no two houses alike. And anytime I think I have seen it all…. I stumble upon a house like the “Fish House” and think to myself… “Wait ‘til everyone hears about this one!” So the next time you happen upon a house where something seems “fishy” grab your flashlight and go look in the attic.

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Real Estate: How to Help Your Tenant Can Get Their Loan the Easy Way

LOCAL RECORDS OFFICE – Real estate has been booming in 2016 in this article the pros at Local Records Office will be talking about tenants and loans. Because homeownership is often less expensive than rent, we could see some of our rent-to-own tenant buyers start trying to execute their options. If you don’t have tenant buyers, you may want to consider using them for your rental property. You will generally get more rent and less hassle. In my experience, less than 20% of tenant buyers end up buying the home, but for me, I am happy when they do.

 

I like getting a large payday, with no Realtor fees that I can roll into another deal. For this reason, I want to be sure my lease option documents are prepared correctly, to help their chances of getting a loan.

Buyers vs. Sellers

 

There are many effective and valid ways to structure a lease option transaction, depending on the parties involved and the objectives in mind. What a lot of sellers and buyers often overlook is that one of the most important “parties” to this transaction is the underwriter on the buyer’s loan, when the time comes to exercise the option.

 

One of the most important things to know about today’s new underwriting climate is that the tolerance for inaccuracy is down to almost zero. Much like I would recommend a good attorney review your documents, I think it is crucial for a good mortgage broker or banker to do the same. Here are ten helpful hints to ensure the tenant buyer’s loan closes:

 

“Rent credit should be allowed to be used towards the buyer’s down payment”

 

Rent credit should be allowed to be used towards the buyer’s down payment or minimum borrower contribution only if the rent actually charged does not exceed the fair market rents in that neighborhood. It is actually best to write your agreement that the rent credit reduces the purchase price and is NOT considered down payment. If they need the additional down payment, you may be asked to prove the rent credit is equal to the amount they paid above market rent, which is not going to be an easy task.

 

Fair market rents will be determined by the appraiser in the subject property’s appraisal report. Credit for down payment must be accrued for a minimum of 12 months.

 

It is best to get as much money upfront as possible because all of that can be credited as down payment. You can reduce the amount of money the tenant buyer needs by offering to pay their closing costs. This could also be part of the rent credit, if it is structured correctly.

 

The Lender Needs the Right Documents from You

 

The lender will require a copy of the rental or purchase agreement evidencing a minimum original term of at least 12 months, clearly stating the monthly rental amount and specifying the terms of the lease.

The lender would like to see that the lease agreement references the purchase option and vice versa, or they are contained in a single contract, so the underwriter can have documentation of both aspects of the transaction. I have my option reference the lease but I want the lease to stand on its own; so for me the lease is a separate agreement that does not reference the option. This is how most attorneys would suggest you do it, so it is a good idea to run your contracts by a competent attorney AND a mortgage professional.

 

In no case should the seller ever commingle the borrowers rent credit, purchase option deposit, or security deposit with their own personal accounts.

 

Make Sure to Document Every Transaction That way You’ll Be Prepared

 

Any rent credits, option payments and security deposit funds should be thoroughly documented to include copies of the original checks, copies of the cancelled checks, and copies of the account statements showing their entrance into and retention in those accounts.

 

Lenders will require copies of the buyer’s cancelled checks or other proof of payment for the last 12 months evidencing the rental payments. Be sure the tenant knows this if they are paying with money orders.

 

Equity

 

Sweat equity is normally not an acceptable source of funds or credit; only actual monies paid as outlined above, so don’t count on the buyer “earning” their down payment in lieu of rent payments.

 

Taking the above measures should help ensure a successful closing if your buyer can still qualify in all other required areas. With that said this article is not meant to replace a competent mortgage professional. Please visit Local Records Office’s webpage for a list of vendors they recommend.

 

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What is Bankable and How is it Used in Real Estate? Local Records Office

LOS ANGELES – Webster dictionary defines the word Bankable as – bank·a·ble: 1. Acceptable to or at a bank; 2. Guaranteed to bring profit

 

As investors, we hear and see all of the opportunities related to owning rental property: rents are up; prices, vacancies and rates are down. We are being told that there has never been a better time to buy real estate, with lending guidelines changing drastically from just a few short years ago.

 

That being said, it is now incredibly important to stay “Bankable”. When I first heard this term it made perfect sense to me. As investors, we often need to borrow money meaning that, in our everyday lives we needs to keep control of debt to income ratios, claiming enough income on tax returns to qualify for loan programs and keeping a safe amount of reserves available. I have said it before and still truly believe that the most important piece of the investing puzzle understands the financing. Once you understand how to leverage your money, acquiring properties becomes much easier.

 

Most of the topics I will touch on are more stringent in the long-term financing world and not always true for hard money. We have been able to close deals while facing over 200% DTI, unemployed or 550 credit score; because other qualifying factors in each case allowed us to get comfortable with the borrower.

 

When we think we have seen it all we take an application from a client that surprises us. One of my best client’s tax returns show year-over-year losses in excess of $100,000 and this particular client hoped to acquire some buy-and-hold properties. When I told them it wasn’t going to work and why, they explained they worked their entire life to not have to pay taxes/show income and now I am telling them that they need to show income in order to buy rental properties.

