The Mortgage Go To Guy!!

Florida Mortgage & Real Estate | "Market" talk...

2008-02-01T18:26:00.001-05:00

Listening to the News - Local in Florida or National on CNN, Headline News or MSNBC - you learn that there is a big chasm in the interpretation of "The Market" and what that actually refers to.

To some, "The Market" is a MacroEconomic entity that encompasses all the good and especially the bad from "Sea to Shining Sea". It also includes the downturn of housing prices in Florida, the Subprime Mortgage Meltdown, and all things in between.

Unfortunately, "The Market" should be viewed through a MicroEconomic looking glass if you are really strategizing and analyzing properly.

So when I hear someone say, "Well, due to this market..." I wonder what they're referring to?

Could it be just an ignorance of the difference between Macroeconomics and Microeconomics...

Comparing Daytona Beach Florida versus Sebring Florida is apples to oranges but too many people have been slinging mud about "The Market" without realizing how sweepingly generalities as such just prove their own susceptibility to myopia.

So when you hear someone say, "The Market"... figure out which one they are talking about. The national Morning News generality or the local real estate professional's local perspective.

Maybe you can tell me now which one is "in the know".

For more details on this phenomenon, read the full article by following this link -o-> Florida Real Estate & Mortgage | Prognosticating the Market(s)

More Real Estate Industry News You Can Use from
David A. Podgursky, MBA
The Mortgage Go To Guy!
Your Source for Residential and Commercial Mortgage Loans in Florida

Florida Mortgage | Financial Advice ~ Own your home outright - Good or Bad Advice??

2007-12-18T15:01:00.001-05:00

Diversify Diversify Diversify... that's the mantra of today's Financial Planner. Many people disagree with that quote - big notable investors like Trump, Buffett etc...

But that's what we're taught... diversification reduces risk and increases return over the long term.

But ... when we're talking about our Primary Residences and diversification, are traditional Financial Advisors barking up the wrong tree??

Most traditional Financial Advisors are eager to get you on the path to owning your house outright. They have all sorts of ways to teach you how to scrimp and save so that when you are in your 50's and 60's you have paid off your house.

But... what exactly is the advantage of paying off your house?

If their mantra is "Diversify Diversify Diversify" yet in another breath they say, "No Mortgage, No Mortgage, No Mortgage" then aren't they contradicting themselves??

Let me tell you why they are!

Because they are essentially telling you that you need to take a large portion of your potential retirement funds... your nest egg... and sink those funds into an illiquid asset.

These are funds that should be there for you in retirement...but instead this large sum of money is funneled into your house where you cannot use it.

Think of it...sometime in the future when you need money for something big - like an emergency or to finally replace that old car that just passed away right before you could pass it on to your grandson... and you have worked a long time to make that money. Then you have to call someone like me and I have to tell you how much it will COST YOU to access your money!

To read the entire article, follow this link -o--> Florida Mortgage | Real Estate, Investment and your Primary Residence

More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
TheMortgageGoToGuy.com
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Technorati Tags: mortgage, mortgage acceleration, equity, separation of equity, home loan, heloc, equity line, investment, financial advisor, florida, depression era economics

Florida Affordable Housing | great choice for your College Student instead of the dorm or apartment

2007-12-18T11:30:00.001-05:00

Trying to figure out where your college student will live while he/she is at school?

Dorm is reserved for freshman?
Frat house is only for parties?
Off campus apartments are in terrible condition and expensive?

Consider buying an affordable housing condominium for your student instead!

Using FHA loans, you can qualify as a non-occupant co-borrower and have your child on the loan to purchase a great condominium or townhouse near campus.

Why would you consider it?

First of all, Credit. This is a great credit builder.

Secondly, most students prefer living with a roommate, who pay rent to your child which can go to paying the mortgage.

Third, responsibility... owning as opposed to renting means your students have to learn to take care of the place.

Fourth, the tax benefits of having more mortgage interest deductions (consult your CPA)

Fifth, there's a better market to resell an affordable house/condo than a run down duplex near campus. Believe it or not!

For more information, visit the full article at -o-> Florida Affordable Housing | College Students’ perfect place to live

Florida Real Estate Development | Martin County Florida

2007-12-16T11:46:00.001-05:00

The Palm Beach Post had an article ( link )this week regarding developers in Stuart Florida - the county seat of Martin County Florida. The city officials are bracing for an influx of developers looking for extensions on their development timelines.

Due to the market conditions they have been unable to continue their efforts to develop land that they purchased 2-3 years ago. Planned Unit Developments that are reaching the end of their original approved building timeline are now in jeopardy of ever being built due to the lack of financing available for new construction… and not just in Florida!

The biggest blow to development in this Florida market is that lenders are just not funding projects right now without major pre-construction sales numbers.

With the market prices dropping - especially on condominiums in major (overbuilt) markets, many buyers have walked away entirely from large cash deposits leaving developers, lenders and investors stranded.

To get the good news (not mentioned in the article!) that will help the market recover, follow this link -o-> Florida Real Estate Development | Stuart and Martin County Florida

Celebration Florida Affordable Housing | great choice for your College Student instead of the dorm or apartment

2007-12-16T10:53:00.001-05:00

Trying to figure out where your college student will live while he/she is at school?

Dorm is reserved for freshman?
Frat house is only for parties?
Off campus apartments are in terrible condition and expensive?

Consider buying an affordable housing condominium for your student instead!

Using FHA loans, you can qualify as a non-occupant co-borrower and have your child on the loan to purchase a great condominium or townhouse near campus.

Why would you consider it?

First of all, Credit. This is a great credit builder.

Secondly, most students prefer living with a roommate, who pay rent to your child which can go to paying the mortgage.

Third, responsibility... owning as opposed to renting means your students have to learn to take care of the place.

Fourth, the tax benefits of having more mortgage interest deductions (consult your CPA)

Fifth, there's a better market to resell an affordable house/condo than a run down duplex near campus. Believe it or not!

For more information, visit the full article at -o-> Florida Affordable Housing | College Students’ perfect place to live

Florida Mortgage | Subprime Bailout ~ Preliminary views of the plan

2007-12-13T15:45:00.001-05:00

I had to at least make a mention of the new plan to bail out the Subprime Mess and I was in a Clint Eastwood Western sort of mentality. So, I will relate my feelings to the Good the Bad and The Ugly.

I think that in all, it will help some people... but I just don't believe the way that things are being carried out are in the best interest of the masses for more than one reason.

The Good - There are a lot of loans that are about to jump, some even double. This Congressional Bailout of these borrowers will help those people who are about to get a shock... a BIG shock.

The Bad - OK... so these borrowers have some relief.

Now the big test is will they learn their lesson from the scare and start a financial plan to get themselves on track for the big three issues for a loan application so that they can refinance in the future.

They need to work on:

Credit
Income
Assets
Also - Equity

The Ugly - now this is where I'm going to be bordering on ranting.

Congressman Barney Frank - are you reading this??

This plan is by far one of the most dangerous pieces of legislation in US History. This was bred from ignorance and arrogance.

I do not care how bad this problem is or will become...

The Mortgage Industry is built upon the freely moving, market driven Mortgage Backed Securities Market. Rates, programs, etc are all based on this FREE market that is without government interference!

The US Government has NO business regulating this market and industry in anyway.

YES! The Homeowners are hurting... but they have been in this position for at least a year and have heard enough news that this storm was coming. Ohh... now I'm unpopular...

But... there are investors around the world who bought into these investments. They made the decision to back risky mortgages and who's right is it to tell them that they do not deserve the returns that they signed up for??

No ones! Especially not the Federal Government of the United States.

For the FULL ARTICLE follow this link to -o-> Florida Mortgage | Subprime Bailout ~ Preliminary views of the plan

Florida Mortgage & Real Estate | Developers moving In & Out!

2007-11-23T13:41:00.001-05:00

While the real estate market is definitely in a bad place in Florida, many big, national banks and big, national builders are feeling the pinch.... some are even hitting the bricks - figuratively speaking.

