W.Y.S.I.W.Y.G.

(In reference to Marin Fixer mentioned in previous blog (2 posts earlier, scroll down): Well, there it is. It's actually not quite the flaming piece of sh.... that I was expecting. Where else are you going to buy a home in Marin on a double lot that is actually habitable? I like it. As predicted, the hillside creates a serious challenge to the building and there is no parking. The upside is that it didn't "smell" like rott. There are many challenges, but in the scope of things, it's still a great deal for someone who is determined. Two ways to look at the fixer (mentioned in the previous blog)... Either $200,000 or $50,000 to improve. It all depends on who you are. You could also tear it down... but you'd be pretty screwed at that point... better to remodel. Do Note!: There is only a 1/2" water main coming in, so you'll have to fire sprinkle it... and you'll probably need 3/4" meter on there...and depending on the hook up, that could run into the mid Thousands w/ MMWD. Down and dirty, it's a deal waiting to happen. Call me to visit. www.PTRE.net. 415-485-1776. Looking to Partner up on a deal? I'm game. Let's talk.

Commercial Space

Interesting statistic... I guessed wrong. Marin has about 4.5 million square feet of commercial space (warehouse, retail, etc). It's reported that there is only 140,000 square feet currently available (versus Sonoma County at 10 million feet of inventory and 175,000 avail).
Average Marin Vacancy rate is only 3% with prices ranging from $1.45 to $4.80 depending on location. Sonoma County has a 1.8% vacancy rate with prices from $1.25 to $3.30.
As I drive around Marin, I see signs for Lease, Rent and Sale everywhere. It looked like Supply was on the busines owners' side, making negotiations easier for tenants. Apparently not so. Negotiating a solid lease with options for many years is critical in business vitality and investment terms. It's probably the single-most monthly expenderature that is out of your control once you set the terms in any business. You can control overhead, spending, advertising, sales, even energy costs...but you're bound by your lease. And make sure that you exercise your options in a timely fashion or you could be in a bad negotion point at expiration. Need other thoughts? I fund commercial buildings. www.PTRE.net. Pat Townsley, Broker. 415-485-1776

Marin Fixer under 500k!!!

The market is changing. Here's a little dandy that just came on the market. $395,000 in a neighborhood of $800,000 to $1,000,000 homes. I'm sure the previous owners ran out of money and steam.... probably in that order. So, what does this picture tell us?: Hillside, no handrail, upsloping lot, possibly no garage or sidewalk. Color indicates 1950's original construction, probable knob and tube electrical. So, the hillside gives us the most concern: Hydrostatic pressure over the years plus originally crappy foundation will probably find this thing "racked" and un-square. I'm sure there is plenty of unfinished work. Therefore, without seeing it, I can already smell the must, mold and fresh cut doug fir. You'll need cash and hard money to finanace this. No traditional bank will touch it... hence, the price. This is where cash talks and experience gets the deal done. The right person can put $150,000 into this beaut and flip it back onto the market in 60 days for $800,000. And that's how we do it downtown. Got the experience, cash and moxy? Let's go see it. Pat Townsley, Realtor and Hard Money broker. www.PTRE.net 415-485-1776

Selling California

My good friend and associate Realtor John O'Donnell with Lifestyles Real Estate Inc in Santa Cruz just sent me a marketing piece based on a home he just sold. I thought... good for John, but why waste his postage on me. Of course, it's all about sharing information and showing activity. John's the guy I send clients to for Monterey, Aptos, Santa Cruz, Marina and that area. John and his familiy have a long track record of real estate excellence in that area. We have a reciprocity between each other.
So, to bang my own marketing drum:

Are YOU Looking for a Real Estate opportunities?
I’m a Mortgage Broker & Realtor. One call handles it all.

• Hard Money & Cross-Collaterailization leverage options.
• Best wholesale rates from Top national A, B & C paper lenders.
• Great ARMs, Fixed Rate, Construction Loans & Creative financing strategies.
• Get free home listings at http://www.PTRE.net <(Take advantage of that! FREE for Marin, Sonoma, Solano & Napa)
• House Hunt; SFR, Units, fixers, income properties, rehabs & probates.
• Asset, credit and Mortgage Management consultations.
• Fast, honest evaluations over the phone, by email or in person.

Pat Townsley, Broker. 415-485-1776

Reverse Mortgages versus Negative Amortization

Reverse Mortgages are different than Negative Amortization in one fairly key point: In a Reverese Mortgage, your PAYMENT is also DEBT SERVICED by the "Negative Equity" payment...so you don't actually physically pay a Mortgage Payment every month... the payment is automatically drawn against your payment along with the full principal and interest (if you set it up that way). In a Negative Amortization loan you actually do make a Minimum Payment or "Start Rate" for "X" amount of years. Another key distinction is that Reverse Mortgages have an Age Minimum of 62 years old, loan to value guidelines and maximum loan amounts. They're Golden Years loans so that you can party hearty, take trips, see the family, live your life while keeping the house that you bought and living on the equity that you've put into it over the years. Do I have a Reverse Mortgage for you or your loved one? You betchya. Pat Townsley, keeping you in the pink. www.PTRE.net 415-485-1776.

