neighborhood - Blog - REO Pro Network

The Right Way to Investigate Your New Neighborhood

Posted by Michael Collins, CDPE, SFR on April 1, 2014 at 3:36am

The Right Way to Investigate Your New Neighborhood

The house looks perfect and it has all the features you need. The location is convenient for your needs and there really is nothing standing in the way of buying this particular property. STOP. Don’t buy the house until you do one thing; investigate your new potential neighbors. Here are some tips for finding out the not so obvious facts.

Make Multiple Visits at Multiple Times

One of the best things you can do before buying the home is to visit the home are various times and various days. The appearance of the neighborhood at 11:00 am on a Wednesday will likely be different from the appearance on a Thursday night. Look for neighbors that are in the yard, on the street and how busy the roads are. Are any of the neighbors engaged in any loud activities such as parties, electric tool use or other annoying sounds? Take your time and make sure to visit the home on the weekend as well.

Chat Up Your Potential Neighbors

The people that will be your neighbors have the information you need. However, it can be a challenge to get them to talk. During your visits look for people out in the yard engaged in various activities. Start a pleasant conversation and ask them about their opinion of the area and the neighborhood. Ask a few open ended questions and give them a chance to talk. Make sure to ask if there are any troublesome neighbors to look out for or any problems in the area such as sink-holes, poorly built homes or sewer issues.

Use the Internet

Various websites like Google and Bing offer maps and street views of nearly every known address. Type in the address and look around. It is likely that the pictures are at least a few months old if not a few years. The home could look exactly like it does now or there could be some major changes. Take time to look at the home you intend to buy as well as the adjoining properties. You may discover something that raises a red flag and causes you to consider a different property.

Check Police Records

There are some websites and even smart phone apps that provide detailed police records for neighborhoods. These sites will usually list things such as robberies, vehicle thefts, and violent crime. Some neighbors on one street may not be aware of crime that is frequently occurring one or two streets over.

See if anyone is Blogging

Sometimes there will be a blog or even a small community newspaper published for the area that you are considering. If you can find the blog or recent paper take some time to review the information. Local events, improvements in the neighborhoods and other items will likely give you enough detail to see if this is the right area for you.

Some of these steps may take a bit of time to complete and may seem awkward at first. However, considering the large investment that comes with owning a home it really makes sense to spend some time researching your new neighborhood and ensure that it will be as nice as your new home.

Middleton, WI Homes for Sale
Waunakee, WI Homes for Sale
Beloit, WI Homes for Sale
Milton, WI Homes for Sale

Picking the Right Neighborhood for Flipping a Home

Posted by Michael Collins, CDPE, SFR on September 11, 2013 at 4:15am

Which type of neighborhood is best for flipping homes?

: photo credit: Martin LaBar (going on hiatus) via photopin cc

When looking for an investment home that you eventually intend to flip it is important to remember that the location is just as vital as the actual home. It is feasible to earn a profit in nearly every area but certain areas make it easier on the investor.

Top Qualities

When people pick out an automobile they focus on the features that are important to them and their current lifestyle. In a similar manner, you can consider the following neighborhood features when considering an investment property:

Homes that sold recently sold quickly and had strong interest
Declining numbers of rental properties
Homes at least 20 years old that will likely need significant rehab
Steady values or, even better, increasing values
Average age of homeowner is elderly; these people are potentially moving to better climates or downsizing
Increased number of people moving from differing areas; signifies popularity

Three Types of Areas to Examine

In order to assist you in determining where to look for the right homes, here are three types of neighborhoods to consider.

Rebounding areas – There are times when an older, well established neighborhood will undergo a major overhaul. Many of the owners have made the decision to remodel the interior. In some instances the owners may be undertaking expansive additions.
New housing clusters – When an area becomes popular many builders will start developing new subdivisions. The existing homes in the immediate area could be ripe for flipping.
Farming region – Established real estate agents like to focus on an preferred area and call it their “farming area.” They send out regular postcards and newsletters to the residents so that when a home comes up for sale they usually think of that agent first. A home investor can follow a similar strategy and be the first to know of a potential home for sale at a discount.

Keeping Your Ear to the Ground

Some investors like to focus on their own zip code or a nearby area. This makes it easier on them because they already know a bit about the location. There is no long distance commuting to check out a potential property. Sometimes, neighbors can actually provide a good tip that leads to a purchase. And the local gossip is usually easy to find.

