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Fellow REOPros.  If you complete BPOs, I offer a way to calculate what your minimum fee should be instead of just taking low ball offers for your hardwork.  Here is the spreadsheet I use below.  This is for residential properties only.  I have attached the spreadsheet to this post.  Download it if you like.  And if the spreadsheet comes out less than $50.  I use $50 as my rate for exterior drive by.  For interiors my minimum is $75.  Thanks.

1)  Open a spreadsheet.

2)  In cell A1, type in Minimum hourly rate, in cell C1, place your minimum hourly rate, say $25 or $30 or whatever rate use so choose.

3)  Now take the address of the offered BPO location and go to Google Maps and look up the distance and time from your base location(Office, Home).  Write them down.

4)  In cell A2, type in Travel time, enter the travel time from Google Maps cell B2.

5)  In cell A3, type in Round trip, enter the number 2 in cell B3.

6)  In cell A4, type in Total travel time, enter the following formula in B4.  Formula  =B2*B3

7)  In cell A5, type in Desk time, in B5 enter (with 2 decimal places, x.xx), Say for this example this is 1.25.

8)  In cell A6, type in Total BPO time, in C6, put the following formula, Formula =B4+B5

9)  In cell A7, Dollars for travel time and desk time, In cell C7 put the following formula,     

Formula =C1+C6

10) In cell A8, type Mileage from Google Maps, enter travel distance from Google Maps in cell B8.

11)  In cell A9, type in Round trip, enter the number 2 in B9

12)  In cell A10, type in Total mileage roundtrip, enter the following formula in B10, Formula =B8*B9.

13)  In cell A11, type in IRS current mileage rate, in B11 enter the current rate, 2017 rate is 0.535

14) In cell A12, type in Total mileage dollars, in cell B11 enter the following formula, Formula =B10*B11

15) In cell A13, type in BPO compensation, in cell C13 enter the following formula, Formula =C7+C12

BPO%20Compensation%20Calculator.xlsx

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I am a realtor and a Santa Cruz rental property investor since 2000. There are many reasons to invest in Santa Cruz rental properties, some of which I have discussed in this article. Today I want to talk about what the pros and cons are in renting to UCSC students. 

 

Here are the pros that I have experienced.

1. Vacancies are virtually non existent: There are almost $18,000 UCSC students and in any given year there is only room to house about 8,000 of them on campus. There are always many thousands of students looking for a place to rent, so the potential pool leaves no vacancies in your Santa Cruz investment rental properties.

 

2. Students pay more money:  They frequently will pay more per bedroom and sleep 2-3 in a room just to have a place to stay. Here is a link to what students expect to pay from the UCSC community housing page. https://communityrentals.ucsc.edu/cost/index.html

 

3. The rent money is very secure: The students get financial aid and/or are supported by their parents. In 17 years and 4 rental properties as a Santa Cruz rental home investor I have only had a problem getting paid once.

 

4. UCSC makes the rental process very easy for a Santa Cruz rental investor: They give workshops to the students on what they need to do to look attractive to a Santa Cruz rental investor. They come to you with complete rental applications, credit reports, references, and certificates saying they understand what it takes to be a good renter. The university posts your rental for free so you have a large pool of possible renters.

 

5. Students replicate themselves making the rental process even easier: My experience has been when one student moves out they have another take their place making the process seamless for the Santa Cruz rental investor.

 

6. Santa Cruz students are often long term renter: If you get the students early, in their sophomore or junior year they often stay for 3-4 years or more. making the cost of turnover very low.

 

7. Santa Cruz students can vacate in the summer if you want a summer beach home that is rented for 9 or 10 months: If you are a Santa Cruz rental property investor who wants a place in the summer for yourself you can rent to students during the school year and keep it for yourself in the summers. Many students go home in the summers, and the ones who don't can always find a sublet from another student who is going home. It is a way to have a vacation home that more than pays for itself.

 

Cons of renting to UCSC students:

 

1. Insurance on the house can be tricky: Recently many insurance companies, including the one I have always used, State Farm have decided they do not want to insure homes that are filled to the brim with students in college towns. They see them as Frat houses and won't write new policies. You can get commercial insurance, which is more expensive than residential or find the rare insurer who will do it. I found that CIG insurance out of Monterrey was willing to write a residential policy at competitive prices.