Enrolled Agents versus Certified Public Accountants

There's no contest here when it comes to Verification of Self-Employment with a bank or lender. EAs an CPAs might do equally efficient in Tax Returns, but EAs are basically General Tax Preparers approved by the IRS, but not State Certified as Accountants. Without slamming EAs, as there are many great EAs, I absolutely recommend that you start searching for a CPA to do your returns. EAs, in my experience, are bookkeepers who want to provide more services but not willing to go through the bombardment of education, ongoing classes and state licensing that CPA endure.
For those of you planning on buying or refinance a home and are self-employed... or thinking of being self employed, may I HIGHLY recommend that you find a CPA. File some form of Self employment income to generate a SCHEDULE C return and you'll have a much better shot at an easier loan transaction with the help of your CPA. I recommend you interview several CPAs to find one who fits your personal and business needs.
Lastly, it is my belief that you're less likely to get flagged for a Tax Audit with a CPA than an EA, general tax preparer, or yourself. For the few hundred bucks to have a CPA do it...it's worth it. Make sure YOUR tax preparer is a licensed Certified Public Accountant. In California, call Michele Hassid, CPA at micheleh@eckhoff.com or Robert Edwards redwards@redwardscpa.com, or ask your associates for a good referral.
For more info, contact me, your California State Licensed Real Estate Broker, Pat Townsley, 415-485-1776. http://www.ptre.net/

Equity Reimbursement Notification

I just received a check for $240,000, payable to ME, for "extra equity" in my property located in San Rafael. A real check, non-negotiable. Question. Do you think it would clear if I cashed it? It reads:
"In compliance with the lending laws of the State of California, the equity reimbursement program was recently developed to reward homeowners for investing in high appreciating properties located in the 94912 zip code." This is my chance, finally, for reimbursement.
Sadly, this is a freakin' scam and a half, but it will get the phone to ring, and the majority of the callers will get pissed and this will further be a black mark on the image of the mortgage industry. I really doubt that my Post Office Box located on Bellam Ave in San Rafael has appreciated $240,000. I've often thought of moving from my Post Box to a larger cardboard USPO tote or into one of the mail delivery trucks as my family is getting larger. I could probably make that move now with my new $240,000.
Buyer Beward! Call me for the reality check. Pat Townsley, Real Estate Broker. 415-485-1776. www.PTRE.net

Construction: 3 Rules.

One more thought on the topic: As my construction Mentor, Mark, always says "You can always be sure of one thing once you've started a project: It's going to be Harder, more Expensive and take Longer than you think." This goes for General Construction and Landscape Construction. Even the best plans end up costing more... especially when getting down to the "finish hardware." Friends; Do it once, do it right. Get your funds in place and be ready. People don't plan to fail, they fail to plan. I can help tailor your plan, get you the right referrals to get the job done right, and give you peace of mind. Pat Townsley. www.PTRE.net

Why Remodel?...and where to spend your money!

Remodeling not only improves your quality of life (upon completion of the project!) ...but it should also ADD VALUE to your home (which is an investment!). As I've mentioned before, ADDING Square Footage to your property will give you the highest return in equity. For resale and appealing to buyers, you should then focus on Kichen (most expensive "per square foot" cost but highest return on investment), then Bath...then Main/Great Room, Master Bedroom upgrades (least expensive). Of course, CURB APPEAL is what gets buyers salivating from the street, so Siding/Exterior, Windows as well as tasteful landscaping are also important. For me, I buy Worst House, Best Neighborhood. Don't buy Best House in Worst Neighborhood as you'll suffer "equity-wise" until the neighbohood's quality catches up to your value... and in that time, your home will be years older and need...a remodel! Providing FREE consultations on remodeling strategeies, cash-out for remodeling, construction loans and creative financing: Pat Townsley, Builder, Broker, and Financial Advisor to the Stars. www.PTRE.net 415-485-1776.

Pre Payment Penalties

Try to avoid them if possible. They're in place from the lenders so that they make sure they make their interest return on their investment by loaning you money. Now, if you absolutely know your new mortgage isn't going to be a candidate for refinancing in the next Three years, then it may be OK to take a prepayment penalty to lower your rate. Likewise, if you're getting a Home Equity Line of Credit (HELOC / 2nd Mortgage), then lenders have started "HIDING" the prepayment penalty in Semantics: They call it an Early Termination Fee. Basically the same exact thing as a pre-payment penalty... they just use ETF to get around the consumer's psychological barriers as well as disclosures in Federal form. Sometimes, prepayment penalties are "just the cost of doing business." Final note: Most Prepayment Penalties are TAX DEDUCTIBLE in the tax year that you PAY the Penalty. Call me if you need more information on prepayment penalties you might have on your existing mortgages or future loans. Pat Townsley, Mortgage Guru. 415-485-1776. www.PTRE.net

I was just offered a 30 year fixed rate at 4% for Free!

