Auben Realty, LLC

Auben Realty, LLC is a full-service real estate brokerage specializing in property management and real estate investing throughout the Central Savannah River Area (CSRA).

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The City of Augusta Offers Rehab Loans...

Are you a home owner who is a  resident of Richmond County ? Well, you might be eligible  for a housing rehabilitation loan that the City of Augusta is offering to homeowners through HUD's Housing Rehabilitation Program.

  Check it out:

OWNER OCCUPIED HOUSING REHABILITATION PROGRAM: This program is the major element of the overall rehabilitation efforts. You may qualify for this program if you have ownership of the property and are able to provide a copy of the property deed with your name on it; are a resident of Richmond County; occupy the property as your primary residence; have a household income in line with the established low to moderate income limits and if the cost of repair is within our project cost limit. Our aim is to provide decent, safe, sanitary, and affordable housing. We are required to bring your house up to code, meet the HUD Guidelines compliance in addressing the roof, foundation, floors, siding, and the electrical and plumbing systems and to comply with Historic Preservation requirements. We want to help homeowners carry out and maintain improvements preserving pride of ownership as well as the value of homeowner’s equity, which for most represents the majority of their life savings. We will inspect your home to determine if its feasible for repair and to obtain a cost estimate. We will then conduct an interview to determine if and how you qualify for one of the four types of financial assistance that we provide. You may be eligible for a Conditional Deferred Payment Loan, a Low Interest Rate Loan or an Emergency Grant. 

CONDITIONAL DEFERRED PAYMENT LOAN (CDPL) This type of assistance is made to individuals who are the primary owner of their property and whose income falls within and/or below the U.S. Department of Housing & Urban Development’s (HUD) 50% Area Median Income (AMI) guideline. The property owner is exempt from making monthly payments. The funds assigned to their home will be collected in full, at the time of transfer and/or sale of the property.

LOW INTEREST RATE LOAN (LIRL) This type of assistance includes repayable loans made at interest rates of three percent (3%). LIRLs are made to applicants who qualify as moderate-income households. The loan approvals are based on the applicant's ability to repay a loan. Loan repayment periods may extend up to twenty (20) years.

EMERGENCY GRANT Emergency Grants are dependent on the circumstances and the severity of the situation as determined by the Housing Rehabilitation Department. This program is limited to emergency work only and must be within our established emergency cost limit.

FREE PAINT PROGRAM: This program was designed to address the deteriorating exterior conditions of the older housing stock within Augusta Richmond County. We provide free exterior paint to qualified homeowners and landlords whose tenants are residing within Augusta Richmond County and who meet the low income guidelines established by HUD for that size household. We will provide the paint but the owner must make arrangements to have the structure painted. The applicant is allowed 90 days to begin painting and 180 days to complete the work. 

An owner will only be allowed to reapply for the Paint Program after seven (7) years have lapsed. 

Source: http://www.augustaga.gov/index.aspx?NID=1405&ART=3167&ADMIN=1

The city of Augusta is accepting applications from May 13, 2013- June 6, 2013

For more information contact   Sonya Johnson-lee at 706-821-1797.

  Auben Realty- "Improving Augusta One At A Time"

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The Problem with Investing In Real Estate...

Who Would Say Such A Thing? You've gotta check this out

What guile? What nerve? What..... were my first thoughts  when I first saw this headline. Someone actually thinks that real estate investing is not the best way to build financial stability and wealth for ones self?  When I found the article titled Problems with Investing In Real Estate by Tony Chou on investwithpassion.com, I nearly flipped my top until I actually read the article. This ninny actually makes a valid point.

Can you believe that?

Gary can't believe it

Tony Chou actually makes a good point. His major quarrel is the liquidity of the asset.  If you are unaware of what liquidity refers to:

Liquid asset is an asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally regarded in the same light as cash because their prices are relatively stable when they are sold on the open market.

http://www.investopedia.com

Examples of liquid assets are : stocks, government bonds, money market instruments, etc. These assets can be converted into cash fairly easy whenever you desire.

Can you guess what the most liquid asset is ?  I'll give you one hint. I have already said it....

You got it, little dude

Cash is the most liquid asset because it can be immediately used to perform economic activities such buying, selling and paying off debt.   Chou goes on to say,

" Believe it or not, the liquidity for the real estate markets is terrible. Every time a financial crash comes along, the first market to lose liquidity is the real estate market. Remember the real estate bubble that burst in 2007? There are instantly no buyers. So why is this? The reason behind the lack of liquidity in the real estate markets is that the price per unit of real estate is simply so high. Selling a house typically takes 4 – 8 months."