With announcements that Hollywood Florida based TOUSA and Fort Lauderdale Florida based Levitt & Sons are filing bankruptsy, and that Levitt ceased all construction due to massive debt... it would seem that we've seen the end of development in Florida until we absorb what we already have... but that may not necessarily be so!

Now that some of the big boys are hurting, a new breed of smaller, leaner developers are descending on Florida like Snowbirds of Prey.

These developers are well positioned to find abandoned projects, builder close-outs, and distressed projects at bargain prices that are ready to be salvaged.

These new, smaller developers are more nimble and more agile than the big names like D.R. Horton, K. Hovnanian, Toll Bros. and GL Homes. They can buy smaller parcels and still make money on them.

They also have the vision to pull off more interesting projects that have margins that are significantly lower than a big developer's shareholders require.

Couple with this the terrible brain drain due to the middle class heading for the greener pastures with lower property taxes, these developers are able to build condos & townhomes that will help first time home buyers, low and moderate income buyers, and local workforces find properties near where they work at appropriate prices.

Keep an eye out for these Snowbirds... and if you're sitting on a project that needs some TLC to get it off the ground, think of them fondly. They might just want to partner with you to make your project a reality!

For the full story, follow this link -o-> Florida Mortgage & Real Estate | Developers heading In and Out

Florida Mortgage & Real Estate | Opportunity Costs in a Bad Market - Why to buy now

2007-11-21T09:57:00.001-05:00

Can a very fundamental notion within Modern Economic theory help you make a decision whether to make a move or not in this current Florida Real Estate Market downturn?

There is no doubt that if you're living in it or renting it out, you want to be sure you're making a wise financial decision (note I did not say investment!)... but sometimes with such bad market news you're going to hesitate, especially if you're reading horrible articles like on MSN Money.

That's what is happening here in South Florida. There are listings that are just sitting there. Sure, sometimes they are priced wrong for the current market and have ignored the dips in prices... but the buyers are waiting because there are still some sellers acting like we're in a sellers market.

There are buyers that are gun-shy because they think that they'll lose some value right off the bat. I had a conversation with one a couple of months ago. He said that he thinks there is another 2-3% drop before rebounding. I told him this:

First of all, there is no magic prognostication software to determine what's going to decline and how much. Overall, he COULD be right... but that doesn't mean that every little area will suffer it...
Some may go up and just have the average brought down due to foreclosures or a glut of Condo inventory in Miami. West Boca Raton (75mi North of Miami Beach) might be more stable because it isn't condo based and he's looking for a home near a particular demographic neighborhood and schools for his son.

What is more important to consider is that Rates aren't going down significantly for a while. SO I spoke to him about ENTRY and EXIT Strategies. I told him that if he waits 6 months and the rates tick up 1/2%, he could easily be $100-200 more per month depending on the loan amount - even if he sees a 5% decline in the property values he still will pay more monthly which will cost him much more in the long run!

The Opportunity Cost of NOT buying could mean:

SCARCITY - Qualifiable - Losing the property that you love and not being able to replace it
SECURITY - Qualifiable - A bird in the hand is better than two in the bush - there is security in knowing that his family will be in place and comfortable before the fall term begins ...
PRICE - Quantifiable - the property may go UP in value based on other market factors while other parts of the market or the market as a whole goes down
RATE - Quantifiable - the interest rates may rise causing him to end up spending more on the monthly payment than if he were to buy today
UNKNOWN - Qualifiable - things could crop up that cause an issue that keeps him from qualifying for a loan later - Quantifiable - there may be nothing suitable in that area to buy in 4-6 months

So I summed it up this way:

"If you're buying a home - buy a house you LOVE. If you have this many regrets causing you to keep from purchasing then maybe you just don't LOVE the house. Don't, though, let a good deal or the right house slip away from you because you're betting on the market. Know what is controllable and what isn't. The right house could disappear as quickly as it came on the market and you could miss out on the right property while trying to figure out the right time to make your move"

Boynton Beach Florida | Pollo Campero ~ New Restaurant Opening Soon! 2

2007-11-14T16:32:00.000-05:00

Boynton Beach Florida is about to get a highly anticipated new restaurant chain - Pollo Campero. Located in the Boynton Town Center, with direct road frontage on Congress Road north of Boynton Beach Boulevard.

Pollo Campero - translated from Spanish - means "County Chicken"... this restaurant is the Latin American version of Kentucky Fried Chicken. The menu varies from KFC in that they offer plantains (patacones), rice and beans (arroz con frijoles), flan and other traditional Latin American dishes.

The interesting thing to this writer is the location... the new destination of Boynton Town Center will drive in lots of traffic... but the direct competition of a Kentucky Fried Chicken 2 blocks South, a Boston Market 6 blocks North and a Pollo Tropical 8 Blocks North will definitely create a stir in Boynton Beach Florida for chicken lovers!

Set to open in December 2007, you can find information about this new restaurant at:

Boynton Beach Florida Pollo Campero ~ New Restaurant Opening Soon!

Florida Mortgage | Green News ~ BioFuel Alliance on shaky Political Grounds

2007-11-14T15:02:00.000-05:00

Lurking in the shadows of the current Florida Property Tax issues, Florida Governor Charlie Crist (R) has been traveling with several key Florida Legislators through South America working different trade agreements. The most lucrative of which would have created an enormous trade agreement with Brazil to import Ethanol into the United States.

Florida would serve as the National Headquarters for this effort potentially bringing billions in profits to the state to help fill our tax coffers when they are depleted from property tax cuts. Unfortunately, the deal with Petrobras seems to be on the back burner -- indefinitely.

According to an article on Tallahassee.com, the issue at hand for Governor Crist is that Petrobras (NYSE stock symbol PBR) has confirmed business links to Iran. That linkage violates the spirit of a bill he signed in June that forbids the state from investing its $140 billion pension fund in companies that do business with Iran.

This is a big disappointment considering the benefit it would have for the Florida Economy as well as the National effort to "Go Green". This also shows that the US needs to consider its many options for producing its own Ethanol and other Bio-fuels domestically to reduce the US dependence on Foreign Fuels.

To learn more about this political issue, please follow the link to:

Florida Mortgage | Green News ~ BioFuel Alliance on shaky Political Grounds

Technorati Tags: florida, mortgage, real estate, charlie crist, biofuel, bio-fuel, ethanol, Go Green, petrobras, boca raton, boynton beach

Florida Mortgage | Short Sales & Bank Owned Properties

2007-11-01T10:55:00.001-05:00

Right now one of the most popular requests that I am hearing is that someone wants to buy a bank owned or short sale property. These two property types are very similar in that they both entail negotiating with the bank for the ultimate purchase price.

The other similarity is that in both instances you are asking the bank to take a loss on their asset - their asset is the mortgage on the property you want to purchase. This is not always as easy as some of the Real Estate Experts might say... but if you have your ducks in a row, then it can be accomplished in a way that can save you a good bit of money on the property you want to purchase.

The most vital step in the process that is often pushed until later-on in the process is making sure that the finances are in place.

This can mean any number of things... but we can narrow them down with one simple question:

Do you have enough cash to close on the property without financing and without hurting your financial well-being?

If you answer is no... and for most people it is, then you need to pull back the reins and start at square one... get with your favorite mortgage broker, like me!

Your Mortgage Broker will help you understand the process involved in financing a short sale property. He will also help you understand the costs...

Right now there are some amazing deals out there... foreclosures on properties with lots of equity. Getting your team together before you start trying to find the property is important... but getting your Mortgage plan in place is key.

For more information on Short Sales and Mortgages, please follow this link to learn more about the different options of financing a short sale:

Florida Mortgage | Short Sales & Bank Owned Properties

Florida Mortgage | Builders Focus on Value

2007-10-18T11:29:00.001-05:00

This is a little departure from my normal posts that are mainly informational - call it an Opinion Piece.

