Auto Financing

Many people purchase a vehicle, motor home, boat, or ATV after doing a ton of research. They generally know the color, make, model and edition that they want. It’s interesting to me that they would do all of this research on their purchase, but still just walk in and take whatever financing option the dealership offers.  I can’t sit here and say that a bank or financial institution can always provide better rates and terms, but frequently they can. My advice is to at least do some research on the lending options while searching out your new toy.  I will give you the steps needed to purchase through your bank.

Timing – The most important thing to keep in mind when financing through the bank would be to give yourself and the bank enough time to get the loan done. All too often the borrower comes in hours before going to the dealership and this is not enough time to get the deal done. The borrower then ends up having to settle for whatever loan the dealership is offering.  Generally speaking, allow your bank a couple days to approve you.

Pre-Qualification – now that you have reached out to your banker in advance, you need to have them pre-qualify you.  They will take an application to make sure your credit and income is in line for you to make the purchase. They may need some of your financial information that I have discussed in previous blogs but it should be a fairly simple process.

Shop – Once you have the green light that you are approved by the bank then go out and shop for what you are looking for. Pick out the car, truck, boat, motorhome, or ATV and let the dealer you are pre-approved through your bank. Tell them that you need to have them send the purchase contract over to your financial institution. Once the bank has the purchase contract we can cut the check for the dealer. Usually once the dealer knows that you are pre-approved they will draw up their paperwork for the vehicle and let you leave with it. The bank will take care of issuing payment to the dealership.

Financing through your banking institution may take a little bit longer than just walking into the dealership, but if you can get a better rate then it will be a valuable choice for you. On the flip side, if the dealer is offering 0% interest on the loan then you should jump on it, but with a rising interest rate environment that is less likely. As always talk to your banker if you are in the market for a new vehicle or toy and see if it is something they can help facilitate.

Please leave a comment or contact me with questions.

 

 

Buying an Investment Property

Buying an investment property can be a hobby, business, or a way to supplement your income. People buy investment properties for numerous reasons. In this post I will discuss a couple of the most common reasons that people tell me as to why they are buying an investment property. In this article I won’t break down all of the rate, term, and financial differences in the lending procedure from a traditional purchase and an investment purchase, but rather some tidbits I have seen over the years.

HGTV Effect – We have all seen Property Brothers, Flipping Vegas, Flip or Flop. I have been told on many occasions that people want to try and flip a home and make some quick cash like they see on TV. This is probably the worst reason in my opinion to buy an investment property. Those shows are often like magic shows in that they show you what they want you to see and they always make it look very easy. In reality they are often very talented and doing this on a massive scale, so when they are telling you that the house is going to cost $50,000 to renovate that’s with their team doing the work at contractor pricing. That’s the reason they can do a whole house for the price that it costs you and I to remodel our kitchen. Also, the margins between the purchase and selling price are so low now that it’s extremely difficult to turn a profit, especially in the Nevada Market. My advice to you if you want to try this is to speak with someone that has had experience in the flipping business and really pick his or her brain because it can be done, but it is difficult.

Earn a Higher Return – Let’s use an example on this one. I have a friend that had $20,000 sitting in the bank earning .05% interest, basically earning you $10 per year in interest. This is very common for people to just leave cash in an account earning little to no interest. Instead, he went to an auction and purchased a condo in a pretty rough development for $20,000 cash. He put about $1500 into it for a total investment of $21,500. He rents it out for about $550 per month and the tenant pays the utilities. So as opposed to earning $10 for the year, he earned $6600 for the year. He has since purchased 3 more in the same development. They have gotten more expensive over the years, but that also means that they are gaining value as well. His goal is to continue to buy them cash or pay off the loans very quickly and ultimately have a large investment portfolio creating an additional income stream for him.

Investment properties can provide excellent income and offer you the opportunity to try your hand in a different area of real estate than you are probably used to. As always, I recommend you consult with your team of professionals to make sure you do your research and are well informed of the process. Good luck and happy investment property hunting.