 

2. Large homes can be a hot bed of petty emotional issues for the Santa Cruz rental property investor.: If you are the owner of a large home with 6-10 students they may turn to you when there is a spat between the tenants. It is a time and emotional drain. I put one person in charge and have that person deal with issues like who is going to clean the house, noise complaints, bullying, etc. They have the final say. It works pretty well.

 

3. Students are often unaware of what it takes to take care of a house: Students do not always understand what it takes to care of a home and things can be damaged by mistake, even without large parties or Frat behavior. The way to ameliorate this is to buy a house that does not have delicate finishes and educate the students on basic home maintenance. My tenants know they need to call me right away if something is wrong and not let a small problem get out of hand. I would rather be over called than under called, and they know it.

So as a long time owner of Santa Cruz rental property I can enthusiastically say that renting to Santa Cruz students is a good thing from an investor perspective and not something to be afraid of.

 

If you have any questions about becoming a Santa Cruz rental property investor please feel free to contact me.

Marcy Moyer

eXp Realty of California

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

Specializing in Probate, Trust, and Investment Properties

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Santa Cruz, known for the beach, the boardwalk, Pacific Ave, hippies, and organic food, along with University of California Santa Cruz is also probably the best place for investors looking for rental properties right now. Here are some reasons why.

 

  • 62% of Santa Cruz residents live in rentals, compared to a ntional average of 43%
  • Average sale price of Santa Cruz homes has doubled in the last 5 years
  • Cap rates for Santa Cruz rental properties are between 3.5-4% very easy to obtain, as opposed to 2.5-3% in The Silicon Valley
  • No rent control but there is a one year moratorium on Santa Cruz short term rental permits so Air B&B investments not the way to go now.
  • While the market is apprectiating the competition for investment homes in Santa Cruz is not as great as in Silicon Valley
  • There are still Santa Cruz home sales contingent on the sale of another property, making 1031 exchanges much easier.
  • Accepted offers almost always have contingnecies so you have time to figure out if the property makes sense for your portfolio.
  • Would you rather visit your rental property in Santa Cruz or Milpitas? I would pick Santa Cruz any day.
  • UCSC only guarentees housing for students for 2 years. They have over 18,000 students. The housing shortage is so acute that students are living 3 to a room or in their cars, not because they don't have the money for housing, but because there is such a shortage.

 

Smart Silicon Valley investors should look at Santa Cruz as a place where your money goes further and the cash flow is so much better. 

I have put my money where my mouth is and own 3 Santa Cruz rental properties myself.

I encourage you to contact me if you have any questions about how and why to buy a rental property in Santa Cruz.

Marcy Moyer

eXp Realty of California

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

Specializing in Probate, Trust, and Investment Properties

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BPOA LogoThe Leader in BPO Automation
Software Since 2009 

HUGE News About Our New BPO AutoFill Software!!!!!!!

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We are a technology company that strives to be on the cutting-edge of all that we do and with the products that we offer. Since we invented BPO AutoFill software in 2009, we have learned a whole heck of a lot about our business, our subscribers needs, changes in the industy and have taken it all to heart.

We are SUPER proud to announce that we are starting to work on a new version of our BPO AutoFill software product. Although, we officially start work on October, 2nd 2017, this project is something that I have been working towards for years.

We anticipate releasing it very soon as we are currently in beta testing of the new, improved BPO AutoFill software and can't wait to see this dream come true!

More news to follow and we can't tell you all of the exact details just yet but know that this is going to be HUGE!!!!!!

Sincerely,

Nicole Ocean

  

BPO AUTOMATION GROUP-CLEARLY THE LEADER IN THE BPO SOFTWARE INDUSTRY!

Finish Your BPO Orders Faster With The Industry Leader Since 2009.

  

 BPO Automation Group

Phone: (360) 223-2482
E-mail: sales@bpo-automation.com
495 Grand Boulevard Suite #206

Miramar Beach, FL 32550
www.bpo-automation.com

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 All Rights Reserved, BPO Automation Group LLC, © 2009-2018

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Secrets to Real Estate Success for Newbies

Secrets to Real Estate Success for Newbies

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Getting started in real estate can be tough is almost like trying to learn a brand, new game. It comes with its very own set of special rules, laws, systems, standards and guidelines that you must learn. While you are trying to become more competitive in an already over-saturated field where everyone knows someone who is a real estate agent or broker, you must be able to figure out a way to hustle and be different than your competition.