The Real Estate Industry in Florida is hurting as evidenced in all the bad news being reported. It isn't all bad, as the reporters would like you to believe. Houses are selling because there are people that need to buy and there are those that are finding bargains already.

Now builders are spending their time marketing value and affordability into their homes... the reverse of the trend when they were marketing luxury and amenities. Honestly, they should have caught on sooner.

Affordability... Value... Attainable... Steven Webster at the Florida Workforce Housing Network discusses how these new buzzwords are showing up in builders' marketing efforts. He cites that Lennar challenged local builders to build affordably and Centex chose the path of becoming Florida's leading affordable housing builder.

This article would not be complete without discussing the other side of the story... the Real Estate Industry has another industry that it works hand in hand with that needs to be a consideration of these builders - the Lending Industry.

You see... the big, production builders builders can control most of the costs related to the homes they are building. What they can't control is mortgages.... only the market itself can do that!

My recommendation to builders is to keep in mind what buyers need - affordable payments. This means making sure that the larger homes stay within conforming lending limits so that the interest rates stay low. It also means to quit blackballing lenders and mortgage brokers from projects. The buyer should have free choice of who they use and all the enticements from the advertisements to buy.

For buyers who will need 100% financing, builders should make sure to keep an eye on the median home prices in the area - that will be the lending limit for FHA, Fannie Mae and Freddie Mac 100% loan programs. Builders could offer to pay closing costs up to 3% of the loan amount as an enticement for $0 down homes.

For more information about this trend, please follow this link to visit my main site: Florida Mortgage | Builders Price your homes appropriately

Florida Commercial Mortgage | Anthology of Posts

2007-08-29T13:50:00.001-05:00

For those of you interested in, practicing, or investing in Commercial Real Estate in Florida or the rest of the United States, here are some posts that might help you understand more about the industry and how it affects both the owner occupant and the investor as well as the Realtors and the Mortgage Brokers that work in the industry.

Enjoy!

Florida Commercial Mortgage | Investment Formula - Debt Service Coverage Ratio

August 28th, 2007

DEBT SERVICE COVERAGE RATIO or DSCR
What is it?
Who came up with this?
Why do we need to know another math equation?
How can it save a deal? or a client?
[Read more →]

Florida Commercial Mortgage | Loans for Small Business ~ Underwriting Methodology

August 25th, 2007

Commercial Mortgages for Small Businesses are a notably animal than Residential Mortgages. Commercial Mortgages are based on three main criteria but there are many variables that can make those criteria flex based on the lender and their goals. Yes… the Lender’s goals.
In Residential Finance, my goal is to take the borrower’s unique needs and match […]
[Read more →]

Florida Commercial Mortgage | Just 3% Down - Small Balance Commercial Loans

July 1st, 2007

So I was driving to a client and heard on the radio a commercial that played out like a skit
One guy was telling the other that he was expanding his business and needed a commercial loan.
The second one told him he just refinanced his commercial office condo and it was great.
Come to find out you […]
[Read more →]

Florida Mortgage | Land Surveying Primer ~ Why you should order a survey every time!

July 29th, 2007

ARE YOU BUYING A HOME OR AN ENCROACHMENT??
A Land Surveying Primer
Ok… I am a little biased right now. I grew up in a Real Estate Industry Family…specifically my parents own a Land Surveying Company.
I remember at 11-12 years old going in and doing tax book research and answering phones…yes I was a master of microfiche […]
[Read more →]

Florida Commercial Real Estate: Redevelopment of Industrial Zoned Land in South Florida

May 23rd, 2007

Who loses most when city planners rezone commercial land in order to make room for more housing? Is it the right of a citizen who moves into an area rich in industrial zoning to complain about trucks and businesses or is this a buyer beware issue?
In Boynton Beach, Florida there is a controversy brewing about […]
[Read more →]

Florida Mortgage | Advice ~ Your Mortgage Advisor is WHO???

April 21st, 2007

Today’s Mortgage Industry is a vast, complicated landscape of amortization, interest calculations, equity lines and bond prices.
People are clamoring to get in on the profession but soon find that it is far more education intensive than they ever would imagine.
Just keeping up with the ever changing progams offered by the major lenders is a […]
[Read more →]

More Florida Mortgage and Real Estate News you can use from David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment, and Relocation Mortgages in Florida

Florida Mortgage| Real Estate Industry Commentary

2007-08-29T13:39:00.001-05:00

When I first moved to the State of Florida, I was very surprised to find Realtors and Mortgage Brokers that were so busy and so successful that they would limit their businesses to loans, listings and buyers of over a certain dollar value. The reason it was so surprising was that the dollar amounts that were mentioned were enormous to me.

One listing agent I know would not work on listings under $650,000. One Mortgage Broker said "No first time homebuyers". I even knew of some agents that would not take anything but multimillion dollar listings or superstar, VIP buyers.

In this current market, changes are creating a new paradigm for Real Estate Agents and Mortgage Brokers everywhere. There are many who are just leaving the field. They are just absolutely sure that there is no way to survive this market downturn.

Read the rest of this piece at: Florida Mortgage | Real Estate Market Commentary

More Florida Mortgage and Real Estate News you can use from

David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment, and Relocation Mortgages in Florida

Florida Mortgage | Blogging - New and Improved Style

2007-08-12T19:46:00.001-05:00

Sometimes, change is good... and freshening things up is always a great idea. I have tried to manage this site on the Blogger platform but alas a higher calling has led me down another path.

The other day a journalist found my "answer" on Trulia Voices and wanted to use some quotes from my answer and my blog to help substantiate her position in an article....

I'm excited about it and more than that I'm just enjoying the great press and validation of what I am doing and saying out there in the real world.

You can see the image of the article... and click on the link to read it.

Inquiring minds
Six consumer questions about how mortgage-market issues affect them
By Amy Hoak, MarketWatch

Wow... I was very happy... until I realized that I really didn't want her to link to the wrong blog site... I didn't want to look like a total amateur - only partially amateurish is the worst I'll do...

So I scrambled. I phoned a few people like Colleen Kulikowski ... emailed a few more like Jeff Turner and Jeff Corbett... then I even got on Facebook and contacted a high powered Blog Theme designer!!

Everyone had great advice and I appreciate it all...

So here's what I did. I got my hosting package with Linux Apache Server... and installed Wordpress. I then got back on Facebook and got the blessing to use one of my designer-friend's themes called Cutline!

I then spent some time adding content, tweaking and getting my new site up and running complete with the new post that Amy Hoak was interesed in quoting...

After all that work, my new site was born!!

http://www.themortgagegotoguy.com

That's what it looks like! Check it out and let me know what you think... heck, leave a comment, digg it, whatever...

Alas, this is one of, if not THE last post on this site now that my swanky digs are over on my own site.

Thanks for all my readers - come find me, I think you'll enjoy the new layout and all the new content I'll be adding soon!

More Florida Mortgage News you can use from:
David A. Podgursky, MBA
The Mortgage Go To Guy!!
Serving all of Florida including Palm Beach County, Broward County, and Miami-Dade County

Florida Mortgage | Loan Servicing ~ What Consumers Need to Know in this Market...

2007-08-08T20:49:00.001-05:00

Bad economic news tops every news broadcast with big lenders like American Home Mortgage, Geneva Mortgage, Homebanc and many more completely cease all operations. This change in the game is leaving many homeowners worried about what is going to happen to them now that their lender is KAPUT!

Do not fret... don't worry at all... in fact, get ready to make your September payment as scheduled. Just keep your eyes open for your letter regarding who will be servicing your loan from now on.

You see, many of the lenders that you are paying your monthly payments to are in fact only servicing your loan. They are not holding the note, but instead they are collecting and distributing funds for the actual mortgagee - typically an institutional investor.

A lender that holds loans is called a Portfolio Lender. Meaning that the loan is part of their investment portfolio much like we would keep stocks, bonds or a mutual fund in our retirement portfolio. Most lenders do not portfolio loans, they sell them on the secondary market instead.