However, this only makes sense if the area is holding steady or rising. A neighborhood suffering from falling values, crime, or an imminent new highway is not a good choice, no matter how close it is.

Don't Get In Over Your Head

This should come as no surprise, but it is also important to remember your financing. Finding a great home at a 40% or 50% discount is worthless if the home is $50,000 more than you can afford. Always keep the price in the forefront of your mind since it is a very important piece of the elimination process. If a neighborhood is out of your price range, focus elsewhere.

Following a well-designed plan is important for almost everybody. Building a business, planning a party and even putting together a family vacation all work more smoothly when there is a good plan in place. Buying a home for flipping is no different.

Is Rental Property a Safe Investment

Posted by Michael Collins, CDPE, SFR on July 15, 2013 at 6:11am

: photo credit: JMS2 via photopin cc

Financial Gurus Still Believe Rental Property Is a Safe Investment

(Investment Properties: Part 3 of 5)

The record low interest rates for mortgages have helped the real estate market to slowly improve month by month for the last several quarters. Thanks to these low rates real estate has continued to be a sound investment for people who wish to diversify their portfolio. For those people that are considering buying their first investment property here are some considerations to keep in mind.

Neighborhood History

It is wise to pick areas that are accustomed to rental homes. One of the most obvious choices would be neighborhoods close to a major university or college. If there are no colleges or universities in your area then look for certain neighborhoods close to quality schools. Schools often attract stable, hardworking tenants that will likely pay on time.

Understanding the Role of Landlord

There are two major ways to prosper from owning rental property. The first is to buy the home at a significant discount and then sell the place at a profit after the home has appreciated. The second way is to have positive cash flow. The second method takes considerable planning. Just because the tenant is willing to pay more per month than the actual mortgage payment, it does not mean that the home is profitable. There are other items to consider such as regular maintenance and repairs.

Determining What to Charge in Rent

Appraisers and real estate agents can provide information about rental rates for a certain area. This gives the investor some idea of what can be charged per month. The monthly mortgage amount and allotted figures for maintenance should be subtracted from the rent. There should be at least 15% left over after subtracting the payments and expenses. Otherwise, you run the risk of losing money.

Choosing Tenants

Once you have some interested parties and they seem capable of paying the rent it is time to begin the screening process. Experienced landlords hold fast to the rule of checking out prior landlord references as well as the tenant’s credit file and even a criminal check. The criminal check could spare you from inadvertently leasing to a felon and finding major damage to your home due to a police raid.

Research the Possibility of Using a Rental Management Firm

Some companies specialize in managing properties for investors. These firms will review applications from potential tenants, handle collecting rent payments and, most importantly, take care of the maintenance issues that pop up at the most inopportune times.

For instance, if you get a call in the middle of the day that a toilet is leaking, can you leave work and fix it? If you get a call at 2 am on Saturday morning notifying you of a sudden hole in the roof, are you capable of fixing that problem? Some people have the skills and time to manage these issues, but most people do not. In these instances it is a good idea to use the service of a reputable management firm.

Investment/Rental Properties (5 Part Series)

Preparing to Purchase that First Rental Home (Part 1 of 5)
Adding the Title of Landlord Behind your Name (Part 2 0f 5)
Rental Property is Still a Safe Investment (Part 3 of 5)
How to Pick Profitable Rental Properties (Part 4 of 5)
Success Plan for Investing in Rental Property (Part 5 of 5)