As you try to balance your new career and all the responsibilities that come with us, the real test of success is seeing if you can really juggle everything in the air at once, keep it moving smoothly so you don’t drop any balls and come out making enough money to maintain the lifestyle that you desire.

All of this is possible and I know because I’ve “been there, done that” myself. I’ve been a new real estate agent and quickly learned how to carve out a niche for myself so that I could not only stay in real estate and keep practicing it but also to see to it that I was thriving in my career. The same is possible for you, even though nothing is promised to you, you have the same opportunities to succeed as everyone else, IF you are willing to work for it, learn how to play the game and keep up with your duties on a daily basis.

For me, I found out about a way to make supplemental my income by doing CMA types of reports for banks called, broker price opinions. It saved me in more ways than one, in fact it helped pull me out of poverty as a single Mom to a young, bright-eyed and very loveable boy. And I’ve never looked back!

I’m very vocal about the BPO industry and I’m in love with it. I live to help real estate professionals around this great nation of ours that want to also carve out a niche for themselves in their real estate business by doing BPO’s. I also live for coaching and teaching, it’s what makes me happiest at my core on a professional level.

If you are curious to learn more about anything related to BPO’s, I’d love to be your guide, your coach and hopefully someone that you look up to.

Learn more about my newly updated “Broker Price Opinion Basics 101” video course here:

http://bpo-university.com/courses.html

If you already know the basics about BPO’s then I’d like to invite you to learn more about how to double and triple your BPO income by using BPO AutoFill software here:

http://bpo-automation.com

Your BPO Coach,

Nicole Ocean

  

BPO AUTOMATION GROUP-CLEARLY THE LEADER IN THE BPO SOFTWARE INDUSTRY!

Finish Your BPO Orders Faster With The Industry Leader Since 2009.

  

 BPO Automation Group

Phone: (360) 223-2482
E-mail: sales@bpo-automation.com
495 Grand Boulevard Suite #206

Miramar Beach, FL 32550
www.bpo-automation.com

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Broker Price Opinion Needs

WePro BPO has been established as a Broker Price Opinion outsourcing company which caters all types of Residential and Commercial properties throughout United States.

Our company started as a small business partnership in 2008. 
With the perseverance, commitment and continuously delivering high quality reports of the people behind, the business started to grow and created a team of highly skilled real estate analyst who are best experienced in processing and formulating standard quality, error-free, quick turn around time and cost effective broker price opinions.

Please visit our website at https://weprobpo.com/

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Solo 401k for business owners

“Save your money. You’re going to need twice as much money in your old age as you think.” — Michael Caine

If you’re self-employed and trying to boost your retirement savings, Solo 401(k) plans are a potential option.

Solo 401(k) plans are qualified retirement plans for self-employed professionals and business owners with no employees other than a spouse. These plans have gained popularity because of investor-friendly features and higher contribution limits than traditional retirement accounts.

The biggest limitation on a Solo 401(k) plan is its eligibility criteria. You must have some sort of partial or full-time self-employment, and you can’t have any full-time employees — except your spouse — working in the business. Having such eligibility criteria rules it out for business owners with employees.

Solo 401k for Business Owners: What are the plan benefits?

For an owner-only business, it presents an option for ensuring your savings are sufficient to fund your retirement years.

Is a Solo 401(k) is right for you? Here are four reasons to consider Solo 401k for business owners.

1. High contribution limits

Unlike individual retirement accounts, which limit contributions to $5,500 (or $6,500 for those age 50 and older), you can contribute up to $54,000 to a Solo 401(k) account in 2017 ($60,000 for 50 and older).

Related article How to achieve financial independence with your small business

2. More investment options

Relying on the stock market for retirement, as many retirement plans do, may not sit well with investors who prefer to have more flexibility and freedom to choose different types of investments. With a specific kind of Solo 401(k) called a self-directed Solo 401(k), you can invest in alternative assets including real estate, tax deeds, tax liens, mortgage notes, private equity, personal lending, precious metals and even regular stock-bond investments. Make sure to ask your Solo 401(k) provider about the availability of these investment options upfront.