Please leave a comment or contact me with questions.

 

Condo Living

As you drive down I15 in Las Vegas you can’t help but notice all of the high-rise condo’s along the strip. But, have you ever thought about living in one? I know when most people in Nevada think of home ownership, they think of your standard single family home. If you live in New York, Chicago, or San Francisco condo living is much more common, but as Las Vegas Grows I believe more condo’s will be built and there will be a shift to condo living. There are many reasons that people prefer to live in a condo and I will discuss them in this article.

Maintenance – Many people enjoy planting a garden, mowing the lawn, and doing little fixer upper type projects around their home. There are also many people that don’t. Living in a condo eliminates most of the work outside of the condo. The exterior of the property is all taken care of by management and is usually covered by your HOA fee. If there is something wrong with the building or there are weeds out front, it will be taken care of by the maintenance team. This frees up your time to enjoy the amenities.

Amenities – Depending on the condo that you purchase, you will get to enjoy the amenities they have to offer. Common amenities include, indoor/outdoor pool, gym, valet, tennis, basketball, doorman, security, bar, etc. Again, this is all maintained by the condo and covered by the tenants HOA fees. This is great if you are active and like to have all your amenities under one roof. When purchasing a condo, this is one area you want to really research to make sure you are getting exactly what you want out of condo living.

Social – Living in a community under one roof will really bring people together. Condo’s will usually have different mixers and events that build the sense of community and togetherness for the residents. You can try to avoid these if you want, but generally people looking into condo living are outgoing and are looking for that sense of community. There isn’t a better way to build a community and friendships than Thursday Night Karaoke in the lobby bar.

Location – Condo’s are usually built with location in mind. Part of the allure is that you will be close to restaurants, night life, sport venues, and other important attractions. People that live in condos often like the ability to walk places without having to drive across town to get somewhere. They also tend to be set up with views that are far superior to most homes depending on which way your unit faces.

Price – Perhaps the most important aspect of Condo Living is the price. Condo’s tend to be priced below stand alone homes, although they can get pricey if you want them to. Let’s use the example of buying a 1200 Square Foot condo for $280,000 with 20% down, you would have a loan for $224,000. Your payment would be about $1000 per month plus taxes and insurance. If you have an HOA fee of about $200 per month then your total cost would be about $1400 per month for hassle free living.

There is something about owning your home that is very satisfying, so you just need to figure our what “your home” looks like. If it is condo living then contact your realtor and lender and get the process started today.

Please leave a comment or contact me with questions.

 

Dream Home Construction and Financing

Most of us that have ever bought a home did it in one of two ways. We either go into a new home development and walk through the models and purchase one of these new homes. Or we buy a resale home that is on the market from another homeowner. But have you ever driven by a golf course or the side of some remote hill that says lots available? Have you ever seen lots cut into the side of a mountain with that single lone house being built? Wonder what it takes to do this? I will give you some highlights to this process with some approximations of the numbers that make this work.

Picking the Lot – Just like shopping for a home, shopping for a lot takes some patience as well.   This is still a step that I would recommend using a valued real estate agent to help you navigate. You may see lots around town with reasonably priced lots but what about the lot with the city view of Las Vegas? These lots are priced between $500,000 and $3,000,000 just for the dirt lot. So what does it take financially to get a loan on that? Buying dirt usually requires a higher down payment because there is not as much recourse for the lender as there is with the home. The number is usually around 40% down for the lot. So if you find the lot you want for $1,000,0000 then you will have to bring approximately $400,000 to the table to purchase the lot.

Picking the home – Now that you have a clean slate with the lot you have chosen now you have to figure out how to build on it. Generally I would recommend getting plans from several builders, to make sure you are getting what you want. In order to get a loan on a new construction, the lender will usually ask for the builder’s financials to make sure that they know what they are doing and are reliable enough to get the job done. The lender does not want to get stuck with a construction project that is not complete and therefore the buyer is in a tough position. Once the buyer’s financials, home plans, and the budget are approved by the lender, then the bank will process the loan so construction can start. There will be construction financing in place that you will be paying during the time of construction, as funds are withdrawn to complete the project.