The Secondary Market is made up of investors like Pension Funds, Insurance Companies, FNMA (Fannie Mae), and FHLMC (Freddie Mac). These investors have contracts with lenders to service loans on their behalf.

A lender that services loans performs certain tasks for a Portfolio Lender or Institutional Investor. These tasks are:

Collecting Payments - the most visible function
Collecting Escrow payments
Maintaining appropriate Hazard Insurance - including fire, hazard, windstorm and flood
Paying Real Estate taxes
Collecting Private Mortgage Insurance (PMI) payments
Paying Net Proceeds to the Investor/Lender

Other tasks that these service lenders provide that are not as evident are:

Sending out compliance documents - like the escrow analysis forms
Preparing Mortgage Interest Tax Deduction forms for your taxes
Disclosing the principle and interest due and paid monthly and annually
Dropping the Mortgage Insurance when it reaches appropriate levels
Calculating payoff amounts upon sale

and finally... (what we're seeing so much in this market)

Accelerating the note and foreclosing on the borrower in the event of default
Taking title to the property and liquidating the collateral on behalf of the Investor.

So in this market when we see some big name "lenders" going under, many times they are not the ultimate mortgagee... but instead the servicing entity. Despite the servicing entity's demise, the investor will have another lender contracted out very quickly so they do not lose the revenues.

Unfortunately, there is little or no transparency in this area of the lending industry to show you who you ultimately owe your money to...

So... as I mentioned before... be ready for your next month's payment. It will be due to someone even if your "lender" shut its doors.

More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Technorati Tags: real estate, mortgage broker, mortgage, loan servicing, lender, florida, palm beach county, boca raton, boynton beach

Florida Mortgage Loans | Condo-Hotel/Condotel Rental Income Rules

2007-07-31T19:02:00.001-05:00

Condo Hotels or Condotels continue to grow in popularity in Florida, especially in hot tourist areas like West Palm Beach, Fort Lauderdale, Orlando, Tampa, Bonita Springs and Miami. Because of this, it is important to keep in mind what Lenders are requiring in their lending guidelines concerning this unique property type.

One major issue that comes up with Condo Hotels is the rental pool. Part of the allure of the property is the ability to allow the hotel to rent the room out to guests while it is not being used by the owner.

Unfortunately, Lenders require that the rental pool be voluntary. Involuntary rental pools are to be classified as Timeshares.

What this means is that when the owner of the Condotel unit wants to rent out their unit, they must make sure they put the unit into the rental pool... it isn't automatically rented without their say so.

Considering issues like seasonality, major local events, and discount room rates/sales, there is no valid way to forecast the actual income that will be shared by the hotel and the room owner.

An owner that does not want to rent their Condo Hotel room at all has that option under a voluntary rental pool. While this might bother some hotel operations that want the room to rent, this is the only way that financing can be obtained.

The voluntary rental pool also affects the potential net income. A buyer cannot be promised $10,000 a year return on a property if they are only going to make it available for 6 months out of the years or only on weekdays.

Realtors (listing agents) and Developers are therefore strictly prohibited from advertising rates of return, cap rates or even offering investment advice concerning Condotels. Any potential rate of return could only be hypothetically based on an assumed usage rate that may never be reached.

Because of this, any rental income will not be counted as part of the qualification income for the Condo Hotel Loan. To the borrower, this means that their debt to income ratios will not benefit from any potential cash flows from the property.

Given this information, it is prudent that Realtors and Mortgage Brokers advise their clients who are interested in purchasing Condo Hotel properties that they will need to be able to qualify for this purchase on its own with all their other current debt.

If they are unable to meet the Lenders' Debt to Income Ratios with their current debts and current primary residence, then they will likely not qualify for a Condo Hotel Loan.

Technorati Tags: condotel, condo hotel, mortgage broker, loan, real estate, mortgage, florida, palm beach county, palm beach loan, south beach, pompano beach, miami, fort lauderdale, boca raton, boynton beach

Florida Mortgage | Fixed Rate or ARM ~ the decision depends on YOU

2007-07-30T13:58:00.001-05:00

Fixed Rate Mortgages (FRM) versus Adjustable Rate Mortgages (ARMs) is a hot topic of debate right now. There is a camp of Fixed Rate evangelists that want to force-convert all mortgagors into their fold... all-the-while the ARM holders are scared by the news of impending doom sung from the rafters by Journalists and FRM propaganda.

So now YOU want to buy a house or refinance your loan and you're getting drawn and quartered by your "trusted advisors" about whether you should get a Fixed Rate Mortgage or an Adjustable Rate Mortgage (ARM).

Different people swear by different financial philosophies... the problem is they are DIFFERENT FROM YOU. The only person that knows your financial situation is YOU. The only other person who can help you decide which loan program fits you best is your Mortgage Broker.

Your Mortgage Broker will understand the nuances of your unique financial situation and will help you decide on a loan program based on your needs and preferences TODAY as well as help you plan for the future.

The information you give to your Mortgage Broker will all filter down through his/her consultative funnel and allow them to offer you two to three loan programs to choose from as well as the features and benefits of each program for you.

There are several criteria that are weighed to make the decision. A few of them are as follows:

Your life stage
Your career stage
Your income and future potential
Your family stage
Your stability
Your property needs

A good way to show how the decision process works is via the table below.

	Fresh out of college Just got first great job Family recommends buying not renting Single 600sq ft - 1br - Condo Down Payment Assistance from Parents
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage Likely won't be in small condo long New job = money is tight Interest Only option helps reduce Monthly expenses No real need to "build" Equity Low cost of property means low appreciation Really this is just a step above renting
	3 years later Promotion at work Engaged - two incomes Need more space 1000 sq - 3br - Townhouse
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage Double Income but increase in expenses Nice but small profit on other property Further from work means cost of commute Interest Only option frees up monies to repay fiance's student loans Interest Only frees up monies to pay off credit cards
	Married Husband gets promotion New Baby Refinance for Renovation of Nursery
Fixed Rate Mortgage Secure - Rate is good for 30yrs Higher Payment Building Equity Assurances beyond period of time borrower will need	Adjustable Rate Mortgage More babies in the future Space is already tight Cash is tighter Cash out with Interest Only Exit Strategy - 2 yrs Max
	Dad now Middle Management Second child First child in private school New Dog - Need a Yard Need a 5 bedroom
Fixed Rate Mortgage Secure - Rate is good for 30yrs Longer period in Home "Family Home" Salary plus investments makes comfort 30yr Hybrid with 10yrs Interest Only	Adjustable Rate Mortgage Expenses are manageable 10 year timeline unsure (max ARM length) Interest Only nice option
	Son headed away to College Daughter in Private School Mom going back to work Refinance to renovate home office Some of Cash Out used to buy 4-plex on campus for son and friends
Fixed Rate Mortgage 10yr Interest Only expires soon Double Income Investments Up Salary plus investments makes comfort 30yr Hybrid with 10yrs Interest Only Primary Residence	Adjustable Rate Mortgage Expenses are manageable 10 year timeline unsure (max ARM length) Interest Only nice option 4-plex purchased with Cash Flow ARM... increased monthly returns Investment
	Both Kids in college / Empty Nest Mom's career is taking off Dad has promotion Buying Vacation home in South Florida Buying Investment Property as well
Fixed Rate Mortgage Secure - Rate is good for 30yrs Appreciation = good equity position Investments well stocked Not sure if/when full time move to Florida Cash out of this property to buy 2nd Home another 30yr w/10 IO? - could go either way Primary Residence	Adjustable Rate Mortgage Likely won't be in House for 10 years Wintering in South Florida is great! Many friends already full time Florida residents 4plex in 1031 for 20plex Retail Strip Center Purchased where Mom's office resides 20plex bought with OptionARM Strip Center 5/1 ARM Investments
	Retirement Full time residents in Boca Raton Living on investments Sold home Up East Enjoying grandkids' visits
Fixed Rate Mortgage Timeline unknown on Primary Using monies from sale of other home to add on to retirement funds Great Ranch House in Gated Community Ability to travel Can always refinance if need for equity HELOC in place for emergencies Another 30yr Fixed with 10yr Interest Only Primary Residence	Adjustable Rate Mortgage Investment Properties 1031 Exchanged for more Properties Large Portfolio of investment properties growing Future Cash Out Refis fund purchases Cash flow establishing further income for retirement Investments restructured into LLCs to put in trust for kids/grandkids Investments

___________________________________________________

As you can see, the borrowers' unique needs changed throughout the different lifecycles that they experienced. From just starting out in a job to getting engaged and needing to pay down accumulated debt to having kids that eventually went off to school to retirement...