3. Roth, minus the income limits

According to the current IRS regulations, if you’re a single filer earning more than $132,000 in a calendar year, you’re not eligible for Roth IRA contributions. The phasing out starts at $117,000, limiting your options for after-tax contributions. A Roth Solo 401(k), which doesn’t have income limits, allows you to make annual after-tax contributions of up to $18,000, or $24,000 if you’re over 50, giving your money an opportunity to grow tax-free.

Related article:  How to choose a self-directed retirement plan for your future?

4. Ability to borrow

The IRS allows borrowing from a Solo 401(k) plan, just as it allows borrowing from 401(k) plans. This means no one can turn you down and you can spend the money the way you want. Just make sure you follow IRS rules about repayment to avoid taxes and penalties. And loans from a Solo 401(k) hold one advantage over loans from a regular 401(k). With a 401(k), if you leave your current employment, the loan will become due in full. That kind of job change is not a factor with a Solo 401(k) loan.

This article was originally published on NerdWallet.com

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Single Source/IMortgage fee drop

Ouch, they dropped fees for exterior BPO from $40 to $35.  I rarely accepted at $40 unless it was close by.  No way would I accept a BPO for $35.   This comes at a time when several others raised their fees.  One went from $50 to a varied fee depending on area to $55 to $65.  I do desktop BPOs for $40 - $50 without leaving the house!  One company went to $63 exterior and $95 for interior.  The BPO gets taken at $35 since it goes away.  Lots of hungry Realtors out their I guess.

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Best IRA for Self EmployedRoth IRA is one of the well-known and oftentimes considered best IRA for self employed. If you are looking for reliable financial investment and retirement account, it is imperative to know more about this plan. Nowadays, you might find it more challenging to decide what retirement account to choose. There is a big difference as well as similarities for 401k vs IRA. Sense Financial Services LLC, the leading provider of premier retirement plan Solo 401k and Self-Directed IRA offers valuable information about these two topmost investment ventures. For Roth IRA, there are essential benefits from this account that you must learn and understand.

Roth IRA plan is not subject to Required Minimum Distribution Rules

One of the reasons why Roth IRA is considered the best IRA for self employed is that it is not required to comply with RMD rules unlike traditional retirement accounts. The Required Minimum Distribution rules subject the account holder to pay taxes on distributions. This is a requirement which takes effect as soon as the plan holder reaches 70 ½ years old. If you are not subject to RMD, tax-free income is accumulated, allowing the account to boost its accumulated and tax-free income throughout the duration of the owner’s lifetime.

401k or Best IRA for self employed: Which is best - distribution extension for surviving spouse

Roth IRA is not only the best IRA for self employed account holders but also a lucrative and useful investment for the surviving spouse. That’s because the account beneficiary of the retirement plan can still opt to continue the contribution to the plan. Or the beneficiary could opt to combine this Roth IRA to their own retirement plan, basically the same Roth IRA. This means that the surviving spouse could take over and benefit from the account particularly the growth on investment with its tax-free features. On the other hand, traditional retirement plans are not allowed to be combined and merged into the surviving spouse’s IRA. The beneficiary is also not allowed to opt for an additional contribution to the existing account.

Roth IRA account holders do not pay 10% early distribution withdrawal penalty

Account holders who decide to withdraw their account contribution before they reach the age of 59 ½ are not subject to the 10% payment of the early withdrawal penalty. Account holders could basically withdraw their converted or contributed amounts to their Roth IRA retirement account without the hassle of paying taxes or the penalty as long as they comply with the 5-year wait period making it the best IRA for self employed.

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Seller Must Dos --Before Listing

1. Clean, clean, clean. Be sure to clean every nook and cranny in the house.2. Pay attention to smells. Sellers should not smoke in the House or exits duringthe listing period. If pets are allowed in the home, refresh the home daily withair freshener - like Glade.3. Clear out the clutter in the closets, in the bookcases, on the tables, in walkways, on counters, orlaying on furniture. Your goal is to make the house neat and attractive.4. Boost the curb appeal - by trimming bushes, shrubs, pulling weeds, cutting grass, andedging around driveways and islands.5. Freshen up the decor with a new coat of paint in a neutral color and update curtains and bedding.6. Remove bulky couches or arrange furniture to make home look spacious and inviting.7. Last -remember to repair or replace broken lighting or fixtures so buyers feel the houseis well maintained.
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As an agent with 10 years experience with BPO/REO companies I'm finding the fees and commissions getting extremely low. Just last week I had several requests from companies I have worked with for years offering fees as low as $35.00. I did request fee changes for $45. to $50. which I still think is low. I did not get one order. I have a license, continuing education, MLS and board dues  not to mention things that go with being self employed. Office, gas, health care, paper computers and the like. So I think we deserve a fair fee. I also understand everything changes and we have to evolve to the ever changing market. With that being said my question is this? What is the next big thing for agents that like to work in this industry, providing services. I need a fee that can feed my family? They like to eat to! Maybe make video home tours, go back to working with clients in the traditional market? Any suggestions before going broke slowly?

