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Veterans Should be Running the Rental Industry With This Program

There are a great many programs that are available to help veterans succeed in life such as Vocational Rehab and the GI Bill (that I personally have taken advantage of) as well as VA home loans. The home loan in particular is absolutely astounding because it requires no money down, lower interest rates, allows for a higher debt-to-income ratio than a conventional loan, and much more! But, most extraordinary of all, we can use them to buy multi-family homes. This means that veterans have greater access to “house hacking”, which is when you have renters pay for your mortgage. But that is not all:

Another advantage of using the VA home loan to become a landlord (ergo a real estate investor) is the qualification process that makes this so much more pain-free. The projected income may be used to help you qualify for a much greater loan using projected income if you’re absolutely inexperienced as a property manager meaning that if you were, for example, to buy a quad-plex up to three quarters of that mortgage would be offset. In other words a majority of your mortgage could be offset in qualifying! Even better, if you are an experienced landlord you could use your projected revenue from rents due as income! That means for the same quad-plex, if you think that each living space could go for $1300 apiece (which is relatively easily doable in Colorado Springs), all that projected revenue will go towards your total monthly debt-to-income ratio! The downside of that is the property must be owner occupied, but this theoretical property would essentially boost your monthly income by $3900! This program is limited to two-four multi-family properties, but that is OK!

Let’s look at the big picture together real fast: as of right now, June 14, 2017, there are seventeen of these multi-family properties that a veteran family could qualify for ranging from $205k-$424k. Let’s say you buy one and put some sweat equity into it and hold on to it for two or three years and then you have to PCS if you’re still active or you’re out of the military now but decide to move fore whatever reason. If you’ve also had one to three domiciles rented out while also making some sort of mortgage payment you have effectively had other people pay for you to have more equity! not to mention rent will be by design higher than a mortgage payment because a renter is paying for the landlord’s mortgage as well as costs inherent for upkeep and even more for a profit. In theory, depending on market rates and what you payed and et cetera you could even be living in your own property completely cost free to you! Did someone say early retirement? Win, win, win.

If you have any questions and want to know more or want to get the ball rolling on this feel free to call or text me any time at 801-391-5568.

So You Want to Buy a Home? A Guide for First Time Home-Buyers

My name is Jesse: Realtor Extraordinaire! I would like to give you a guide on the home buying process because, quite frankly, this is a huge step to take–and albeit emotional–and I wanted to take the time to tell you how to do it right! Without further ado, let’s begin!

The very first thing you want to do is establish if you’re paying with cash or financing; if with cash please go to the next paragraph. If not, pay attention! To get financing you will need to talk to a lender (of whom I just so happen to know a few) who will do a “hard pull” of your credit history. This sounds scary, but fret not! This temporarily affects your credit score by a few points, and it’s not much worse than applying and getting denied for a few rentals. During this time the lender is simply weighing whether or not you’re a good fit to lend money to, and your credit score and monthly debt to income ratio will be factored to determine loan length, amount, and interest rate. There are a few different kinds of loans: FHA, VA, and conventional mostly, so please discuss with your lender which is best. For example, if you’re a veteran ask about the VA loan that requires no money down. If you qualify ask about the FHA loan and a possible grant for the down payment for first time home buyers. That all said your lender is your friend and you need to listen to them! As a Realtor, I cannot give you advise about lending or credit, but they can! And if you don’t qualify then they can set you up with someone who can help you work on your credit score. Now don’t tell them I told you this, but you have 45 days after talking to the first lender to shop around for a better loan without your credit being affected, so please take advantage of that!

Once pre-approved for a loan, come talk to me! Now is the time to start house hunting, and I highly recommend you utilize a licensed Realtor such as yours truly because: a) our commission is built into the listing price of homes for sale on the MLS so my services to you are not out of pocket, b) we do this every day and are the best with negotiations and advising, c) paperwork (need I say more?), and d) if you don’t hire us the listing agent of the homes for sale gets all the commission in lieu of splitting it with me while you’re left defenseless! That said, for buyers we can either be Transaction Brokers or Buyer’s Agents. I highly recommend you sign the buyers agreement to hire me as your Buyer’s Agent (or another agent if you must) because it is an agreement between us both that we will both behave and provides protection for all parties. Either with or without  a Realtor though, I promise the entire process is very anxious so just be emotionally prepared for that.

Once the house hunting is done, negotiations and offers have gone back and forth, and the day is comes that your offer is accepted you will be what’s called “under contract.” During this time you will have paperwork sent and submitted to and fro (unless you’ve hired me) and you will be closed on and moved into your new home in normally 30-45 days. At this time you must have your “earnest money” (a check written to the title company promising to fulfill your end of the contract, which you will get back when I do my job correctly) within 72 hours of your offer being accepted. The title company can also request additional documentation, and I suggest you start talking to your lender to find out what all they need from you. While under contract I beg you to please never do anything out of the ordinary with your finances like paying off a lump sum of credit or buying a car without talking to your lender first because you may find yourself forcefully out of contract.