Even investing in rental properties posed a dilemma about which way to go - Fixed Rate or ARM.

The consensus wants to say that since there are so many Winner icons in the Fixed Rate column, that it is obviously the winner by majority rules. The problem with that philosophy is that in any case shown above, if the timeline varied just slightly, the ARM might have come back in favor.

If an ARM had been chosen over a Fixed Rate Mortgage then the timeline had run longer than expected then Mr and Mrs. Borrower would have had to refinance ahead of schedule. Although, this isn't the worst problem they could have - it could speed up their timetable for investing in other properties or other investment vehicles.

The truth is that it is hard to predict change. The best that can be done for these borrowers is to sit down and consult on:

Where they are
Where they are going
What is their entry strategy for the property
What is their exit strategy

The best mortgage vehicle is whichever plan that will give them some security to make sure that their personal and financial lives are not burdened - but instead enhanced by their Mortgage.

When this occurs, their mortgage actually becomes a tool for their:

wealth accumulation
debt elimination
college planning
Investment strategy
future retirement incomes

The choice between the Fixed Rate Mortgage and the Adjustable Rate Mortgage is ultimately up to the borrower. The Mortgage Broker can only advise... but a good mortgage broker can show that there are definite advantages to both programs for all borrowers.

More Florida Mortgage and Real Estate News You Can Use From David A. Podgursky, MBA The Mortgage Go To Guy!! Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage | Land Surveying Primer ~ Why you should order a survey every time!

2007-07-29T10:17:00.001-05:00

ARE YOU BUYING A HOME OR AN ENCROACHMENT??

A Land Surveying Primer

Ok... I am a little biased right now. I grew up in a Real Estate Industry Family...specifically my parents own a Land Surveying Company.

I remember at 11-12 years old going in and doing tax book research and answering phones...yes I was a master of microfiche then!
I remember at 14-15 going to the courthouse and looking up deeds and plat maps.
I remember at 16-17 following the field crew around and watching and helping them spot houses
I remember at 17-18 after drafting and architecture classes at High School drawing the mortgage inspections (the simpler ones)...

I remember driving out and doing Mortgage Inspections... spotting boundaries, driveways, decks... anything that may have been added either after construction or since the last sale.

Why am I relating this to you??

Because... the mortgage industry has become cheap!

Everyone is worried about closing costs and interior inspections... but who is making sure that you are not buying a property with an encroachment?

Who is making sure that you're buying a home without a huge easement?

No one!!!

Why?? Because lenders are not requiring mortgage inspections... much less full surveys, or pins.

Mortgage Inspections are rudimentary checks of the house to make sure that whoever built on the land colored within the lines.
Surveys actually find benchmarks, setbacks, landmarks, centerlines and easements and detail them on paper...they are of legal record if recorded.
A Staked Survey is when the crew marks the corners with wooden stakes or flags. They are temporary but are important for construction.
Pins is when the surveying crew does a survey and then puts iron rods, usually capped with an orange plastic cap with the surveyor's initials and license number. These are "permanent".
Plat... the drawing to the left is a "plat map" ... it shows all the dimensions and directions of a property including where the house sits. Note the dotted lines, those are set backs. Transits, GPS and Triangulation are used to find these dimensions and their latitudes and longitudes.

The biggest issue that arises from not ordering at least a mortgage inspection is border disputes!

What a survey or mortgage inspection helps to prove is whether your neighbor has a deck or driveway on your property and whether the area you wish to expand upon is buildable land!

If you purchase a piece of property and the neighbor has his driveway over the lot line, you can request that he move it.

If he cannot, you have to do a "sell-off" of that portion of the land to the neighbor - which leaves you with an irregular lot and some deed restrictions will not allow you to have a smaller lot than you already have ... this requires rezoning!

You can also create an easement... a legal pass-through allowing your neighbor to use that part of your property. The easement will be written for a number of years and for one specific use.

My community is Zero-Lot-Line... because of this, the Eastern boundary of my lot abuts my neighbor's house. Well... the roof line hangs over my lot so there is a legal "Overhang Easement" drawn onto my property allowing the neighbor to have his roof and a satellite dish overhanging but not attached to my property.

An easement can also be created to provide access to a lot behind another parcel that has no direct road access... and the driveway created would be the responsibility of the property owner to maintain not the person behind them.

Easements can also be for Utilities, Sewers, Phone, Roadways, access, etc...

Because of the complicated nature of land - raw or unimproved - it is up to us - the Real Estate professionals - to encourage the use of Land Surveying techniques. It is up to us to step forward and head off the purchase of land without an inspection of the parcel because then we can ensure a smoother transaction and a peaceful existence for our clients on their properties for the entire term of ownership.

More Real Estate News You Can Use from
David A. Podgursky, MBA
The Mortgage Go To Guy!
Your Source for Residential and Commercial Mortgage Loans in Florida

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Florida Mortgage | Foreign National Homebuyers: How to get your Loan Started!

2007-07-20T09:55:00.001-05:00

Florida is a HOT market for Foreign National's to purchase both Second Homes and Investment Properties. This is a great time and a great market for their purchases. With the weak dollar and the strong Euro and British Sterling, European investment in Florida is at an all time high!

A Foreign National Loan is a very simple process if you have your documentation in place. Here is a great checklist to use when you want to get the ball rolling on that process.

Documents needed for a Foreign National Loan Program:

1) Three Personal Reference Letters from Country of Origin. Letter must be from a lending institution and include the following:

Credit was extended to the Borrower
Borrower is in Good Standing
High Balance
Current Balance
Payment Amount
Payment History

2) Two Months' Bank Statements from a US Based Bank.

3) Employment Verification Must Include the Following:

Must be on company letterhead from Country of Origin.
Must state Income for for prior 2 years and current income.
Length of Employment
Position of Borrower
Type of Business

For Self Employed Borrowers, please include:

Percentage of Ownership in company
Address of business for the past 2 years.

4) Copy of Visa (if applicable)

5) Copy of Passport

All letters must be translated into English by a certified translator.

For more information about Foreign National Loans, please check the following links:

More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

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Florida Mortgage | Foreign National Homebuyers - Visa Waiver Program

2007-07-19T23:18:00.001-05:00

When applying for a Foreign National Loan in the United States, a Foreign National Borrower must provide a copy of a valid passport and Visitor Visa for the lender to verify the eligibility of the borrower.

The Visa Waiver Program is available to residents of certain countries to come to the United States and stay for a period of no longer than 90 days without obtaining a visa. These Foreign Nationals can come for either Tourism or Business reasons... Business or Pleasure.

Currently there are twenty seven (27) countries who qualify for the Visa Waiver Program. They are:

Andorra	Iceland	Norway
Australia	Ireland	Portugal
Austria	Italy	San Marino
Belgium	Japan	Singapore
Brunei	Liechtenstein	Slovenia
Denmark	Luxembourg	Spain
Finland	Monaco	Sweden
France	the Netherlands	Switzerland
Germany	New Zealand	United Kingdom

In order for a Foreign National that qualifies for the Visa Waiver Program to obtain a Mortgage on a Second Home or Investment Real Estate, the Foreign National Borrower will need to obtain a letter certifying their Visa Waiver Program status from the nearest US Embassy or Consulate.

Foreign Nationals using the Visa Waiver Program as opposed to obtaining a full Visitor Visa will likely have trouble qualifying for a property as a primary residence, therefore only a Second Home or Investment Property mortgage program will work for these borrowers.