Bank A, Neighborhood Z

Posted by MIRELA MONTE on February 28, 2009 at 7:44pm

As a follow up to my earlier blog: "The Ocean Between Buyer and Seller", here is my letter to the bank decision makers, arguing for the acceptance of a price which is $165,000 (34%) lower than the original asking price. This, along with the comps of this neighborhood and the adjoining neighborhoods, pictures and video of other, better priced listings will accompany this presentation tomorrow. Please give me any tips that may help me offer a more compelling argument!Bank A, Neighborhood Z6 Month Analysis:Homes Available for sale: 20Expired Listings: 26Withdrawn Listings: 29On Hold (don't show): 1Pending Sale: 1Sold: 1We have a unique situation in Neighborhood Z. The community is incomplete; only about a third of the lots have been built on with two thirds of them still vacant (raw land). Twenty properties are currently available for sale. Four of these available properties are Bank owned and two of them are short sales. In the past 6 months this community has seen a total of 26 listings expire and 29 listings withdrawn.We could only find one property sold within the last six months. The listing agent of that property claims that he only inserted the transaction in the MLS as a favor for an out of state builder who sold the property to one of his out of state investors. The property shows a sold price which is about twice the amount indicated by any of the current listings. We've tried to reach that builder repeatedly, but as of yet we have not had any success.The only property that has a contract on it and is waiting to close is fairly similar to ours in terms of price and size, although it's somewhat smaller. The current pricing on it is similar to ours and the original price was similar to our original price. We will not know what it sold for until it actually closes, if and when it does.There is another available property, also bank owned, which is 200 sq. ft. larger than ours, but priced for $50,000 less than ours. Most likely that property will sell first, unless we lower our price first. If we used the same price per square foot as that home, our price would be $333,333. The $325,000 offer we received today, although significantly lower than our asking price, is right in line with the market price.When the property was appraised last month for $390,000 (was the appraiser local and familiar with our market, or an out of the area appraiser?), this lower priced competing listing was not yet on the market.This neighborhood is in close proximity to Neighborhood T, U, X and Y, which are all finished neighborhoods of a higher caliber offering homes at similar prices and still garnering a very low level of transactions. Because "Neighborhood Z" is only one third complete and has so many competing properties for sale and virtually no sales activity, my fervent recommendation is to accept, or come close to the Buyer's offer price.Mirela Monte, Your Myrtle Beach Real Estate Connection

How to Do a Good BPO – with the emphasis on GOOD!

