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Archive for November, 2009

Responsible Lending could improve the Investment real estate outlook in Memphis

Memphis, like so many other cities in America, continues to see rising foreclosures and a rise in delinquent notes.  Some caused by circumstance, some caused by the economy and many caused by the initial actions of the lender.  Not all the news is bad for Memphis real estate investors, but as the economy worsens, investors are having a harder time finding the funding needed for continued purchasing.  This is a great article highlighting where the MBA stands and how the Center for Responsible Lending, a non-profit that protects consumers from abusive lending practices, views the current situation.

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The Mortgage Bankers Association (MBA) reported this week that a record number of loans — 1 in 7 — is delinquent, up from 1 in 10 a year ago. The numbers also show that 1 in 22 families in the United States is in the process of losing their home, up from 1 in 34 this time last year.

Based on these figures, the Center for Responsible Lending says the industry is on track for 2.9 million foreclosure starts in this year alone.

MBA blames the rise in defaults on the nation’s worsening employment picture. But the Center for Responsible Lending argues that it was lax lending practices that not only precipitated the economic crisis, but prolongs it with every new foreclosure, which in turn forces down surrounding property values and pushes recovery farther out of reach.

According to Michael Calhoun, president of the Center for Responsible Lending, the damage from reckless lending continues to harm families and the economy and has made it imperative for Congress to establish a single federal regulator to police consumer credit products, such as mortgages.

“These [MBA’s] results underscore the need for a Consumer Financial Protection Agency to avoid another housing debacle and bring focus to the best interests of consumers — who drive 70 percent of the economy — and of taxpayers, who have to pick up the tab when lenders act irresponsibly,” Calhoun said.

The Washington, D.C.-based Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization with a credo of protecting homeownership and family wealth by working to eliminate abusive financial practices. The group is affiliated with Self-Help, one of the nation’s largest community development financial institutions.

– Carrie Bay 11/20/2009

 

Categories: Investment News

Memphis real estate investors are set to do very well!

Zillow has recently reported that is shows the percentage of U.S. homes with mortgage debt higher than the value of the home has actually decreased from the second quarter to the third quarter.  What does this mean for you and I and all the other real estate investors out there who are jumping into the Memphis investment property pool?

Don’t break out your party hats yet!  That’s what it means.

I don’t trust the numbers put out by companies or institutions which have a vested interest in the housing market turning around.  For those of us investing in Memphis real estate, we know from being on the ground that the situation is improving, but until retail sales actually beging to pick up steam in more parts of the city, homeowners with mortgages put in place in the last 9 years are more than likely still under water.

It’s also hard to read an article like this and get a deduction about our particular market when they are obviously looking at details across many markets.  Here are some of the numbers that Zillow produced:

21% of the records collected showed homes with mortgages greater than the value of the property.  That is down from 23% in the second quarter.  Anyone have a bottle of champaign!

7% of the markets analyzed showed declines in year to year value.

18% of the markets showed values increasing in year to year value.

But if you dig a little deeper you see what the real reason for the turn around is.  “The decline in the percentage of homeowners with negative equity is a positive sign, and is directly attributable to the stabilization of home values from the second quarter to the third,” Zillow Chief Economist Stan Humphries said in a statement. “It is also attributable to many homeowners who were previously underwater on their mortgage losing their homes to foreclosure.”

And there it is.  As more homes go into foreclosure there are fewer homes underwater.  Eventually all of the Memphis properties that are underwater will be cleared up as more go into foreclosure and those properties are then fixed and re-sold at a true value.  When that occurs, there will be more retail sales for comparable analysis which in turn will raise the value on the last of the homes sitting under water.

In my opinion, it will take years (3-5) best guess for the Memphis real estate market to turn around.  This is actually a very positive step for investors looking to buy Memphis investment property.  There will be several more years of depressed pricing and an ever increasing demand for quality housing to be provided.  When the housing crisis begins to abate, we should Memphis property values return to normal levels very quickly and investors who purchased today at 80% of current value, will suddenly find themselves with 40%-50% equity.  As the economy turns around, not only will values go up, but so will rent rates as supply declines and demand remains.  All of this leads to a bright future for any investor who is purchasing properties for invesmtent in Memphis today.

Chris

Categories: Investment News

Will homebuyer tax credit help Memphis real estate investors?