For more information on the Visa Waiver Program choose one of the links below:

Department of Homeland Security Customs & Border Protection website.
Visa Waiver Program Traveler Guide

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Florida Mortgage Loans | Equity Line for Hurricane Preparedness

2007-07-16T17:22:00.001-05:00

Hurricane Season is upon us once again in South Florida. People are checking their rations, stocking up on bottles of water, vital medicines and cans of tuna, buying batteries by the case and trying to meet the Hurricane VIP - the neighborhood roofer! All the while they are forgetting to have ready CASH in an emergency - cash that could come from a Home Equity Line of Credit (aka HELOC).

The HELOC is a life preserver when there is a sea of people out there all clamoring to get their home repairs done. Having ready access to cash is essential to quick repairs. Many contractors will be very busy and turn away business if they have to offer financing.

When a homeowner does not have cash available, we see the all-too-familiar blue tarps for months until finances catch up to repair costs...

...and when there are major repairs to do, it may be hard to get financing! A lender may not write a loan on a property in need of hurricane repairs

A Home Equity Line can solve this issue which is why I recommend one to all of my clients.

Advantages of having a Home Equity Line

Low Cost

There are typically two options, the Low Cost Home Equity Line and the No Cost Home Equity Line. Both have their advantages but neither will have anywhere near the closing costs associated with a Conventional Mortgage

Interest Only

The payment is low because it is an Interest Only payment. This helps the borrower afford the payments when cash is tight.

Easy access to funds

A HELOC will have a checkbook associated with it and often even a credit card. These checks and cards draw money from the line rather than a checking account. This gives the borrower 24/7 access to their money.

Tax deductible

The repairs are always deductible when a state of emergency is issued. The IRS has a box to insert the repair costs due to a Hurricane. The interest paid may qualify for mortgage interest deduction as it is technically being used for home improvement. Consult with your tax professional to make sure.

Easy Processing

Typically the Home Equity Line is an easier program to process with less time needed.

Loan Amount

The HELOC can go as high as 95% Loan to Value in many cases. I prefer to see a 90% Loan to Value which leaves some equity in the home to pay for expenses in the case that the borrower needs to sell the property in the next few years.

You can evacuate

FEMA guidelines are pretty strict. If you were able to evacuate and did not stay in the home or a FEMA shelter, then you will likely be denied assistance.

Caveats to Home Equity Lines!

No discussion of mortgages could be complete without the pitfalls!

The HELOC payment will be in addition to the current mortgage payment on the property so you will need to qualify for the combined payment.
Using up too much your Home Equity can flip you upside down should the market drop.
Almost all HELOC's have some sort of prepayment penalty. It is usually small but there nonetheless.
Home Equity Lines are Prime-Based Loans. That means that the interest rate on the loan will be determined by what the Prime Rate is at the time. Prime is currently 8.25%. There are teaser rates offered by many banks but make sure to read the fine print!
HELOCs are Adjustable Rate Mortgages and will adjust as Prime Adjusts. There are loans that are fixed as well. You should ask about fixing the rate as an option if possible.
HELOCs are not ATMs. The money should be used for home improvement or debt consolidation and should be budgetted carefully.

Don't wait until it is too late. Consult with your Florida Mortgage Professional today to talk about your options before the storm is in the box!

Florida Mortgage | Foreign National Homebuyers - "Dollar weakens on Subprime Woes" is good news for you!

2007-07-10T14:35:00.001-05:00

Today my Google Alerts popped up with a story from DowJones' MarketWatch.

Euro at high vs. dollar amid subprime worries

This is great news for Foreign National Buyers in the US.

"The euro was up 0.7% at $1.3717. The dollar was down 0.9% against the yen at 122.12 yen. The British pound was up 0.5% at $2.0255."

As the US Dollar weakens, Foreign Investors and Foreign Nationals looking to buy investment and/or vacation homes in Florida will find that the conversion rate will be that much more favorable. In terms of where the dollar should be, this presents foreign buyers with veritable bargains in this market.

While the US economy remains shaky under the pressure of the subprime mortgage woes, big stocks like Home Depot are suffering. The confidence in the current administration coupled with these economic problems and the Fed's current stance on controlling inflation are all fueling this continued market upswing in favor of Foreign Nationals.

While interest rates are low, Foreign Nationals are finding it easier than ever to purchase properties in Florida that will allow them to cash flow as well as capitalize on long term asset appreciation.

It is not often that both assets - Cash and Property - can appreciate simultaneously. For US Buyers, Inflation aka Time Value of Money assures there is no such thing as Return on Equity - but Foreign Investors can overcome this over time when the dollar recovers.

While the Florida Real Estate market remains at its current state of high inventory and low prices, bargains do exist. The resurgence of Foreign Investment should pick up some of the slack in the market and help the market rebound from the past two brutal years. In the meantime, Foreign buyers will surely benefit from the market rebound that they will help kick start.

Florida Mortgage Loans | Reverse Mortgages - are they all hype??

2007-07-10T12:09:00.001-05:00

There have been many new commercials on TV with trusted actors/spokespeople who are adamant that the Senior Citizen public needs access to the equity in their homes via a Reverse Mortgage. The commercials discuss Peace of Mind, Security, and Quality of Life. What they do not discuss is the downsides to such a program in the short and long terms.

Note: This post is meant for debate as much as for informative purposes and I am sure it will ruffle some feathers... but it is better to ruffle those feathers now before more people choose to go down a path that they were sold on despite the fact that it may not fit their true needs.

There are very pronounced limits to the Reverse Mortgage that are not always outlined in advertisements or even by the Loan Originators that pitch these loans.

I will start with the positives of this loan to show how it can help.

There is no problem with credit histories. In fact, this is a good program to use in the situation when the homeowner has bad credit as opposed to using a hard money loan.
Not determined by ability to repay
The borrower can stay in the property indefinitely.
This is a negative amortization loan but the borrower will never owe more than fair market value on the property if all the equity is lost to negative amortization.
Funds can be used in any way
Manufactured homes do qualify
Three options to receive funds: Annuity, Line of Credit or Lump Sum.

Here are some of the negatives to ponder:

HIGH Interest Rates. While the "Interest Rate" itself seems in line, the true accumulation of Negative Amortization is based on the TALC - Total Accumulated Loan Costs. These costs can create an effective interest rate of 9.5% or more. When appreciation in the property is low, the 9.5% negative amortization eats equity at a very fast rate.
The minimum age for qualifying for a Reverse Mortgage is 62 in the State of Florida.
At age 62, a borrower can only access roughly 40% of the value of the home.
The loan to value of this program is calculated based on a determination of approximately how long the borrower will remain in the property... i.e. a mortality calculation
Once a borrower takes out a Reverse Mortgage, they can never do it again. The Reverse Mortgage cannot be refinanced. If a need for more money arises, there is no way to get additional funds from the mortgage.
Having more than $2,000 in a savings account for an individual or $3,000 for a couple prohibits the borrowers from qualifying for Medicaid in the event of a medical emergency or catastrophic illness.
Residency is required. The Reverse Mortgage requires that the borrower stay in the property. An absence of more than 30 days will allow the lender to seek foreclosure.

This is especially important in Florida. This means that snowbirds will have to make the reverse mortgaged home their primary/homestead and stay here full time. This also means that a prolonged stay out of the property - i.e. to help with taking care of a new grandchild, to help in rehabilitation of a loved one, to seek treatment of the borrowers themselves, to travel - are all absences that can trigger default.
The Negative Amortization of this loan means that the house that Mom and Dad spent so much time and money building and paying off may belong 100% to the bank instead of having any value that can be left to their heirs. In the case that the loan amount is 100% of the value of the property, the heirs still must dispose of the property or refinance it or they or the estate could be liable for the foreclosure.

Now, while AARP and HUD both endorse this program for Seniors, AARP recommends and HUD requires at least two counseling sessions to make sure the borrowers know the positives AND the negatives of this program. Both groups understand the potential damage that this loan program could cause and want to be sure that Seniors receive full disclosure.