What does it all mean. How can one lender offer 1%, another 4% and the financial report says 6% and your bank or broker actually quotes you 6.5%? It's all in SEMANTICS, "grey area" marketing and reality. Most loans are 30 Year Loans, so they quote that, however, the fixed period varies and the Points you pay (or don't pay) can change the rate. Advertisers may say "30-year loan with a Fixed Payment" which is NOT a fixed rate....or a 30 year loan Fixed at "X" percent...(but fixed for how long???). Deceptive advertising gets the phone to ring, then you get the "bait and switch" in many cases. When the Financial Report says Fannie Mae/Freddy Mac offering a 30 year fixed mortgage at 6%, that's the bare bones wholesale pricing; it doesn't include the cost to actaully obtain that rate. Here's a sample of what I might see in one of my many market rate updates:

Security Price Change Intra-Day
FNMA 30 6.0% 99.97 00 BPS
FNMA 30 6.5% 101.50 00 BPS
GNMA 30 6.5% 102.22 00 BPS
FNMA 15 6.0% 101.06 00 BPS
US 10 YR 100.44 00 BPS

This shows Me that at One Point I can give someone a standard 30-year fixed rate at 6.0%. It also shows me that at NO POINTS I can do it at 6.5%. This is your standard Full Doc convential conforming fixed rate loan. There are MANY options you can throw into the mix from Adjustable Rates to shorter and longer term loans, negative amortization, interest only and more. Need the real rates? Contact Pat Townsley, California State Licensed Mortgage Broker. 415-485-1776 at http://www.ptre.net/. Thanks.

Economic Predictions

Snakes On A Blog: If you've been receiving my newsletters, you'll see my forecasting has been pretty dead on as far as interest rates, The Fed, House Values and appreciation. I'm also going out on a limb to predict that the upcoming release of the movie "Snakes On A Plane" will be a block buster cult classic. Using the same logic, I also predict that we're going to see some interesting loan programs emerge in the next 5 months. We're going to see 50 year amorization loans and new hybrid loans where there will be an amalgam of neg-am loans and fixed rate interest only loans. There are two reasons: The industry must create new niches to keep loans in process and Two; the enconomy is strong with inflation leveling off. Fuel prices will continue to be a challenge, insurance rates will rise, educational costs going up, entertainment costs (ticket price to see Snake On A Plane will be $10 per ticket), travel cost will rise (security costs) and the Holidays are right around the corner. The economy needs to keep moving. Buying, selling, producing, importing, exporting. So, everything will get more expensive including an increase in wages to off-set that (a vicious cycle really)...and people will be needing to REFINANCE to make "cash-flow" to afford everything. So, look for 'Snakes' to make headlines, and call me before the mad rush to refinance. Get things planned so you don't stress. People don't plan to fail, they fail to plan. Pat Townsley, Real Estate Forecasting and Finance. www.PTRE.net. Licensed Broker #01234350. 800-646-5527.

Just Sold

Consolidating your point of contact can ease the stress in a transaction. I'm both a Realtor and Mortgage Broker. I can do both the financing and the real estate negotiation. This can not only make the process painless on you, it can also be a good leverage tool to quickly and efficiently make a better and more competitive offer, getting you the home you need. This recently sold Eichler on Penny Royal Lane in Terra Linda (North San Rafael) is a perfect example of that strategy working. Here we see new home owner, Kent Langley of RW Environments proudly standing in front of the home on closing day. We were the winner in a four party bidding war with the fastest and cleanest closing. We also did a stated income high LTV loan. Bam. Done. This fixer is well on it's way to seeing $100,000 of equity in less than two months due to a few basic improvements. We'll move the financing around (Mortgage Management) and improve the rate and term by using the new current market value upon completion of some landscaping. My axiom of Worst House in Best Neighborhood proves a winner again. Let me show you how to do it. I can do the financing or negotiation, or both... I just want to be in there somewhere! Pat Townsley, Excellence in Real Estate financing and acquisition. www.PTRE.net. 800-646-5527.