Permanent Financing – Once the project is completed, the lender will then have the home appraised and determine the total project cost, which will then be turned into permanent financing. This means that you will have to determine what type of loan you will want on the home going forward. At this point you will have already been approved, so it is more a matter of getting and signing loan documentation, so that the home can be recorded and you are able to move in.

Construction to permanent financing is a much more detailed process than just going and buying your standard resale home. This is a very generic roadmap to what this process looks like. Every lender will have their own tweaks to this process and finding a good lender has never been as crucial. If you are in the position to be able to make this giant step, then it is in your best interest to really do your research and find the right real estate agent, right lot, right builder and right lender to help you accomplish your dream.

Please leave a comment or contact me with questions.

Renter No More

I have discussed in a previous blog about the opportunities to buy your own building, but here I would like to discuss the opportunity to buy a home. Renting is usually where most people start and Las Vegas is no exception. The good new is; however, that the home market in Las Vegas is still affordable. If you are thinking about transitioning from being a renter to a homeowner, remember to find a good realtor and get your lending in place to find out what you can afford.

Let’s create some examples to paint a clearer picture of homeownership. Let’s say that you are currently renting a 2500 square foot home and you are paying $1900 per month for that rental. If you are comfortable with that payment, what can $1900 get you as far as purchasing a home including taxes and insurance? What would your down payment look like?

When you are leaving your rental one morning you see a For Sale sign right across the street and it is a model match. You decide to get out and take a flyer. It has a listing price of $295,000, so you are curious to find out what that looks like financially. At that price point you could do an FHA loan, which would be 3.5% down so approximately $10,000 for a down payment. The loan for the remaining $285,000 at a competitive rate would give you a monthly payment of about $1300 per month. You would then need to add in taxes and insurance of about $200 per month. So, let’s recap…

Rental $1900 per month

Own $1300 per month + $200 taxes and insurance for a total of $1500

That is a savings of $400 per month. All of these numbers are approximates, but it gives you a good idea of the possibilities out there for you if you want to shift from a home renter to a homeowner. Now if you are in Silicon Valley or New York this may not be a possibility, but here in Las Vegas, home prices are still very reasonable.

As we have discussed before there are many things that need to be considered. A good realtor will help you locate, search, and find a home for you. They will also help you understand the value and what your offer should be on the home. Make sure your lender gets you pre-approved before you shop, so you know exactly what you qualify for. Get a pre-qual letter from your lender, so your realtor can share that with the sellers to make them feel comfortable that you qualify. Home ownership can be very rewarding, so make sure you have all your ducks in a row to improve your chances for a smooth purchase process.

Please leave a comment or contact me with questions.

 

 

The Importance of Listing Photos

Today with such great cameras on our cell phones, everyone thinks that they are a professional photographer. You can get high quality shots, edit them on your phone, and post them directly to Facebook for all your friends to comment on. The problem is that just because you can take photos does not mean that you are a photographer. One area where this happens all too often is in real estate. Agents will come in and list a home for the seller and use their cell phone or some junky camera to take pictures of your most valuable asset that you are trying to sell.

When you are interviewing agents to list your home ask them about who takes their photos. This is just as important as any other questions you should be asking. Many agents have a photographer that takes photos of all of their listings, so it’s okay to ask to see them. If the agent has an issue with this, then maybe it is not the right agent for you. Here are a few tips that a good real estate photographer can help with.

Clutter – A good real estate photographer will not take pictures with clutter in them. Their job is to make each photo look as appealing as possible. Usually they will ask the borrower to clean the clutter up ahead of time so that they can get clean shots. I have seen them actually pile all of the homeowner’s junk in one corner on the spot, just to make sure the shot was clean.