My personal and professional opinion is that there are situations where the reverse mortgages do fit. I think that some homeowners have certain goals which can be achieved through a reverse mortgage. I think that it definitely fits a niche market.

That being said, I do not believe it is meant to work for the masses. I believe it truthfully does not fit MOST potential borrowers.

If a borrower has:

good credit,
some income by which they can repay a mortgage,
adequate equity,
minimal debt,
controlled expenses,
affordable lifestyle,
the need to continue growing wealth during retirement,
the desire to leave an inheritance to their family/friends,

then I believe that a Conventional Mortgage - a "Forward" mortgage - and proper use of secure, liquid investments can offer the borrower more security and definitely more money over a longer period of time than a Reverse Mortgage.

With a cash out refinance and funding an annuity that can not-only pay or help pay the mortgage payments but can accrue interest to allow the borrowers to have a documented income, a Conventional Mortgage can create a better financial plan for future needs and emergency funds.

Florida Mortgage Loans | Pre-Approval vs Pre-Qualification - a lesson in industry semantics

2007-07-01T18:11:00.001-05:00

When buying a home, it is very important to be Pre-Approved for your mortgage in advance. The reasons for this vary from calculating affordability to presenting a stronger contract. The issue is that the definition of this Pre-Approval varies depending on the context in which it is used. This guide should help you understand what Sellers are asking for when they advertised "Pre-Approved Buyers Only".

The phrase "Pre-Approved" brings up a question of semantics. The best way to further this discussion is to define the terms Pre-Qualification and Pre-Approval.

Pre-Qualification is a process whereby the buyer's income, credit and assets are analyzed. There are several factors that are measured which are important to lenders when they are underwriting your file. They are:

Affordability - How much property you can afford?
Credit Score and History - Have you paid your past debts?
Ability to Repay - Debt Ratios = expenses / income
History of Savings - Do you overspend every month?
Stability of Income - Has your pay dropped or spiked this year?
Stability of Employment - How long at your current job?
Availability of Down Payment - How much can you put down?
Adequate Reserves - Can you afford the mortgage without income for a certain amount of time? Can you afford to close?

It is essential that all of these factors are weighed to give you a legitimate chance of getting the loan approved.

The findings in the Pre-Qualification will also help you and your Realtor decide the home prices to search in the MLS. This prevents falling in love with a house just to find up that is $50,000 out of your price range.

Pre-Approval is a step PAST what you see above. It is actually only available after your complete loan file is submitted to a lender. The additional steps required to come up with a Pre-Approval are:

Signing of Loan Application
Collection of Bank and Asset Account Statements
Collection of Tax forms and 1009s / W-2s
Verification of Employment
Verification of Business Owned if Self Employed
Submission of all documents to Lender

At this point the lender will underwrite the loan file and come back with a Conditional Approval - a.k.a. a Pre-Approval. This is only a Conditional Approval because there will be conditions that the lender places on the loan that must be met prior to closing. These conditions will be:

Receipt of satisfactory, fully executed sales contract
Appraisal meeting or exceeding value of house
Re-pull of credit if it takes longer than 30 days
Updating of all bank statements and asset accounts

After these documents are reviewed and signed off on by the Underwriter, the loan should have Final Approval or Commitment and be Cleared to Close.

A Pre-Qualification is therefore very important. It is not a guarantee, though!

As you can see by the two descriptions, the Pre-Qualification is just a necessary step by the Realtor and Mortgage Originator in the homebuying process. It helps determine how much house a buyer can afford. It also helps outline how much of a payment the buyer can handle based on real numbers like income, savings, expenses and credit scores.

"Pre-Approved Buyers Only"

When trying to satisfy this Seller requirement, a buyer should realize that the difference in a Letter of Pre-Qualification and a Letter of Pre-Approval is much more than just semantics. It can take between a few days and a couple of weeks to get a pre-approval. It all depends on the particulars of the loan file and the lender itself. This is why it is important to get started on the loan application before shopping for the property

A Letter of Pre-Qualification should only detail that a buyer appears able to purchase a home at a particular price point based on the information they provided. The caveat to a letter of Pre-Qualification is that it should always say that it is not a commitment or promise of one in the future but instead a judgement based on the experience of the parties involved.

A Letter of Pre-Approval is the document that is actually prescribed by Realtors and desired by Sellers. This is proof that the lender has already approved the buyer for a loan and is just waiting on a property to put with the loan. This is the "Golden Ticket" that you will need need to have in hand to successfully move along the path to homeownership.

Florida Mortgage Loans | Foreign National Homebuyers: Seasoning Funds in US Banks

2007-06-28T09:56:00.001-05:00

Foreign National Homebuyers typically purchase properties both Second Homes and Investment Properties in Vacation and Resort areas.

With the Florida real estate market being on a downswing but still chock full of new development, Foreign Nationals are finding now to be a great time to purchase their vacation homes in Florida. The weak dollar versus the Euro and British Pound makes this a great time for Europeans!

During the purchase transaction, most lenders require funds equivalent to closing costs plus six (6) to twelve (12) months of PITI (Principle Interest Taxes and Insurance) payments to be placed in a US bank account. The lender will require verification of the deposits for loan approval.

Based on the findings of some of my Realtor partners, some small local banks have some issues accepting and translating or exchanging checks from International Accounts.

To get around this hurdle, I suggest to Foreign Nationals that they choose to start an account in their home country with a large international bank, preferably with branches in the area near where they want to purchase.

Several banks come to mind that have International branches such as:

When the Foreign National is in the loan process, monies can easily be transferred and verified at these banks. They may even create US based accounts for automatic monthly payment options.

High Net Worth Clients can also use the Private Wealth Management departments of these three International banks to get their accounts set up and verified.

Read more about Foreign National Mortgage Planning in my previous posts:

Florida Mortgage Loans | Condo-Hotel/Condotel Financing Explained

2007-06-21T15:22:00.001-05:00

Condo Hotels or Condotels are a popular property type in Florida, especially in hot tourist areas like West Palm Beach, Fort Lauderdale, Orlando, Tampa and Miami. With access to beaches, golf and other tourist attractions, Condo Hotel properties are a great way to purchase a vacation home with the benefits of ownership and the conveniences and amenities of a hotel room.

Condo Hotels have recently become more accepted by lenders who are now offering loans with as little as 10% down. Residency in these units is typically taken as either a Second/Vacation Home or an Investment for loan purposes. Some Lenders allow limited Primary Residence loans on these properties.

Foreign Nationals are common investors into these units in Florida as they typically purchase in vacation/resort areas.

A favorite feature of Condo Hotels for their owners is the rental pool and built in management. While not in use, the hotel can rent the units out and maintain them with housekeeping services on a nightly, weekly or monthly rental. While the rents will not count towards mortgage qualifications, this is a perk of ownership that most people do not overlook.

Lenders often look for specific criteria to be met such as:

Minimum of 600 square feet
In proximity to vacation/resort area
Separate Kitchen Space, Bathroom and Living Area/Bedroom
Kitchen to be equipped for food preparation
Voluntary rental pools

Some Examples of some great South Florida Condo Hotels are:

The Brazilian Court in Palm Beach Florida just off world renown Worth Avenue shopping. This is a quaint historic building complete with the five-star hotel amenities you would expect to find on Palm Beach Island including an amazing spa and a gourmet restaurant owned by five-star Chef Daniel Boulud.

Trump Las Olas Beach Resort - a 12 story Condo Hotel Project with 95 residences in a boutique setting set in the exciting Las Olas area of downtown Fort Lauderdale Florida. Located on a barrier island, on Sea Breeze Blvd between the Atlantic Ocean and the Intracoastal Waterways.

Trump International Sonesta Beach Resort - Part of the Trump Grande project in Sunny Isles Beach, Florida, this project is a three phase project includes the condo hotel project designed by renowned Sieger Suarez Architectural Partnership.

