Realty World - Tri Shasta » 1999 » November

Shasta County Investment Property

Elisa Coyle — Tue, 30 Nov 1999 07:00:00 +0000

Buying investment property in Shasta County has always been a challenge. Why?, you may ask. Well, the nitty-gritty of the entire prospect of investing in real estate in Shasta County is that the rents collected can not cover the basic debt service of the investment. In the last year or so that gap is diminishing slowly.
Now when you are looking into investment property in Shasta County you are more likely to find projects that make more sense. When you are looking to invest you need to look at several things that are not generally easy to access on the listing. These items are actual income collected versus market rents, ALL expenses that need to be paid monthly including the mortgage payment, what are you paying "per door", what is the cap rate on the project after all of these numbers are included and most importantly is the project obsolete in the market.
Shasta County has several apartment and townhouse configurations, but many of them are obsolete in this day and age because of their size and condition. Sometimes the "bones" of the project are good, the amenities are in reasonable condition and the land it sits on is prime. If you have enough funds to renovate the project and the patience to wait for it to turn, it could be an excellent investment. Foresight is a vital quality in this situation.
As an investor, the important thing to remember is who will be renting, managing and maintaining your property. Is it worth jumping in head first. Only you are to say, but the opportunities are growing in Shasta County and the need is definitely there.

From one extreme to the other!

Elisa Coyle — Tue, 30 Nov 1999 07:00:00 +0000

To say, "Our industry is in an uproar!", is an absolute understatement. I have spoken before about perspective of the market conditions and the like, but I feel I need to address the ridiculousness of our standards and protocols for operations.
The sub-prime lending practices that contributed to the mess we are in right now were so lax that it created a mess that needs cleaning up and desperately so, however, now that everyone is aware of this necessity they are jumping off the deep end in the other direction. Don’t get me wrong, I believe standards need tightening, but sometimes a little of something is better that a lot of everything. The new appraisal requirements and education requirements for not only lenders, but borrowers and real estate professionals are good in theory. I do not have any arguments about the necessity of educating the masses with respect to real property purchasing. It is obviously necessary. That much has been proven. The primary issue I have is with the new requirements for the ordering of appraisals. Those requirements have tightened so much that it is impractical to function. I realize many questionable appraisals have been performed and submitted, but tightening the belt to the point where no one knows who is to do what and limiting the order to a very select few is not necessarily the best option.
I agree with tightening the belt, but come on folks jumping in the complete opposite direction is carrying things a bit far. Moderation and small steps are the keys to a successful transition period. I hope all those involved in the policy shifts remember that and we, as professionals, need to speak up and give our advice to those involved.

Educating the masses.

Elisa Coyle — Tue, 30 Nov 1999 07:00:00 +0000

With the economy being as it is today, consumers are extremely cautious. The most important thing for our industry to remember is that now is a great time to purchase real property. Interest rates are down, as are prices. That just does not happen. The economic rule is if the prices go down, interest rates jump and vice versa.
The consumers are wary of stepping out of the comfort of holding on to their money in lieu of spending on anything, let alone "big ticket" items like transportation and homes. With a little education, I think our industry can turn that around, but the most important thing to remember is the feelings of the consumers, What are their key factors in consideration…. Job security, will I be able to continue making my payments is one of the top items on this list. As an industry, we should give them a pat on the back for this way of thinking, especially in light of the economic situation we are in currently. In addition, they want to hold on to all they have so it does not lose any value. This is where we, as professionals need to educate the consumers. Real property will not always be in this state of depression and flux. It will rebound and appreciate, so any investment made now will give them equity later.
This is merely a sampling of what we can do for our consumer base to educate them on the rare opportunities that we are faced with right now.

Buying Your First Home

Elisa Coyle — Tue, 30 Nov 1999 07:00:00 +0000

To buy or to rent, that is the question. There are several factors leading to that decision. This is a quick introduction in how to proceed in yours decision making.
Before you start, grab your household budget, ask family and friends for recommendations and ask yourselves about how homeownership will affect your family.
After addressing the issues mentioned above and presumably you have come to the conclusion that buying your first home now is for you. Below are a series of items you need to consider:
1) What are your needs, size, area, condition of house, storage space, etc.
2) What are you willing to maintain regularly on the property?
3) Where do you want to be located?
4) What can you afford?
In calculating how much you can afford, remember to be realistic. The crisis we are in right now was affected heavily by the over reaching of the consumer and unrealistic income to debt ratios. Remember, it is prudent to be more conservative when you are looking for your first home, to insure that it will be a rewarding experience. Below are some of the pertinent points of calculating what you can afford:
1) What is your monthly income. (The housing expense ratio uses your gross income)
2) Take 28% of your total gross income and that is what your housing payment should not exceed. One point ot remember is that 28% needs to include not only the principal and interest of the loan, but the taxes and insurance payments as well. This will protect you in the long run.
3) Take your other debt ( monthly payments to loans, credit cards, etc.) add it your basic housing costs and divide it by your total gross income. That percentage should not be more than 36%.
Once you have assessed this information, you should have a fairly good idea about whether you can afford to buy a home and what price range you should be focusing on in the market. Your next step is to find a broker and get yourself pre-qualified for a loan. Once these steps are done – happy house hunting!

It’s all in your perspective….

Elisa Coyle — Tue, 30 Nov 1999 07:00:00 +0000

As a real estate professional in this economic climate, I have heard my fair share of griping. Yes the economy is in a severe downturn and future prospects "don’t look good", but there is always the need for housing, whether it be rental or owner occupied. The wonderful thing about this particular moment in time is that the housing options are more affordable than ever.
I realize investors and potential home buyers are keeping close fisted right now, but I also realize that the safest investment in this volatile economy is real property, be it for rental purposes or other uses. What people do not realize is that now is the time to invest. When the boom in California was happening people were scooping up property like it was going out of style. This is part of the reason we are in the situation we are in right now. Property values were so high and the loans given on these values did not reflect the realistic portrayal of value. Savvy investors know that now is the time to get into the investment market, when prices are low. This makes the debt service on the property much more balanced and achievable.
So, when I hear we are in a "bad market", I scoff. We are actually in a remarkably good market, but we need to educate the investors and potential home buyers to that fact. Yes, the economy is bad, but wouldn’t you like your money in a safe investment, that you can actually have some control over. Think about it, it is all in your perspective.