Lending stuff aside, while under contract you will have at least two other out of pocket expenses: general inspection and appraisal. The average cost for an inspection is normally around $300, and again ask me for suggested inspectors that I know who will do a great job (another perk of hiring an agent). I did say “at least” because you may have other inspections done at your discretion as well such as a sewer scope or a radon inspection which I may or may not suggest depending on the property. Now just take note that it is the job of the inspector to find absolutely everything wrong with the property so it will seem like the place is falling apart on their report, but just breathe and talk to me about this and we will work this out together! it is at this point where you may or may not elect me to submit an inspection objection where we ask the sellers to fix a few things, and if not you can either back out of the contract to get your money back, continue on either way, or some combination of the two as all is negotiable. The Appraisal is another out of picket cost, normally around $400 unless you’re a VA loan buyer where you may or may not pay for the appraisal depending on the lender. Either the house will be worth as much as you’ve offered, or it won’t. In that case the sellers must agree to either lower the price, you agree to come to the closing table with the difference in cash in hand, some combination of the two, or you can back out of the contract and get your earnest money back.

If everything is gravy other deadlines may include, but are not limited to, Title Resolution, Association Documents, Off-Record Title, Loan Application, Surveys, Property Insurance, and et cetera deadlines. All of which will be expedited by either myself or your agent. As well as all the enumerated above deadlines, there will also be loan processing and underwriting with your lender–again, your lender is your friend so choose a good one! After your lender gives you a “clear to close” we go to the closing table together and you get your keys if all goes according to plan!

If you have any more questions call, text, or email me at any time at 801-391-5568 and jesse@theagencycolorado.com. 🤴

Colorado Springs crossed $300K average home resale value

In a development that hasn’t received much fanfare, the average resale value for a home in Colorado Springs crossed over $300K for the first time in at least ten years, according to data from the Pikes Peak Multiple Listing System. 

For the month ending 31 May 2017, the average resale value of a home was $305,391. Inventory was at a near all time low, with 2,609 active listings (vs the February 2017 ten year low of 2,308).

What’s next?

That’s the question of the day! Some forums are predicting continued front range growth for 3-5 more years. Others are looking for a 2017 price correction.

I think we are probably looking at ‘peak value’ in Colorado Springs in the next couple of months.

A lot depends on interest rates, too. If they rise, this has a downward effect on a buyer’s purchasing power. Illustrated above is the shift in buying power (approximate), based on median wage in the Springs. This is approximate and doesn’t necessarily correspond to a drop in prices. However, I do think a rise in interest rate will SLOW price growth.

My best advice right now is this: plan for the long term and do not buy with the expectation of continued appreciation higher than the historical norm.

If you’re looking to buy or sell in Colorado Springs or Denver, please give me a ring @ 719-440-6626. 

Rob Thompson
Associate Broker, The Agency Colorado Springs 

 

Just What Exactly is Going on Here: The High Price of Rentals in Colorado Springs

It’s no secret: it is hard to get a good rental property for a low price here in the good ole Springs area. Why could that be? well there are many reasons why ranging from the Federal Reserve (“Fed” commonly) and basic economics, demographics, and the housing market outlook. It takes a holistic approach to understand so I will be taking a holistic approach from the inside to try and explain what is happening here.

There are a couple things to consider as far as who is here and what they’re doing, the first being the fact that Colorado Springs is a college town. Within our city borders we have not one, not two, but three major continuing-educational facilities (Pikes Peak Community College, Colorado College, and University of Colorado in Colorado Springs). Schools bring students who are going to school to get into a career which means that they are likely temporary and therefore more likely to rent. Also keep in mind that the adage “starving college student” is still a relevant saying and students will likely not yet qualify to buy a house so they are by design forced to rent. The second thing to consider is that with Fort Carson, Schriever Air Force Base, Peterson Air Force Base, and The Air Force Academy surrounding us there are a legion of enlisted and commissioned military personnel in the area. If these personnel are here and ready to rent with or without dependents, of which there are plenty, then they are given a decent stipend for housing specifically. According to MilitaryBenifits.info the housing allowance for Colorado Springs in 2017 ranges from $1,149 for an E-1 (lowest rank) with no dependents to $2,091 for an O-7 (General) in addition to their respective base pays every month. Considering that the length of time at any duty station is usually only a few years many people currently serving are renting–and who would blame them? Even though they would likely get a return on their investment from possible equity, such a return from buying is never a sure thing.

I mentioned the Fed and basic economics earlier, and that could honestly be one of the biggest factors. Everybody has at least heard of supply and demand, but what does that mean? In this context supply is how many places are available and demand is how many potential renters there are, so what am I saying you may be asking? The supply of rental properties is low in a high demand market. in the Pikes Peak Association of Realtor’s MLS as of April 20, 2017 at 1:19pm there are 204 rentals available in stark contrast to the 2,922 properties for sale–and this is supposed to be in a sellers’ market! I mean, it still certainly is a seller’s market, but it’s more so of a landlord’s market right now. Currently the economy is in an upswing, which is part of the reason of the recent increases of the notorious interest rate set by the Federal Reserve, but that means that more people are wanting to buy which will also lead to the seller’s market. The Business Journal of Colorado Springs concluded in early 2017 that they expect demand to rise with the expected growth of our economy too.