Thanks in advance for your feedback.   

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While it may seem as if it is hard to determine what is happening in the downtown San Jose condo real estate market, there are some majors metrics that are quantifiable that can help you see where the market is going. These markers include:

 

  1.      Sales to list price ratio
  2.      Days on Market
  3.      Months of inventory
  4.      Number of active listings vs number of pending listings.

 

We can learn something from each of these metrics.

 

  1.      Sales to list price ratio: When the San Jose condo market is appreciating, the sales price will be higher than the list price. In Jan of 2017 the sales price of Downtown San Jose condos is 101% of the list price. This is obviously very healthy, but in Feb 2015 the sales price on average was 105% of the list price which was a much hotter market.
  2. San Jose Condo market
  3.      Days on market is a very good way to look at how the market is doing. The stronger the market the shorter the days on market. In Feb 2016 the average days on market was 15 and it increased to 28 in Jan 2017. Things are obviously slowing, but the San Jose condo market has not tanked.
  4. San Jose condo market
  5.      Months of inventory: Months of inventory tells you how long it would take to sell all the homes currently on the market at the current pace of sales. When months of inventory goes up it means the market is slowing, most of time.  The months of inventory in downtown San Jose has been less than 2 all through 2016 and into Jan 2017. It has gone up to 7 months in Feb., but there have only been 2 days so we can not count that yet.
  6. San Jose condo market
  7.      Number of active listings vs number of pending listings: this one is my favorite. You look at the number of active sales and compare to pending sales. When inventory is low and sales are brisk there will be more pending sales than active sales. When there are 4 or more times as many pending sales as listings it is a really hot market. When there are more active listings than pending sales it is a buyer’s market, or trending that way. There are currently 21 active listings and 32 pending  sales of downtown San Jose condos.

 

So how is the market of downtown San Jose condos?

 

Looking at all the metrics I would say it is good, but slower than in the first part of 2017.

 

If you have any questions about buying or selling a condo in downtown San Jose please feel free to call me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

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Bonjour,

  We all feel the pain as do appraisers, so if you did BPOs for Wells between 2005-2010 those BPO companies were cleaning up while we were getting peanuts. Take a minute to view these guys adding humor to current issues. http://thenationalrealestatepost.com/another-50mm-from-wells-for-overcharged-bpos/

While I am on a rant, AMC- appraiser clearing houses where appraisers have to pay the middle man for their appraisals, in my neck of the woods a SFR appraisals are $450-500, those AMCs take around $125, in the video link above these guys talk about.

  In a nut shell New York Governor Cuomo in my eyes is behind the AMC mess http://mandelman.ml-implode.com/2009/08/cuomo%E2%80%99s-crossing-an-outsider%E2%80%99s-appraisal-of-the-new-hvcc-rules/

Also remember Dodd- Frank not the bill , a.k.a. Chris and Bernie were on the Senate finance committee 2000-2007, these are the guys that started this mess along with Graham -leach bill of 99'.  We do need more reform removing the finders/referral co, all these banks have to do is set-up web-portal date entry site, agents get on the approved list, code the fields like we do now on quality and condition may be other fields, less people involve, more efficient. 

Very likely these finders might be editing our BPO's after we submit too? Is that right, how do we know?

Where is the fine money?  Govt has received in excess of billions from these financial institutions.

 Summary can we collect on that 50 million if we did BPOs for Wells? Class action suit?

Thoughts!!