I don't completely agree with the last sentence, but I understand his thought process. In my opinion, the reason that real estate bubble burst in 2007 was because speculative investors, competing against themselves,  inflated prices well beyond the true market value which made it impossible to sell a property to the end user. Bottom line is speculative investors, who did not have a firm fundamental understanding of real estate investing,  paid too much for their asset. But, this is a story for another day.

Chou explains how buying real estate is different for purchasing stocks:

Buyers typically spend a lot of time haggling and pondering whether or not to buy the piece of real estate. Buying real estate isn’t like buying stocks; you don’t just click enter button and watch your order get filled. Buying and selling real estate takes time, and a lot can happen between that 4 – 8 months. The financial markets can quickly turn from bull to bear. When that happens, the thing that investors in the stock markets want the most is cash (liquidity)..... 

So what does the lack of liquidity in the real estate markets mean for investors? It means a big OUCH. Let’s use an example. You want to sell housing unit A right now for $200,000, because you forecast that the financial markets will crash within 3 months. Once your house is on the market, you wait for 2 months, and then receive a buy offer. But before all the haggling and paperwork and this and that gets done, the housing markets have already dropped, so your buyer says “no deal”. Then you wait some more. The financial crisis worsens.... 

http://www.investwithpassion.com/problems-with-real-estate-investing/

I don't care what Chou says. I will pick investing in real estate over investing in the stock market any day.

Here are three reasons why:

1) Stability- The real estate market is way more stable  than the stock market. We all have heard the characterization of the stock market being, " volatile." There are usually signs when the real estate market is about to take a turn for the worst. The stock market can change dramatically in one day. Do you guys remember what happen to the stock market on September 11, 2001?

2) Ownership- I am the CEO of my LLC and I make the decisions on how my capital is used. The success of your investment depends a lot on your  due diligence and  hard work that you pour into: decisions, strategy, processes, systems, etc.

3) Rate of Return: Real estate investments yield  better rates of returns that any other investment vehicles. Period.

So... Take that Mr. Chou.....

Oooole Ole Ole Ole  real estate estate investing...

Cheers,

Auben Realty- Improving Augusta One Home At A Time

www.aubenrealty.com

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Realtors Against Bulk REO Deals

The California  Association of Realtors speaks out against Bulk REO Deals

The California Association of Realtors ® is livid over the bulk sale of REO properties in the State of California. CAR is calling for a change in leadership at the FHFA due to their total disagreement of the FHFA's  pilot program for the sale of bulk foreclosure  properties to the highest bidder.

Here is the press release if you have not had a chance to read it yet:

The California Association of REALTORS® is calling for a change in leadership at the Federal Housing Finance Agency, mostly stemming over its pilot bulk sales foreclosure program, which CAR has called harmful to the housing recovery. 

CAR’s latest objection stems from the federal government’s Nov. 5 sale to investment firm Colony Capital, which took ownership of 970 foreclosed homes in California, Nevada, and Arizona in a recent auction. Colony Capital had the winning bid of $176 million for the Fannie Mae properties. 

"Fannie Mae and FHFA's decision to move forward with the REO bulk sale in California amounts to another gift to Wall Street at the expense of taxpayers," says LeFrancis Arnold, CAR’s president. "The deal, which calls for the sale of more than 400 foreclosed homes in Los Angeles and the Inland Empire, not only hurts taxpayers and prospective home buyers, but will also delay a full recovery in the housing market." 

FHFA, which oversees Fannie Mae and Freddie Mac, initiated the bulk sales program to help unload the high number of foreclosed homes in its books.

But the National Association of REALTORS®, along with other REALTOR® groups like CAR and associations in Florida, have spoken out against the bulk sales program. They have argued that with inventory levels of for-sale homes so low and home buyer demand increasing that such a program is unnecessary. 

"Buyers are having a hard time getting into the market because there aren't enough homes to meet demand,” says Suzanne Yost, president of the Silicon Valley Association of REALTORS®. “By going forward with bulk sales of foreclosed properties, investors will be buying homes and holding them until prices appreciate further. These are homes that are affordable now for first-time buyers but may not be when prices have gone up.”

http://realtormag.realtor.org/daily-news/2012/11/14/realtor-groups-speak-out-against-bulk-reo-sales

So what do you think? Do you like the idea of the FHFA selling Bulk REO packages in Georgia to the highest bidder? 