What does the Federal Reserve’s interest rate have to do with housing? Well what that is the Fed adjusting the interest rate for the money they print and give to the banks to a level above our Gross Domestic Product (GDP) growth rate. They do this because 1) they can and, from their perspective, should do so because they are a non-government entity that wants to earn a profit, and 2) it keeps our inflation rate from going to out of control. When our GDP rate grows, our economy is technically in an upswing so the Fed adjusts interest rates accordingly. In the long run, because banks’ interest rates were raised then they raise our interest rates too for all loans including mortgages because they also would like to raise a profit. That means that housing costs are expected to go up even more.

MortgageCalculator.org says, considering a home at a $250 thousand value with a $250 thousand loan for thirty years at a 4% *hypothetical* interest rate and a 1.25% property tax rate, your monthly payment will be $1,641.45 a month including Private Mortgage Insurance. Now put yourself in the shoes if a landlord: if you’re savvy you add an additional 20% to whatever your mortgage is for your tenets to pay because why rent if you can’t make a profit? So not only is it smart to add that cost to your tenets bill, but it is wholly acceptable with the Colorado Springs rental market.

Essentially, buying is hard right now but renting is harder. All costs are going up and the very-well beaten path right now for shoppers is to rent. Obviously, there are a great many completely rational reasons to rent rather than buy, but it just so happens that our city has a lot of people with said rational reasons to rent. My advice? Find some help where you can or reconsider buying!

 

From the inbox: Are buyer’s agents free?

I was recently asked if “buyer’s agents are free?” 

The straight, short answer to this question is, “No.”

The longer answer is there is a perception that seller’s pay the agents and that the buyers receive this service for free. I think the answer is more nuanced than this.

When a buyer purchases a home, the price is usually inclusive of the fees paid to agents. I think it’s accurate then to say the buyer and seller are paying the agent fees. The buyer’s contract price provides the proceeds from which a seller pays the fees.

Disclaimer: This isn’t legal advice. Always consult a professional in your market

Featured Listing! 8498 Shadow Run Ln, Fountain, CO 80817

Welcome home! This 1446 square foot home features 3 beds and 3 baths, close proximity to nearby military installations and an open floor plan with lots of light, vaulted ceilings and upper level bedrooms! 

PPMLS #7111287 and offered for $231K by The Agency and Rob Thompson, Associate Broker! Please call 719-440-6626 for your showing today!

More pictures shortly!

Featured Listing! RENTAL — 4063 Silver Star Gr, Fountain, CO 80911

Welcome home! This open floor plan Madison home on a corner lot is move in ready and waiting for you! Offered for $1550 a month, this 3 bed, 3 bath home features 1633 square feet and is near local military bases! This homes features a master bedroom w/a walk in closet, the kitchen has a walk in pantry and the home has central air. 

Listed by Rob Thompson, Associate Broker with The Agency. 

Please call 719-440-6626 to schedule your showing and apply today!

See more photos here!
http://ppmls.mlsmatrix.com/matrix/shared/rJ9k3k2XQg/4063SilverStarGrove1017

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Featured Listing! 2325 Clarendon Dr., Colorado Springs, CO 80916

UNDER CONTRACT!! Welcome home! This 1646 square foot, 3 bedroom home, offered for $197,500, bi-level home features a well designed kitchen and a flowing floor plan. The walk-out from dining area to the deck with mountain views showcases the best of Colorado views! Close to downtown, bases and shopping!

PPAR MLS # 2182834, listed by Rob Thompson, Associate Broker with The Agency

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From the inbox: will my house sell quickly?

pixabay image and rob’s future home

This is a REALLY good question. 

The best answer is: it depends. That’s not me being evasive but it really depends on condition, location and price.

There is one metric that I think gives the best measure and best answers the question: DOM or Days on Market.

An agent can run an analysis for you from the Multiple Listing System from a neighborhood, diameter, zip code, etc., perspective that can give you this number.

The lower the DOM the better. It’s a measure of how quickly homes sell and can inform your decision with one caveat:

As a general rule, days on market is a good measure assuming home conditions, size, pricing are roughly equal and within a diameter acceptable for an appraiser to consider them comparable.
– Rob Thompson

I am a Colorado licensed Realtor® who specializes in the Colorado Springs area. If you are looking to buy or sell a home, please don’t hesitate to call me at 719-440-6626! 

Rob Thompson, Associate Broker, The Agency

Featured Listing! 4036 Tennyson Ave, Colorado Springs, CO 80910

SOLD!! Welcome home!! Pride of ownership shows throughout this well maintained 4 bedroom, 2 bath 1848 square foot move-in ready rancher. Stainless kitchen appliances, upgraded cabinets, RV parking and custom tile work are among the upgrades! Also features a newer furnace and water heater. Close to nearby bases and shopping, this one will not last long! 

PPAR MLS # 8244617, Offered for $200,000 and listed by Associate Broker Rob Thompson @ 719-440-6626 with The Agency! 

Check out this 3D scan!

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