 

I have seen applicants that hope to buy and hold rentals as an investment when they are in foreclosure on their own home and taken phone calls from individuals that want to get a loan but all of their cash is in the sock drawer because they do not believe in banks. Some pretty extreme examples, but the point is that staying bankable is important in a lending environment where it takes more than a pulse to obtain a loan. Here are some tips to staying Bankable:

 

Income is Important When Being Bankable

 

Income: For some, income is much easier to verify than others. Namely, W2 income vs. self-employed. A borrower with decent W2 income that does not take a lot of deductions is typically the easiest borrower to approve for long-term financing. Because the income can be verified so easily, with one piece of paper, these borrowers can find out “how much they can borrow” with little hassle. For those who are self-employed however, a trip to the dentist might be more enjoyable than proving income. Keeping good books and not writing off everything under the sun will make documenting your income much easier. The easier your income, not losses, can be seen, the less trouble you will have obtaining financing.

 

Debt to Income is Crucial

 

DTI: Debt-to-Income is the most important part of obtaining long-term financing because it includes two parts of the equation that you have some amount of control over. Conventional financing requires a DTI ratio of 45% or less and, in some instances, up to 50%.

 

Every mortgage, loan, credit card, student loan, and time-share on your credit report stacks up against your income to create this ratio. If you want to acquire rental properties or financing, think twice before opening that Best Buy card for your new 100” flat screen TV and understand where your DTI stands. The good news is some debt, like mortgage on a rental property, can reduce your DTI because it creates income past the monthly amount owed. For example, let’s say that you purchase a property and the monthly PITI is $500 per month and you have it rented for $1,000 per month.

 

Conventional financing is going to count 75% of gross rent towards your income, so after debt service your monthly income increases by $250 per month. It is very important to understand your DTI ratio and where it needs to be to achieve your real estate goals.

 

If You Are Self-Employed You Have to Read This

 

Self-employment: Most investors and real estate professionals are self-employed, which creates challenges in lending if not done correctly. Trust me, I do not enjoy paying taxes any more than the next person, but it is a necessary evil in qualifying for long-term financing. Investors cannot expect to write off all of their income and obtain a mortgage. In fact, I have seen a married couple where one has W2 income and the other is self-employed but the self-employed spouse writes off so much that they show a loss large enough to eliminate the W2 income.

 

Typically, when self-employed, the lender takes a 2-year average so unless this couple amends taxes and belly’s up to the tax payment, they might be 2 years away from obtaining financing. I do not want to discourage any self-employed borrowers because there is financing out there, as evidence by the two rental properties that I just refinanced out of hard money. Just note that there are additional hoops to jump through and it’s up to you to decide how difficult it will be.

 

Dealing With Liquid Reserves

 

Liquid Reserves: Reserves is the number one most important qualifier for our hard money loans, also important in conventional financing and should be a priority for all borrowers. In this business, we all know some properties can be challenging, and as a hard moneylender, we want to know you have reserves available in case your project costs run over or it takes longer to sell or refinance than expected. In the conventional world, the underwriters assume that at some point all of your properties are going to be vacant for the same 6-month period, and they require reserves to handle such a phase. Once an investor has four or more mortgages, the requirement is 6 months of payment reserves for every property.

If you have 6 properties, all with a $1,000 per month mortgage, you need to have $36,000 in reserves. Check with your mortgage professional to see what they can qualify as reserves, 401k, HELOC, personal line of credit, etc., and how long the funds need to be seasoned. As an investor, everyone should find the value in having funds readily available as we never know when the buyer’s inspector will find that the sewer needs replaced or an appraisal comes in low requiring you to bring a chunk of money to closing. Although some deals are no money down, it doesn’t mean you qualify with no money in the bank.

 

Keep Your Paper Work Organized

 

Be Organized: I am often surprised at how unorganized investors can be. At the end of the day, we are running a business, or at least hoping to, so having the right documents in order makes life easier for everyone. Let’s remember we are obtaining loans for hundreds of thousands of dollars sometimes with no money down, so having your taxes in a place they can be easily accessible is probably a good idea.

 

I joke about this, but ask any loan officer which loan is on the top of their priority list and it will be the one in which they have what they need to complete the file. Most of the documents required for a loan can be stored electronically and very easily emailed. If you are actively doing deals or looking for financing, build a package and update it monthly to give your lender what they need when requested. This will keep your loan moving through the process and the lender won’t bother you for missing pages.

 

Banks Around Your Area

 

Local Banks: Occasionally, investors can find funding through local banks, either through lines of credit for operating capital or financing non-owner-occupied properties. Freddie and Fannie, the largest buyer of conventional loans, will only allow a borrower to obtain 10 mortgages but your local bank does not have a limit other than their own risk tolerance.

 

The terms are different from 30-year-fixed so you should expect to pay a slightly higher rate and with shorter terms such as 5, 7 and 10-year balloons. Depending on the bank, they may be more interested in the property than the borrower, but most cases will also require a banking relationship (deposit accounts).

 

I hope you find this information valuable and can better plan ahead for your real estate investment goals. If you have any questions about the article please feel free to contact us at our office.

 

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