Happy Holidays!

Do Your Homework before Considering Commercial Investment

                               

If you’re thinking about investing in commercial real estate, always keep in mind the “five P’s”:

Prior planning prevents poor performance.

“Most people who invest in rental or commercial real estate don’t spend near enough time thinking about what their intent is and what they expect, nor do they do enough research to help ensure a successful venture,” says Adam Whitz, Broker/Owner of RE/MAX Commercial Group in Lansing, Mich.

To help you determine which commercial sector - and ultimately, which specific property - to invest in, Whitz advises you to consider these things:

• Why are you investing? Retirement? A steady stream of income? Long-term growth? College funds for your children?
• How much cash do you have for a down payment?
• Where is your investment capital going to come from?
• What return on investment do you expect?
• Do you want immediate income or a return years down the road?
• Do you have a plan for managing the property?

Without knowing the answers to these questions, Whitz says, you’re flying blind and have little chance of a satisfactory outcome. But once you have these factors in mind, you can get more serious.

A good first step is to contact a local expert.

.     Keith Hurtubise, a RE/MAX Broker in the Denver Metro area says, “Find someone familiar with the local markets. A good broker will refer you to an expert in whatever market you are comfortable in. An experienced commercial real estate professional can be a valuable member of your team, which should also include, at the minimum, an attorney and an accountant.”

“Most investors get caught up in the glamour of the transaction, but a good real estate professional can do the detail work that needs to be done,” Whitz says. “There are many commercial sectors to choose from – including retail, office, vacant land, manufacturing, and warehouse, medical and multifamily residential. We can help you evaluate your specific needs and choose the right investment for you.”

Commercial real estate professionals also know their market.

“Is it an ascending market? Very few are right now,” Whitz says. “Of course, that doesn’t mean you shouldn’t invest, but you must go into an investment with your eyes open.”

You also must understand aspects of your market’s demographics – whether the population is growing or declining, the average age and income of the populace, and so on. And you must understand critical factors in the commercial marketplace, including economic trends, vacancy rates, lease/rental rates and so on.

In all these areas, a commercial real estate specialist can be a valuable guide and counselor.

“You know the old adage: Ready, Fire, Aim,” Whitz says. “That doesn’t work out too well. We can keep you from going off-track.”

The advice offered here comes from sales associates affiliated with independently owned and operated RE/MAX office and may not be applicable to all areas.

The advice offered here comes from sales associates affiliated with independently owned and operated RE/MAX real estate offices and may not be applicable to all areas.

Contact Keith Hurtubise for a referral to an expert in your area.

Keith A. Hurtubise
RE/MAX 100 Inc.
Certified Distressed Property Expert
Broker Associate
Registered Real Estate Appraiser (Inactive)
710 Kipling St., Suite 110
Lakewood, CO 80215
303-232-4444 office
303-202-2221 direct
303-808-8202 mobile
keithabees@aol.com

203(k) Loan - Combine Purchase, Repair Money In One Loan

So you've found a home, perhaps a foreclosure, that's in the right location at the right price. You'd love to buy it, but it needs some work. And the seller, which may be a lending institution or the U.S. Department of Housing and Urban Development (HUD), is not offering to help pay for the fix-up. Is there a way to finance the repairs so that you don't have to come up with what may be thousands of dollars?

There is if you're going to be using an FHA-insured loan. Through what's known as the 203(k) program, you can add the repair costs into a primary mortgage and finance it over the life of the loan - at a much lower interest rate than with conventional alternatives.

"The 203(k) is becoming very important right now, because there are so many bank-owned homes on the market, you can't work with the sellers to get homes repaired," says Sherri Hopper of RE/MAX Properties in Colorado Springs, Colo. Hopper has worked with several clients who have used the 203(k) in their home purchase.

The FHA (Federal Housing Administration) doesn't actually lend money, but insures lenders against a loss if a borrower defaults on a loan. FHA-insured loans require lower down payments (3.5 percent) than conventional mortgages and have more flexible requirements, allowing borrowers with less than perfect credit to obtain a loan with a competitive interest rate.

Hopper provides these tips for buyers interested in a 203(k) loan:

• Work with a lender that has expertise in the program; not all do. A professional real estate agent should be able to help you identify such a lender.
• Be aware that closing a 203(k) loan will take longer than a conventional loan, so patience is a plus. Lenders may request additional paperwork throughout the process, so you need to be fully engaged.
• The amount of the loan will be based on the appraised value of the home after repairs are made.
• Contractors can't be related to the buyer, real estate agent or lender. And they must be validated by the FHA. You should make sure any contractors you're interested in using have filled out the paperwork to get validated. The contractor may be validated in as little as 10 days. The FHA can provide names of contractors who've already been validated.
• For some types of repairs, you can perform the work yourself if you're qualified. However, you can't be paid for the work.
• You're not required to get multiple bids, but it's in your interest to do so. After all, you'll be paying it off over 15 or 30 years.
• You can't use a 203(k) loan as an investor; only as an owner occupant. You can use the program for dwellings up to four units, provided you live in one of the units.
• You can use the 203(k) to fix up a condo, but only the interior.