Auben Realty- Improving Augusta One Home At A Time

Check out: www.aubenrealty.com for more blog post

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Good Neighbor Next Door Program

HUD Homes discounted 50% for individuals who can make a change in a community...

If you are unaware, HUD (The United States Department of Housing & Urban Development) has a program called the Good Neighbor Next Door Program.  The purpose of this program is to revitalize urban areas via transplanting community difference makers into urban areas.  Individuals such as: Law enforcement officers, teachers, firefighters, EMTs are the caliber of individuals that HUD is trying implant into these communities.  HUD is offering these types of professionals a substantial incentive in the form of a discount of 50% from the list price of purchasing a HUD home. In return HUD is asking that they commit to living in the property for 36 months as your sole residence.

Who Are Eligible Can Participate?

Law Enforcement

You may participate in the Good Neighbor Next Door program as a law enforcement officer if you are employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; and, in carrying out such full-time employment, you are sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws.

Teachers

You may participate in the Good Neighbor Next Door program as a Teacher if you are employed as a full-time teacher by a state-accredited public school or private school that provides direct services to students in grades pre-kindergarten through 12. In addition, the public or private school where you are employed as a teacher must serve students from the area where the home you are purchasing is located in the normal course of business.

Firefighter/Emergency Medical Technicians

You may participate in the Good Neighbor Next Door program as a Firefighter/Emergency Medical Technician if you are employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the federal government, a state, unit of general local government, or an Indian tribal government serving the area where the home is located.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot

How the Program Works

Individuals who qualify for this program choose from a pool of eligible single family homes. These eligible single family homes are located in areas that HUD has designated as revitalization areas and are listed exclusively for sales through the Good Neighbor Next Door Sales program.  These properties are available for purchase through the program for five days.

Once the individual finds a property they are interested in, they must submit their interest in the property to HUD. If more than one person submits their interest for the same property, a selection is made by utilizing a random lottery. After a decision is made and the property is sold, HUD requires that participant signs a second mortgage and note for the discount amount. The second mortgage acts as a “silent second mortgage," that the participant will not have make any payments on given that the participant commits to occupying the house as their primary residents for three years .

Auben Realty Improving Augusta One Home At A Time

For more great blog post on real estate investing , check out: www.aubenrealty.com

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Top Three Cocktail Napkin Formulas for Analyzing deals...

Deal Analysis for  individuals whose investment strategy is to " Hold"

  If you are an investor whose investment strategy is to hold investment properties long-term, here are a couple of formulas that will help you assess the legitimacy of a deal fast. These quick formulas are not meant to take the place of the due diligence needed to fully assess a deal but it will allow you to filter your search before you waste a lot of time analyzing a bad deal.  The top three formulas that I use for doing an quick analysis: Capitalization Rate, Rent-to-Value Ratio,  Cash-on-Cash Return

Capitalization Rate

The Capitalization Rate, also known as “Cap Rate”, is a quick calculation that allows you to place a value on a property based on the income that the property can generate. This is also a good ratio to use to compare properties with different valuations. The formula for calculating the"cap rate":  Net operation income / sales price

Example:

You purchased a home for $100,000

The rental income that your property has the potential to produce after expenses (N.O.I) is $15,000

$15,000 / $100,000 = .15  or  15%

Rent-to-Value Ratio

The rent-to value is an invaluable guide for an investor to use to evaluate an investment opportunity before they invest a lot of  time performing the due diligence needed to fully analyze a deal.

The formula for the rent-to-value ratio is: 12 months of rent/home price which is called “rental yield.”

Unlike the cap rate, the rent-to-value formula does not take into the account the  operating expenses that you will incur during the year.

Cash-on- Cash Return

Cash on Cash Return is probably the most important ratio you need to focus on when evaluating the long-term performance of a property investment. One down fall of this formula is that it does not take into account the appreciation that the property will experience because appreciation is a non-cash flow item. Appreciation will only be accounted for in the year that the property is sold . Cash on Cash Return is: annual net cash flow/ net investment

Example:

If the net cash flow from a property is $15,000, and the cash invested in the property is $100,000, then the Cash on Cash return is calculated to be 15% ($15,000/$100,000).

Net investment is:  the cost of the property- the amount that you borrowed

Hope these formulas help you assess deals fast.