Bad Credit

There's not credit like bad credit. The good news is: It's repairable. Creditors (lenders; banks, credit cards, private parties, financial institutions, Visa, Amex, MasterCard)...they typically don't report to the credit bureaus (TransUnion, Equifax, Fair Isaac) if you're 30 days late on a payment on a credit card. It's when you get over 30 days that they start reporting that you were late in the previous 30 days. Not much you can do about that IF it is your fault. Collections are another downer. These things will haunt you...so if you've paid, make sure you keep your paperwork Forever. The original creditor will usually hire a Collections Agency to recover the money on their behalf, and that information can get sold off again and again, and I've seen clients with three agencies collecting the same debt to for a creditor who is long out of business. It can be a tangled web. Tax Liens are another issue. You've got to make sure those are paid correctly and get your Receipt and "Book number." Keep these payments forever as well. Lastly, no matter what: NEVER be late on your mortgage. A mortgage payment late will haunt your credit for years and years and really impead your Real Estate financing abilities. If you have credit issues, work with a mortgage broker who understands how to negotiate, navigate and improve your rating! Pat Townsley, Credit Master. www.PTRE.net, 800-646-5527

30-year Fixed rate: SECURITY

If you’re looking for Security, then you need to lock in your 30-year fixed rate if you haven’t already. Rates are attractive again, even in the "jumbo" category...back down to the low and mid 6%’s on the fixed rates. You may also consider looking at "paying a point" if you plan to keep your fixed rate mortgage longer than 5 years... which is really the point behind fixing the rate for 30 years. What a concept. Call me for rates! 415-485-1776, serving all of California; Pat Townsley, Mortgage Broker.

Converting your Adjustable Equity Line to "Fixed"

WARNING: Many lenders are offering to "Fix" your currently Adjustable Equity Lines to a fixed rate below the current Prime rate (at no cost, lower rate, fixed). Here’s a potential challenge: If you’re currently paying Interest Only on this line, and you roll it to most of the proposed Fixed loans, you’ll typically have to pay Principal in addition to the Interest payment. Point being, your payment may go up and you’ve lost the flexibility to pay down/recast the balance and payments and you’ve lost the ability to draw future funds (in most cases). Do your due diligence and get the facts. Every lender varies!
SERVICE: I’m also hearing more and more about lenders and in-house banking lenders quoting one scenario, then upon review quoting an entirely different program and guidelines. If this happens, get the branch manager involved and express your displeasure with the dis-service. Customer service needs to remain Job One.

California Median Home Prices for July 2006

THE MEDIAN PRICE of an existing single-family detached home in California during June 2006 was $575,800, a 6.2 percent increase over the revised $542,330 median for June 2005, C.A.R. (California Association of Realtors) reported. The June 2006 median price increased 2 percent compared with May’s revised $564,440 median price.
NATIONAL RATE: Thirty-year fixed mortgage interest rates averaged 6.68 percent during June 2006, compared with 5.58 percent in June 2005, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.71 percent in June 2006 compared with 4.24 percent in June 2005. The median number of days it took to sell a single-family home was 46 days in June 2006, compared with 28 days (revised) for the same period a year ago. Buying or Selling? Patience! www.PTRE.net. Pat Townsley, Broker. 415-485-1776

Federal Funds rate and Prime Rate

August 8th, 2006: THE FED has given short-term interest rates a break from their climb. The Fed’s primary job is to curb the possibility of inflation. There are many tools, with the fastest reaction coming from short-term (aka Federal Funds) interest rate manipulation, which we tend to hear about as the Prime Lending Rate (Prime is 3 points over the Fed rate).

WHEN PRIME RISES, we see an immediate increase in any adjustable rate loan. This includes any Prime based Home Equity Line of Credit (HELOC), standard ARM (Adjustable Rate Mortgage) loans and your Credit Cards. If you have a Neg-Am Option ARM type loan, watch out for additional deferred interest onto your principal if you’re paying the minimum payments. On Credit Cards, work on your highest interest cards first. If you have room on an Equity Line, check with me, your CPA or CFP as to your best use of leverage to pay those time bombs. If you hear friends, family or colleagues grumbling about adjusting rates, they’d be a great referral to speak to me about the many financing options that can improve their cash flow, security, net worth and lifestyle.

Construction: What is a Story Pole?

Ever see those long sticks nailed to homes with yellow ribbon and orange tips? These are called Story Poles and these Poles tell the Story of your future. It is your friendly neighbor indicating the proposed heights and bounds of a new addition or new construction. If you’re seeing these poles, then the architectural plans are done, stamped and in to the local agency for design review and/or approval to build. If these poles tell the story that a giant wall is going up in front of your view, then you might have reason for concern. Other than that, the addition will bring value to their home and to your neighborhood. Most projects are well underway by this time of year to get "closed-in" before the rains. The picture shown here is a train wreck of an example of sloppy story poles indicating new construction on a slope. Story poles are used for both New Construction and Remodeling/Additions. Need remodel or construction financing? www.PTRE.net Pat Townsley, Construction and Remodel Loans for California. 415-485-1776