Happy Selling,

Paul 

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Understanding Self-directed IRA

“The beauty of diversification is it's about as close as you can get to a free lunch in investing.” Barry Ritholtz

How do you feel about staking your entire future on the stock market? Risky, right! Who would do that? Surprisingly enough, a lot of investors are putting their money in the stock market directly or indirectly. If you rather invested in bonds to minimize the risk, you’re unlikely to gain the returns necessary to fund your retirement. That along with the changing federal interest rates makes bonds an unattractive investment option. So, how do you invest for retirement while minimizing your risk and still pocketing handsome returns? Investing in alternative assets with a self-directed IRA is an option to look into.

Why invest in alternative assets?

The alternative investment strategies have helped smart investors gain competitive returns over the years. Here are some reasons to add them to your portfolio:

  • True diversification & security: Investing in alternative assets allows you to achieve true diversification. You can minimize your risk profile by choosing different alternative asset classes. Real estate, precious metals, mortgage notes, tax liens, private equity, and real estate investment trusts (REITs).
  • Competitive returns: Unlike security bonds, you can earn better returns by investing in alternative assets. If you’re a realtor, imagine the sort of returns you can achieve by using your expertise and industry knowledge.

For an average investor, investing in alternative assets might pose some challenges, especially in choosing assets classes that can achieve your retirement goals. It’s best to seek professional help and make sound financial decisions.

What is a self-directed IRA?

Since you are investing for retirement, you’ll require a retirement tool that can invest in alternative assets with minimal custodial red tape around it.

Self-directed IRA comes into picture.

A self-directed IRA is a retirement solution that offers investment discretion/control to the plan owner. Depending upon your plan custodian, you can access most of the asset classes discussed above. Some of the popular self-directed retirement options include self-directed IRAs, Solo 401k plans, and 401k plans.

What are your investment options through a self-directed IRA?

  • Real estate: The IRS allows real estate investing within retirement accounts. The trick is that it is not mandatory for financial institutions to offer it as an asset class. However, with a self-directed IRA, you can invest in real estate starting with residential, commercial, and third-party real estate LLC investments
  • Private equity: If you have experience in business, you can use your retirement accounts to purchase private equity. While it is an exciting proposition, make sure to test the basics of the company and take professional advice.
  • Mortgage notes/tax liens: If you’re looking for passive growth/returns, mortgage notes, and tax liens are the perfect additions to your portfolio. You don’t have to fret about property maintenance and utility bills.
  • Precious metals: Gold and most of the precious metals are cyclical. They allow investors to hedge their investments against inflation, stock market movements and any financial fiasco.
  • Stock, bonds, mutual funds: Self-directed IRAs allow you to put your money in traditional investment options, including stocks, bonds, and mutual funds. With a self-directed IRA, you as the account owner can initiate transactions without going through custodians. This also minimizes transaction costs and fees. In order to retire with sufficient money, create a balanced portfolio and restructure it routinely.

Who should choose self-directed retirement accounts?

The financial goals of every individual vary and so does their investing strategies. If you have a limited understanding of the investment realm, you may want to use a professional’s help. A self-directed IRA is good for you if you are:

  • Ready to take control of your retirement account.
  • Tired of having brokers handle your money.
  • Wanting to diversify your investments
  • Tired of paying high custodian fees and transaction costs.

It is your retirement at stake, so take your time and make the right choice!

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Palo Alto Probate Home

This is a question I get asked all the time. When an owner has passed and has rental property should the heirs sell the Palo Alto probate or trust home with the tenants in place, or wait until the lease is up?

 

While most years I would say wait until the tenants are gone but with the uncertainty of how interest rates will affect prices and what will happen to a Palo Alto market that has already shown signs of slowing, even with very tight inventory, the answer is not clear cut.

 

Sell Palo Alto Probate or Trust Home With Tenant: Pros:

 

  1.      Palo Alto school Priority 1 Registration goes from Jan 12 thru Feb 15th. That is the best chance of getting your child in the school closest to you. There is always a space in a Palo Alto school for a resident, but getting the one closest to you is best obtained if you are a resident during this period. Selling with tenants in a  Palo Alto probate rental may allow the buyer to get a leg up on school registration for the next year.
  2.      Interest rates are lower now than they will be next summer, or even in March and maybe Feb. A 3 million dollar Palo Alto probate home has a very good chance of having a loan on it so the less a buyer has to pay for the mortgage the more they can afford for the home. For every 1 point increase in interest rates there is a 10 % increase in payment.
  3.      The inventory is very low and the Palo Alto housing is market still active. It is unknown what will happen as the year goes on. The market could go down as interest rates go up, or if there is a natural disaster, a world event, or terrorist attack.
  4.      Some people who buy Palo Alto homes in Probate or Trust early are happy to rent the house out until the end of the school year because they do not want to move until school is out if they are relocating.