Posted by John Occhi on May 31, 2008 at 1:17pm

BPO or “Broker Price Opinion” is the back bone of the REO (Real Estate Owned) industry. This is the tool that banks, lenders, investors and perhaps most importantly the asset managers use to determine the value of a property once they have taken it back at auction and again after it has been on the market for 90 or more days. For this article I will refer to all of these individuals / entities as “Asset Managers”, if that is OK.A BPO is typically tasked to two or more agents to submit their opinions. Having multiple reports, it is now possible for the asset managers to determine a realistic price to list a home for, when it is assigned to an REO Agent.If the values are out of skew, the asset managers will ask for clarifications and may order an additional BPO – just to get a good feel for the property. As a BPO agent, you are the eyes and ears of the lender. This is why this is such an important task in the REO process.TYPES OF BPO’SThere are three different types of reports that a BPO agent may be asked to perform. The first is a drive-by or exterior BPO. This requires a physical trip to the subject and an assessment of the property as well as the neighborhood. The second is an interior or full BPO. An Interior BPO requires that the BPO agent gain access to the interior of the property and make a full assessment based on the condition and amenities of the property. Finally there is a Valuation or desk-top BPO report. A Valuation is simply looking at the property on paper and determining what it should sell for, with all things being equal.Perhaps the most common BPO is the drive by, or Exterior BPO. The entire process should take about 2 hours. I know there are people out there telling you they knock them out in 30 minutes – well, unless you live in a city like New York and every one of your BPO’s is in the same building, then trust me, you will easily have a couple of hours invested – even after you have completed hundreds of them, as I have.The purpose of the BPO is to provide the Asset Manager with a fairly accurate estimate of the property’s value in the current market – which means today. The opinion is made from looking at comparable properties that have recently sold and are currently on the market. Adjustments are made for all the different reasons that separate one property from another. For example, an adjustment would be made for properties that are larger or smaller than the subject. Is the lot size bigger or smaller then the subject?Yes, there are many difference that are almost a ‘give me’ that shouldn’t need to be discussed, if you are an experienced REALTOR®. What makes you a trusted expert is when you can document, adjust and report for the more subtle differences between the subject and the comps. Is one of the properties on an exterior lot (meaning does it back to an exterior street – away from the tract)? Are there improvements that may go over looked, like RV access or perhaps a custom iron gate replacing wood fencing? If the subject and comp are from different tracts – do you document the differences, regardless of how similar they are?On an Interior BPO, you have to be aware of upgrades – are kitchen cabinets, Granite, Corian, White Tile or Formica? Are the cabinets upgraded? What type of tile is on the floor – 12” tile? 16” tile, 18” tile? 20 tile”? Is it Travertine? How many rooms is it in? Does the fireplace have a matching tile surround? Is the carpet an upgrade?What about damage? It is obvious if there are holes in the wall or malicious damage. Are there missing electrical switch plates of outlet covers? Are the ceiling fans or lights missing? Has the closet organizer been stripped, leaving an empty closet? Are all of the drawers in place, or were they used as moving boxes? Are all of the appliances there? Are the appliances’ an upgrade?These questions a local expert could answer. Can You? Do you include this level of detail in your BPO?PICTURESEvery BPO requires that you take digital pictures that can be uploaded – either through a website or perhaps an email. Today, I do not know of any companies that still require that pictures be sent through the snail mail – but it has not been so long ago when that was the norm.For a Drive-By BPO, you will generally be required to take 3 pictures as a minimum – the front of the subject, address verification and a street scene. However, many clients will want more and there is nothing more frustrating to miss a picture that a new client wants, because you were doing what you considered to be the ‘norm’.Every home that I take exterior pictures of I always start with the exterior of the home followed by two address verification shots and two street scenes. The minimum any BPO will require is one of each of these.I take the 2 address verifications, if possible from two different sources – just in case one picture does not turn out right. I’ll take the curb painted with the number or the mailbox, if it is at the street. Then I look for the number on the structure itself. Sometimes this can be a challenge – for example the numbers can be painted the same color as the house.When I take the exterior, I always use my zoom to have the house fill my view finder. My clients are not interested in looking at a band of black asphalt in front of the home that looks far away – they want to see the house and what condition it is in. They also use this picture to verify that you are taking pictures of the right house. (OK, I admit I have taken the wrong pictures more than once – but I’m not going into that here.)I’ll take a picture of the street, going in each direction. If the subject is on a corner, I’ll also get pictures of the side street as well as a corner shot of the subject.What you will learn is you can never take too many pictures – remember, they are digital; it’s not like you have to pay for developing. I will never submit all of the pictures I take – but I do use them. When I am taking pictures, I average 3 homes per trip. By the time I get back to loading then and completing my BPO, it is more than possible I can get homes confused with one another (heck, I can take pictures of the wrong house, so cut me some slack – I’m getting old).I do provide as many pictures as possible, giving the Asset Manager as clear an understanding of what the property looks like and it’s current condition.The other pictures that I will always take include at least one each of each side of the property. If I can gain access to the back yard, I’ll also get one of the back of the property as well as the back yard. Remember, these pictures will help me when I am writing my report and help me offer as accurate an opinion of the value as possible – and that is what I am getting paid for.As I assess the property, I will take a photo of every nuance that I want / need to remember. This will include any apparent damage, needed repairs or deferred maintenance. I will also take pictures of any positive features that I can use to help separate this home from the others.Interior PicturesWhen taking pictures for an Interior BPO, I always start with the front door open and then go in and