I found a great article from RISMEDIA on line detailing how the tax credits work and thought I would share it with everyone while also giving my take on how the tax credit can help investors.  I have been asked several times over the last couple of weeks if the tax credits would help with the Memphis investment real estate market.  I think it can if investors are smart with how they try to utilize it.  Whether selling an exising property to a tenant or purchasing a new property for fix n flip, investors need to be realistic with how much play they will actually get from the program.

In other words, the same problems still exist:  qualifying for a loan, lack of lending, stringent guidelines.  These will absolutely continue to be impediments to moving property fast.  So be honest with your goals and set your expectations accordingly.  Find a qualified lender who understands the paperwork needed to complete the transaction and then go for it.  Anything that helps to stabilize pricing and raise values is good for all of us as that invest in Memphis real estate.

Here is the RISMEDIA article:

RISMEDIA, November 9, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The http://www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.

Recent Memphis news is good for Memphis real estate investing

Recent headlines, including those touting Tennessee Senators fighting for federal funds for Memphis, serve to highlight that Memphis is going to out perform most other investment cities as the recovery takes hold over the next few years.  For investors who are looking to build portfolios of great Memphis investment properties, headlines like these should point to a bright future.

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New federal bill sends money to Memphis

U.S. Sen. Lamar Alexander, R-Tenn., reported Friday that federal funding to combat crime and support at-risk youths in Memphis is included in a conference report to the 2010 Commerce, Justice and Science Appropriations bill approved by the Senate Thursday night.

The Memphis Regional Law Enforcement Project that supports Operation Safe Community will receive $1 million to fight gang-related and violent crime in Shelby County.

Bridge Builders, a college prep education program for at-risk youths in Memphis, will receive $500,000. The program currently serves 1,500 students each year. One hundred percent of the youths who complete the program graduate high school, and 97 percent go on to college.

– Tom Wilemon, The Daily News

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Programs like this only highlight why Memphis is fast becoming the best middle America city for real estate investors looking for turn key real estate investing.  With the recent change in government in Memphis, the announcement of new job additions and infrastructure growth, the uptick in retail residential real estate sales and the over-all good mood of Memphis real estate investors; Memphis continues to improve as a fantastic city for property hunters looking to invest in Memphis real estate.

Keep your eyes out for more news about changes that Memphis is making to improve it’s national and international image as a fantastic city to live, work, play and, of course, invest.

Categories: Memphis News

Investors are finding FANTASTIC pricing right now on Memphis investment property!

Raleigh is a fantastic area of town for real estate investors.  There are many great features to this part of town including access to freeways, proximity to hospitals, schools and shopping as well as several new projects bringing additional jobs.  Raleigh is one of the more popular areas for Memphis Invest to purchase investment properties as our clients like the pricing, the returns and the steady rental area.  We have attached an appraisal to the property from a certified appraiser and are developing a full rehab list.  Call us today and ask how you can get started investing with our Full Turn-Key investment services company.
3789 Kipling, Memphis, TN 38128

Main Photo


This is a nice three bedroom, one bath, brick property situated on a nice street in the Raleigh area of Memphis. This is a high quality Memphis investment property and is a very good additional for any investor looking to invest in Memphis real estate.  This particular street in Raleigh is very nice with well maintained owner occupied homes. There are very few houses for sale or rent in this area. The house absolutely feels larger than it is and features a living room, dining room, kitchen, storage room, three bedrooms, and one bath. With rents of $650-$750, this property should rent quickly and offer a Memphis real estate investor great positive cash flow with a significant equity position.

 

Repairs to include: interior paint, new floor coverings, HVAC system repairs, plumbing repairs, electrical repairs, house cleaning, and lawn maintenance.

Due to perpetually changing market conditions, estimated values can vary due to external factors such as lender requirements, appraiser used, and length of time to refinance after purchase. Estimated values indicated are from time of posting.

Pricing
Price: $31,900.00
Estimated Rent: $650-$750
Annual Taxes: $916.39
Zillow: $65,000
Previous Sale: $46,900 2/21/1997
Tax Assessed: $50,800
Rehab: $11,000
Estimated ARV: $57,500
Property Location
3789 Kipling
Memphis, TN 38128
View Map
Features
Bedrooms: 3
Bathrooms: 1
Parking Spaces: 1 Car Carport
Year Built: 1964
Lot Size: .20
Square Footage: 1000
Attributes
Interior Amenities
Hardwood Floors
Attic
Exterior Amenities
Fenced Yard
Grass Lawn
Photo Gallery

Categories: Investment Properties