Auben Realty- Improving Augusta One Home At A Time

Check out: www.aubenrealty.com

for more interesting blog post on real estate investing

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The Top Five Purchase Contingencies For Investors

How to bulletproof your purchase offers

  As an investor, one of the constant battles that you will always face is figuring out ways to reduce the risk of your investments . The more experience that you gain, the better you will become at reducing your risk as an investor . One trick of the trade that will help you reduce your risk is having purchase contingencies in your purchase contracts.

Here are the top five purchase contingencies that can help you achieve this:

1) Home Inspection: In most states, the seller is obligated under law to disclose all known defects of the property in written form as part of the purchase contract. Since the inspection may take place after the offer is accepted, a good thing to include in your contract is a home inspection contingency that states that  the entire deal is contingent upon an acceptable inspection report. If an inspection finds that there is:  termites damage, roof problems, or major structural damage you can state in the contract that the seller either has the option to correct the issue prior to closing or compensate you monetarily for it.

2) Financing contingencies:  Makes the deal contingent upon your ability to secure a  financing to make the purchase. If you can't find a loan, you will not be bound the contract. It's not a bad idea to use this sometimes.

3) Items included in the purchase:  Major appliances, lighting fixtures, shrubbery, etc.  Try to sweeten the deal for yourself . It never hurts to ask and you might surprise yourself.

4) Title Contingencies: Your attorney or title company will do a title search to make sure the property does not have any legal claims against it and that the seller holds a clear title to it.  This is a good contingency to add because you will be free to walk away from the deal  if the title is "cloudy." If you are unaware of what a " cloudy" title is:

An actual or apparent outstanding claim on the title to real property. "Clouds" can include an old mortgage or deed of trust with no recording showing the secured debt was paid off, a failure to properly transfer all interests in the real property (such as mineral rights) to a former owner, a previous deed which was improperly written or signed, an unresolved legal debt or levy by a creditor or a taxing authority, or some other doubtful link in the chain of title. Often the "cloud" can be removed by a quiet title action, by finding a person to create or execute a document to prove a debt had been paid or corrected. Title companies will refuse to insure title to be transferred with a "cloud," or they will insure ownership except for ("insure around") the "cloud.

http://legal-dictionary.thefreedictionary.com/

5) Timeline: A deadline for responding to you deal is always a good idea to add to your contracts because you will know when to consider your offer rejected and you can move on to finding another deal.  When writing an offer,a good rule of thumb is to allow three days for the seller to respond.

Auben Realty- Improving Augusta One Home At A Time

www.aubenrealty.com

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Thinking about doing a Lease-Options deal

This why I don't do it. These type deals never work out....

I have met a lot of investors who swear by using this strategy to get deals done, I personally don't like this strategy. Because in my personal experience, these deals never work out the way that you envisioned them.

If you are unaware about what a lease option is:

A lease-option is an agreement between an owner of a property and a tenant. A tenant signs an agreement with a property owner to rent a property from the owner  for "x" amount of years ( typically 2-5 years) and once "x" amount of years has passed the tenant becomes an owner occupant by purchasing the home from the owner.At the expiration of the deal, the tenant has the option to buy the property from the owner for a previously negotiated price.

The way it works:

First, the tenant puts down something similar to a deposit which is called an "option fee." This option fee is a non refundable fee which acts as a down payment for when the tenant evolves from being a tenant into becoming an owner occupant. Next the landlord and tenant sign an contract that says that the tenant will buy the property after "x" amount of years. Typically the tenant has to  pay a rent premium for this type of agreement with part of the rent going towards the purchase of the home.

Lease-Option In

A lease option in occurs when you negotiate to rent a property from a seller and sublet the property to another tenant for a price higher than  what you are paying for rent . You can collect the margins and at the expiration of the contract you purchase the property.

Pros for investor:

This is a creative way to build some capital to invest into more properties.

Cons for an investor:

The major pitfall of using this type of strategy is that you don't legally control the property and it can put you in a very bad situation.

Here is the scenario: 

You sign a lease option agreement with Individual A with the agreement that your rent is going towards the payment of the mortgage. You then sublet the property out to Individual B for a rent the exceeds your monthly rent. Instead of channeling the rent that you are paying toward the mortgage of the property, Individual A decides to pocket the rent.  The property goes into foreclosure and you and Individual B  are without a property. Now, you have to deal with an angry tenant whose wrath is focused at you.

Lease-Option Out  

A lease-option out occurs when you own a property and you get a tenant to sign a lease option for your property.

Check out the rest of this post at: http://www.aubenrealty.com/blog/index.php/434/lease-options-deals/

-Auben Realty Improving Augusta One Home At A Time