 

http://www.marcymoyer.com/trustandprobatesaleshttp://www.marcymoyer.com/trustandprobatesales With a Tenant Cons:

 

  1.      Harder to show house
  2.      You will not be able to make interior upgrades or stage with a tenant in place so it may depress the price somewhat
  3.      The tenant may be messy or say inappropriate things to potential buyers which could depress the price.
  4.      If the tenant does not have beautiful furniture the professional pictures will not look as good.

 

Sell Palo Alto Probate or Trust Home After Tenant Lleaves Pros:

 

  1.      You can have the interior painted, wood floors refinished, new carpet, and any other cosmetic upgrades you want that will help bring in more money.
  2.      You can professionally stage the property and the photos will look much better.
  3.      Much easier to show the house and have open houses which bring in more people and help bring in a better price.

 

Sell Palo Alto Home in Probate or Trust After tenant leaves Cons:

 

  1.      Interest rates will be higher which will depress the price. It is unknown by how much because it also depends on how the stock market is doing, most likely for Apple, Google, Facebook, and Linkedin.
  2.      If there is a trade war with China tech stocks could be hurt more than other sectors. This would make less money available for down payments for most of the buyers in the area.
  3.      If the dollar continues to be strong foreign investors will be much less likely to be buying homes in Palo Alto.
  4.      The best time to sell a home in Palo Alto in from Jan thru early June. The second best is the fall. If the tenants are out in June and the home is prepared in July and Aug and on the market in Sept you have missed the best time, but may get the second best time, but only by waiting until Sept to put home on market.

 

So as you can see the answer is not clear. No one can say for sure what will happen to the real estate market in 2017. If you are in this situation now it is probably a good idea to add your own Pros and Cons to this list to get a feel for what may work best in your situation.

 

If you have any questions about selling a home in Probate or Trust please feel free to contact me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

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Buying A San Jose Condo That is in Litigation


Brickyard San Jose

Developers don’t build condos with the intention of sloppy work that they hope no one will notice. But never the less, they almost always get sued in about year 8-9.

 

In California, new construction comes with a 10 year warranty on latent defects on the structure. In plain terms home owners and homeowner associations have 10 years to sue a developer if they find problems with the structural components of a building such as the roof, walls, plumbing or electrical systems, garages, decks, etc.

 

So, around year 8, if no problems have emerged, many HOA communities will hire a company to look at the building and see if there are potential problems that can happen due to faulty construction. If there are known problems they hire someone to try to figure out the fixes to the issues.

 

The communities will approach the builder to fix the discovered issues, and if the builder does not feel there is a problem, or the problem is not their responsibility then a law suit may be filed.

 

Once the suit is filed most lenders will not make loans on the property. The few who do will charge interest rates 1 to 2 pts higher than a traditional lender.

 

This can put the brakes on sales in the development, and will temporarily depress the price.

 

If you are a cash buyer, buying a San Jose Condo in litigation for a rental property can be a good idea if you follow these steps:

 

  1.      Look at the report that explains what the problems are that need to be addressed. If the issues are ones that do not need immediate attention that is better. If the plumbing system has failed, or there is major water intrusion into the building the homeowners may be hit with a special assessment during the multi year lawsuit. Even if the HOA of the San Jose condo in litigation wins the individual homeowners may not be reimbursed.
  2.      Find out what the estimated cost to repair the issues are for the San Jose condo in litigation. Take that number and divide by the number of units, or if available the percentage of ownership the condo in question has. So if the estimate is 10 million dollars, and there are 500 units with equal shares then each unit would be responsible for about 20 thousand in repairs if all units pay condo fees equally.
  3.      Find the market value of the condo you are interested in by looking at the most recent sale of that model before the San Jose condo litigation.
  4.      Subtract the amount of potential assessment.
  5.      If the market is slowing down overall subtract more.
  6.      Explain that you are taking the risk that the HOA of the San Jose Condo in litigation will not prevail in court, and even if they do the homeowners may be assessed before then. You are taking that risk, and buying when most others are not able. You are betting that you will not be assessed.
  7.      Even in a very hot market, this is a good way to get a better price on a San Jose condo in litigation than you would otherwise be able to.
  8.      It is safest to do it when the builder is a very large and stable company, rather than a less well capitalized entity that is more likely to go bankrupt.