take at least 3 pictures of every room – each from a different corner. As mentioned earlier, I will document any damage or deferred maintenance.. I will also take pictures of all upgrades.I walk the house, room by room so I can keep everything straight. Lets say it is a 5 bedroom home, I definitely want to make sure that I document each room with the right pictures. That may be easy when every room is painted a different color, but when they are all white, be careful. The way I do this is I always start with a picture from the bedroom door, then one from across the room looking towards the entrance followed by a 3rd with a picture of the closet (half open so I can see the inside). Any damage would be taken between the first pictured and the closet picture. Then I am ready for the next room.COMPSMore often than not, I like to do my research prior to going out and taking a look at the subject. First, I check my local Title website and pull all of the property characteristics and enter them into the BPO form. Once I know what the subject looks like on paper, I will search the MLS for comps as close as possible to the subject.There are times when I can find all of my cops in the same tract – but most of the time I have to expand my search. It is very important that you fully understand the criteria each company will tolerate. I have clients that will allow me 25% variance in the square footage and others that insist I remain within 10%.Suburban BPO’s generally allow for a one mile radius of where the comps can come from. 90% of my market is suburban – the remaining is rural where I can go 10 miles out. I have not lived in an urban area since 1992 – so check with your client if this is your market.Bedroom and bath room count is usually within tolerance of plus or minus one – but there are times when you just need to expand outside this and other criteria. Consult with your Asset Manager and seek their guidance on how they would like you to proceed. The important thing is that you completely document any variance you make. Let me take this back, the CRITICAL thing that you do is document any variance and the reason why you selected this comp.Remember, for every BPO you do, one of your peers is doing the exact same report and chances are you will never learn who it is – but the lender knows who to give the work to in the future if you mess this up.NEIGHBORHOODAll BPO’s require you to document the positive and negative aspects of the neighborhood the subject is in. Not only the neighborhood, but how about the next door neighbor. I just did a BPO where there was a RV parked right next to the property line and the subject driveway, making it impossible for a car to back out of the garage and driveway and see if anyone is coming from that direction. Well, that’s just one of the subtle little details that can make a difference and account for an adjustment in value.Is the neighborhood close to schools? Shopping? Entertainment? Commuter routes? Restaurants? Parks? Places of worship?...or is it in a secluded upscale neighborhood that residents don’t mind driving an extra couple of mile to get where they want to be?Are there negative or obsolete features? Are there overhead electrical lines? Is there a flood channel? A large vacant field that may attract rodents? How close is it to a landfill? Is there a prison at the end of the street?You get the idea – tell it like it is – Good, Bad or just downright Ugly!MARKET CONDITIONSWhen it is all said and done, you must analyze your data as you client will and offer your opinion of the value. Different clients will want different values. I created an excel spreadsheet where I can plug in the variables in a grid format and make adjustments with a variable number that I can change from report to report.When I’m finished with the BPO, I have just recently started saving a copy of the worksheet. I save it to the folder I created in ‘My Pictures’ for the BPO. This allows me to keep all of my info for each BPO in one location, even though this is not a picture.I do save all of my pictures – not sure why, other than I have a massive hard drive and I might as well use it for something. Truth is I have done a BPO for the same property – a year and a half later. This allowed me to go back and see the transition of the property – not that this is relevant for my BPO at hand, but for my market knowledge, which is why I am an expert in my local real estate market.The basic value the Asset Manager is typically looking for in a BPO is the current AS-IS Value and a REPAIRED VALUE. They many want to know what these values would be with a 30 day window to sell as well as a 30 to 90 day window and perhaps even a 90+ window.There are times when I am not comfortable with he results, based on the overall market. Here in my market, we have 2 cities, an area of unincorporated county - all in 5 zip codes with about 100,000 residents. We are isolated, so yes there are nuances between each zip code and area of the valley, it is still one market.I will use this opportunity to offer market data outside of the 1 mile radius the report is based on. For example, I may have a 4 bedroom 2500 sq ft home built in 2003. The comps may have come from across the mile radius and not the same tract. The data may tell me this home should sell for $180,000…but I am just not comfortable with that number so I’ll run the numbers valley wide and let the asset manager know that there are 45 (or however many) homes that are both newer and larger than the subject and priced between $150K and $180K – letting them know that the competition is not from the 1 mile radius, but from across the valley..FINAL DETAILSIn parting, I would need to offer this last little bit of advise if you are going to be successful with your BPO’s and ultimately your REO’s.TIME is of the ESSENCE!As REALTORS® we have been taught that time is always of the essence and believe me when I tell you, it is no more so than when working with Asset Managers who are often from different states and time zones. They are under a lot of pressure to get their job done and their performance is based on your performance.So, never ever run late – get the job done and get it done early. Most BPO’s are due in 72 hours – my goal is always 48. This is true when you are listing REO properties as well – everything is task oriented and time lines are critical – this is how you will build your business and your reputation in the REO world.John Occhi, REO REALTOR®Century 21 Crest – CrestREOJohn Occhi is a REO REALTOR® thatspecializes in the sale of bankowned homes in the Inland Empireregion of Southern California. Hehas helped many buyers acquiregreat deals on these REO homes.His company, CrestREO, the REODivision of Century 21 Crest – the77th largest C21 in the Nation, hasSold Over $1Billion in REO Sales.

neighborhood (5)

The Right Way to Investigate Your New Neighborhood

The Right Way to Investigate Your New Neighborhood

Picking the Right Neighborhood for Flipping a Home

Is Rental Property a Safe Investment

Bank A, Neighborhood Z

How to Do a Good BPO – with the emphasis on GOOD!

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