It may take a little more time and effort, but a 203(k) loan can help you get into your dream home at a bargain price.

Read more about the 203(k) program.

Contact Keith Hurtubise at RE/MAX 100 Inc with any questions regarding using the 203(k) loan program in the local Metro-Denver area.

Keith A. Hurtubise
RE/MAX 100 Inc.
Certified Distressed Property Expert
Broker Associate
Registered Real Estate Appraiser (Inactive)
710 Kipling St., Suite 110
Lakewood, CO 80215
303-202-2221 direct
303-808-8202 mobile
keithabees@aol.com
www.keithabees.com

Building and Maintaining a Great Credit Profile

Your credit report represents how well you manage your financial responsibilities. The good news is that your negative information drops off over time but the positive information remains. Building a strong and consistent history of responsibly using credit is the foundation to building a great credit profile. Although it’s relatively easy to gain access to new credit such as credit cards, there are many best practices to use and common traps to avoid. Here are a few easy tips for effectively building your credit history.

Applying for new credit

• Don’t apply every time you see an offer. Getting too much credit too quickly can hurt your credit profile.
• Don’t build your credit profile through trial and error. Consult an expert such as a credit coach to develop a plan based on your short- and long-term needs.
• Print clearly when applying for credit. If your application information is entered inaccurately it can create variations of reported information on your credit report.
• Consistently use your complete name without any variations. Providing complete, accurate and consistent identification on your credit applications helps set up your credit history correctly from the beginning. It also minimizes the chance that your credit file will be incomplete or mixed with another consumer's file.

Once you have credit

• Pay your bills on time. Most lenders look at the most recent information on a report. So if you've paid your accounts on time for the last two to three years, the lender may weigh that more heavily than a series of late payments from five years ago.
• Set up a budget, and follow it. This is so much easier said than done! A credit coach can help provide you guidance on creating and managing a budget based on current income and debt as well as your short- and long-term credit needs. In the age of self-help and empowerment, managing your finances should top your list. The key is not to over-extend yourself.
• Develop and follow a plan for the type of credit you have, how you use it, and the type of credit you may need in the near future.
• Review your credit report periodically throughout each year.
  • At least 60 to 90 days before making a major purchase (such as a home, car or large household goods) you should prepare by reviewing your credit profile to help ensure it is optimized.
  • Continual evaluation of your credit profile is necessary to ensure you are not paying unnecessary interest expenses (i.e., you could qualify for lower rates and better terms). The average homeowners spend an estimated $300,000 in their lifetimes on unnecessary interest expenses.
  • Ensure no fraudulent or erroneous activity has occurred related to credit profile. An estimated one in eleven families was a victim of identity theft last year.

Getting help

A personal credit coach can be incredibly valuable whether you understand credit or not. Having a credit coach is similar to an asset manager except it’s for your liabilities. A coach will work closely with you to explain your credit profile, provide you guidance with ways you can more effectively manage it, and can help you evaluate it on an ongoing basis. Changes continually occur for all of us. Jobs change, unforeseen expenses happen and so on. If you begin to fall behind on your payments.

• Contact your lenders. Ignoring the situation will only add to your problems. Many lenders will work with you to set up a different payment schedule or interest rate. It never hurts to ask.
• Pay your bills when they're due. If you have an overdue bill, unpaid debt, tax lien or judgment, pay it off. You may find it easier to pay one affordable consolidation loan rather than several separate accounts. Your credit coach can help identify what options may be available to you.
• Stop using credit, if possible, until your finances are under control. Consider going to cash purchases only based on your budget. This will STOP the financial bleeding while you pull your credit management plan back into place.
• Look to professionals like the ApprovalGUARD Service. Your credit coach is experienced in explaining your credit and indentifying ways to optimize and manage debt.
• AVOID credit repair agencies. "If it’s too good to be true then it often is!" Most credit repair agencies typically charge you high prices to artificially "fix" your credit. This unfortunately often amounts to "band aid" work that manipulates loopholes in the system and often results in the credit issue returning to your credit report within months after it was supposedly fixed. If you have inaccurate information on your report, your ApprovalGUARD credit coach can help you identify it and specifically provide you with the proper methods for getting it addressed.

It’s important to note that The Credit Repair Organization Act is a federal law that prohibits credit repair clinics from taking a consumer's money until they have fully completed the services they promised. It also requires such firms to provide consumers with a written contract stating all the services to be provided and the terms and conditions of payment. Consumers also have three days to withdraw from the contract.

The ApprovalGUARD Service - Is the first and only service of its kind. Each ApprovalGUARD customer is assigned a personal credit coach to help them understand, evaluate and optimize their credit and debt profiles. The ApprovalGUARD Service additionally provides each Full Service customer with credit reports, credit scores, continual informative credit tips and education, and tools to more effectively manage and analyze their credit and debt profiles. Go to www.ApprovalGUARD.com and use the promotion code: REMAX1 for your free 30 day, no obligation trial.

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