 

There is obviously risk involved, but since such a large percentage of builders get sued, it can be a good long term investment. For example, The Brickyard in San Jose was in litigation in 2011-2012. During 2011 one bedroom condos sold for $140,000-$180,000. The litigation was setteled and in 2016 one bedrooms condos sold for $365,000-$395,000. If you bought a condo for at The Brickyard with cash in 2011 for  you would have at least doubled your money in 5 years plus get an additional $800 to $1500 a month profit in rent over the last 5 years. And this was a building with serious problems that have now been fixed with proceeds from the successful law suit.

Most suits are settled, the deficiencies are fixed, and the San Jose condos in litigation go on to appreciate.

 

If you have any questions about buying a San Jose condo in litigation as a rental property please feel free to contact me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

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Why San Jose Condos Make Good Rental Properties

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I am frequently asked by San Jose real estate investors, both veteran and new, what is best for San Jose rental investments, multi- family homes, single family homes, or condos.

 

My first answer has been the same for decades: “Are you most concerned with appreciation or cash flow?”

 

The answer to this question depends on a variety of individual goals. What has changed over the years is what is best for cash flow.

 

Historically San Jose rental property appreciation has been best in this order:

 

  1.      Single family home
  2.      Condo
  3.      Multi family home

 

Historically San Jose rental property cash flow has been best in this order

 

  1.      Multi family home
  2.      Condo
  3.      Single family home

 

This long held wisdom that a multi- family home is the best San Jose rental for cash flow is being disrupted by the latest market forces. Right now, CAP rates are better on newer condos than older multi- family homes, and are much easier to take care of.

 

The CAP rate on a San Jose rental property is a measure of cash flow. To figure it out you take the income minus expenses (assuming no loan) and see what percentage of the price of the property the expenses are. 4% is on the high end of what you can expect in this market, and many investments are in the 2% range for single family homes and 3% for multi family homes.

 

Let’s take a sale of a duplex in Japan town as an example of a San Jose multi- family sale in 2016.

 

Sales price was $1,000,000

 

Expenses including property tax, utilities, garbage, repairs, insurance total $15,200

 

Income is $43,200

 

Cash flow:  $43,200-15,200 is $28,000

 

Cap rate is the what percentage of $1,000,000 is 28000 or 2.8%

 

At this time duplexes are not covered by rent control, but that may happen in the future,

 

This duplex, like many of the homes in downtown San Jose, is very old. This one was built in 1930. While charming, they need a lot of repair and in many years repairs will be over $2000 a year which was this years estimate.

 

Now take that same $1,000,000 and apply it to two studio condos in a beautiful downtown San Jose building called Axis. I have a client who does own 2 studio condos at Axis that are rentals so these are real numbers.

 

Market value: $500,000 each $1,000,000 for both

 

Expenses including HOA, HO6 insurance, property tax and repairs is $24,000 for both

 

Income: $

 

Cash Flow: 57200- $24,000 = $33,200

 

Cap rate: 3.3%

 

In this case this new building needed very few repairs, there will never be rent control per California state law, and the HOA covers most of the insurance, water and garbage, and the repairs of the common area.

Here is another example of a clients cash flow at The Brickyard, a less expensive building than Axis San Jose, but a great downtown San Jose rental with the best HOA management company I have ever experieinced.

 

2 condos worth $370,000 each or $740,000

Expenses including property tax, HOA, HO6 insurance, repairs $19,400

Income: $48000

Cash flow: 3.9 % 

Things to watch out for as the building ages is making sure there is enough in the building reserve fund to cover expenses as the building ages.

 

When the reserves are healthy the future looks brighter for the condos because:

 

  1.      There is no fear of rent control
  2.      There will be no needed foundation repairs, earthquake upgrades, termite issues etc for the individual San Jose rental investor to deal with in the future as the building is new and the HOA covers these issues.

 

Of course every case of San Jose rental properties is different, but if you are thinking about buying a San Jose rental property a condo can be a great investment for cash flow, not just appreciation.

If you have any questions about buying a rental property in San Jose please feel free to contact me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

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