Staging – If your house is empty it is always an option to stage it, but chances are it will be your stuff in the home. A good photographer will tell you that your Star Wars bed set does not photograph well, or that the piece of art you like should not be in the shot. This is not a time to argue with them about the details. This is their job and they generally know what they are doing.

Lighting – This might be the most important aspect of what they do. Have you ever booked a hotel room online because it looks really nice and you get there and… it’s not nice? That’s the art of photography and probably their ability to use lighting. I am not saying that you want to pull a fast one on the potential buyer, but rather give the best visual description of your home as possible. Lighting severely impacts photos if it is not used properly. Good photographers can use the light to your advantage and make your home look beautiful.

You really only have one chance to sell your home so utilize your resources. I will end this with an example. I was recently involved with a transaction and the home had a model match in the same neighborhood. One of them had photos taken with the realtors cell phone and the pictures were terrible. Although it was the nicer house, the other home that had solid photos closed for more money about 6 months ago. The cell phone picture home is still on the market and receives almost no foot traffic. This is the agent’s fault as well as the seller. My guess is the seller knows the agent and doesn’t want to hurt their feelings. Selling your home should not be looked at as an emotional transaction, but rather a business transaction. Use the people and resources that are best suited to get the job done and please use a professional photographer.

Please leave a comment or contact me with questions.

Navigating Credit Card Rewards

“I believe it’s best to pay in cash” – Eric Church. That being said I feel most people believe it’s best to pay with some form of credit card to earn rewards. I know we have all heard the commercials for double points, triple points, airline miles, black out dates, etc., etc. There are so many different types of credit cards out there on the market that it is almost impossible to figure out which one to use. I get asked all of the time what reward cards my clients should use. I usually respond with find one that rewards you with something you find of value. Here are some of the basics to consider when choosing your credit card.

Cash Back – This type of card earns you cash back based on the purchases you are making. Generally you will earn about 1% on all of your purchases. If you spend $100,000 in a year you will earn about $1000 cash back. Some will earn higher than the 1% on specific categories in specific months. Maybe this month you can earn 3% on gas and 2% on grocery stores. Cash back cards are good for people that pay off the balance each month.

Airline/Travel – Airline credit cards are usually specific to a particular airline and are co-branded with a specific hotel chain or cruise line. Every dollar you spend turns into some form of travel points or dollar value to be used within that specific chain of airline/travel. These are great for people that travel frequently. Usually the credit card will earn you double or triple points for purchasing travel through their brand and a lower percentage on everything else.  They will also offer benefits like VIP lounges, free drinks, and/or first class upgrades.

Balance Transfer – These credit cards are great for people trying to pay down their debt. They usually offer a zero percent or low percentage rate for a specified period of time and either no fee or low fee to transfer the balance to their card. For example, let’s say you owe $10,000 on your credit card and the APR is 15%, you would transfer to the new card at 0% for 18 months, which allows you to pay down the card without getting crushed by fees.

Low Interest – These cards either offer a low introductory APR or a low APR all the time for the user. These usually do not offer any rewards, but if you are a person that typically caries a balance it benefits you to have a card with a much lower rate. This type of card is also beneficial if you know you need to make a large purchase and need several months to pay it off.

Student – A student card usually offers a very low line of credit at a higher APR. This allows students to establish their credit at an early age without the fear of going into severe debt. The limit might be somewhere between $300-$500. I always recommend that a student gets their first card in college, so by the time they are out they can have some established credit. Parents can also set them up for auto pay to make sure the minimum is always paid.

Always do your research on the credit card you are going to use, because most people stick with their primary card for a very long time. There are unlimited resources online to help you choose. Always keep APR, terms, and annual fee in mind when choosing. I am very annual fee opposed and think you should not be charged a fee to use a specific companies card, but that is my opinion. I think your focus should be more geared toward the rewards they are offering.

Please leave a comment or contact me with questions.