Ocean Sands Resort and Spa - In Pompano Beach Florida, just South of Boca Raton, Florida. A great location with over 852 feet of beach frontage.

The Ritz-Carlton Golf Club & Spa - Located in Jupiter Florida, in the North part of Palm Beach County Florida, this property offers a members-only spa and a Jack Nicklaus Signature Golf Course. The floorplans offered are 2 & 4 bedroom Mediterranean Styled Club Homes.

Mortgage Advice: Rates, Home Prices and Opportunity Costs

2007-06-15T14:59:00.001-05:00

Homebuyers rely on Realtors and Mortgage Professionals to help them understand the connection between Purchase Price and Interest Rates and how they relate to time. The Time Value of Money can be easily interpreted by Real Estate professionals that do a little math to show people the Opportunity Costs of choosing to buy or not to buy.

People are astonished when they ask me about the market and I say "It is a GREAT time to buy"... it isn't a sales pitch, it is the truth.

What factors do I feel prove this statement?

Prices are DOWN
Rates are LOW
Inventory is HIGH
Days on Market is HIGH

All of these factors show that this is a GREAT time to buy.

But what if Mr. and Mrs. Homebuyer still want to wait? What if they say, "well, everyone keeps saying the market will drop another 1-2% so I think I'll hold off until then!"

That's when I talk to them about Opportunity Cost... the cost of NOT buying now. The cost of passing up a property that they would love and can afford to wait for a future time when:

That house may not be available
Prices in that market may not go down
Rates will go up
There may not be a house available that fits their needs as well in the future

So you see that there are many variables, many unknowns, that could create greater costs if you wait until the future.

Surely, waiting increases the chance of that "1-2% drop" happening if the market is in a downturn...but the benefit of that 1-2% on a purchase can be seriously outweighed by the greater costs of any of the other variables.

The questions that homebuyers must ask themselves are:

Is this the right house?
Is it a house we love?
Does it fit our needs now and for the foreseeable future?
Will we be able to find another house like it if we pass now?
What is our legitimate timeframe for buying?
And most importantly - Will we be able to afford this house if the mortgage payment rises?

Other opportunity costs to factor are:

Lost appreciation on a more expensive house if mortgage rates rise
Costs to shop for a home
Tightening in Lenders Underwriting policies about Loan to Value, Asset and Income, and ratios
Prolonging of escrows based on sale contingencies
Carrying costs of current house/rental while shopping

Robert D. Ashby, CMPS wrote a post called Realtors, You should be scared right now! where he detailed what these recent weeks of rising rates can do to your buyer's home purchase budget.

I have taken it a step further with the table below (click graphic for full size table in new window):

As you can see, there is a lot more detailed calculations that can help your buyer determine if now is the right time to buy.

One of these calculations is simply the amount of house the buyer is qualified to buy based on a interest rate hike of .75%.

As you can see. The Interest Rate goes from 6.00% to 6.75% in this equation. The payments are identical, but the buyer now can no longer afford a house for $375,000 and the new budget is set at $346,250. The $28,750 could mean sacrificing on distance to work, distance to schools, amenities in the community, an extra bathroom, square footage, etc.
Another Calculation I have drawn out is the lost appreciation over time. This table shows an average of 5% appreciation over 10 years.

As most homeowners are in their homes for 4-5 years, I have broken this table into two time frames for examples - 5 and 10 year cycles. Obviously, the lesser priced house cannot appreciate as much over time as the larger home.

At Year 5, you can see that the more expensive home has yielded an additional $13,343 in appreciation over the less expensive home. This is a Direct Opportunity Cost of waiting in a volatile market.

Over 10 years, the difference in appreciation triples to $39,041!! Essentially, for the same monthly payment, the asset returned an additional 10% over 10 years!

This illustration shows the real future value of money lost due to the higher interest rate. (click graphic for full size table in new window)

This shows that same 0.75% interest rate increase actually costs an additional $8,829 if the homebuyer chose to wait and got the house at the same price but with a higher interest rate!

Another calculation that should be considered in this discussion is "What if the market drops another 2%??"

In this table you can see that the original property price is on top with its 30 year Fixed Rate at 6.00% payment of $1,799.

If you drop down to the other three rows, you see that they are all 2% less in property value than the first value.

As you can see, 2% is only $36 in difference in the payments if the rate is the same.

So if there is no negotiating under the current value of the home, this would be considered Today's Value. If you were to wait until the price dropped due to economic changes, time on market, seller urgency and finally get it down, you're gambling over $36.
Now, should the value of the property drop 2%, but the interest rate goes up just 1/8 or 0.125%, the payment difference becomes only $13.

So now we're rolling the dice on the wait over a couple days worth of Starbucks.
Should the value drop 2% but the rate goes up 1/4 or 0.25% (recently we've seen an increase of 0.50%!) then the payment amount goes up and is now $11 MORE... so there is a LOSS of $11 for waiting on property values to drop by $7,500.

Now you can see how two of the main ways to calculate Opportunity Costs as they pertain to Buyers stalling in the current market. As you can see, both of these are Quantitative. The Qualitative factors are harder to calculate but should not be forgotten. They can be:

scarcity in a community,
scarcity of the model,
quality of houses in a price range,
longer commutes,
community amenities,
model amenities,
building materials,
quality of finishes,
inferiority of lots,
etc.

Now, the next time you hear "Oh I think you should wait for the market to totally bottom out" or "I think there's 2% more drop in the house values in this state" remember we're talking a few dollars a month difference versus tens of thousands of dollars difference in payments.

Mortgage Advice: What's worse than Foreclosure?

2007-06-11T17:09:00.001-05:00

What could be worse than foreclosure?? Foreclosure due to being UNDERINSURED.

Many homeowners slide by on their homeowners insurance policy figuring that when the worst happens, they will get paid. The sad truth is that many homeowners will actually come up short on coverage if their house is totally wiped out. When the homeowners policy does not cover the dwelling and the borrower does not have the money to make up the difference, the lender can and will call the note due to lack of repair.

Why does this happen?

Many homeowners do not update their policies to the current value of their home. They don't realize that the insurance company doesn't automatically increase the coverage of their policies. Why not? because that means raising the price of the policy - something most people don't want to hear.

Here in Florida, we have a pretty tough skin when it comes to Insurance costs fluctuating. It is pretty much going to happen annually whether we like it or not. We're very aware of our insurance here due to the weather of the past few years.

What should homeowners be aware of?

Every year or so, it is smart to call your insurance agent and discuss your homeowners policy. Most homeowners don't even think about it because they escrow payments for insurance in their monthly mortgage payment.

Calling your insurance agent and reviewing your policy will allow them to analyze your property and ask questions to find out how and if your policy needs to be altered.

What changes need to be made?

The main alteration that most people need is an adjustment to the replacement cost of the dwelling. The replacement cost is exactly what it sounds like - the cost to replace the dwelling in the case of complete loss. The costs factored in here are strictly construction and materials based on today's market.

For instance, if there is a worldwide shortage of gypsum, then the price of drywall will rise. This will mean that your coverage might not be enough to cover the cost of a complete loss.The replacement cost is estimated in the appraisal upon purchase and refinancing, the two main instances of homeowners insurance analyses. The insurance agent has tools to update these figures to present time to make sure each client is properly covered.

As most people do not refinance every year, calling to make sure your coverage is up to date is a vital conversation to have. As a Mortgage Broker, it is part of my processing that the insurance company is alerted and is included on the mortgagee clause. This means that even if the homeowner forgets to call, it will be taken care of for them.

Realtors: Don't let this happen to you or your clients... when you are sending cards on the anniversary of closing, insert a reminder to call their insurance agents to make sure their coverage is up to date!

Florida Property Tax Update: Investor and Commercial Worries

2007-06-11T15:22:00.001-05:00

The release of the newest version of the proposed Florida Property Tax Reform should worry a large portion of property owners in the State.

While Florida House Speaker Mark Rubio and Governor Charlie Crist have done a reasonable job accommodating homestead property owners, i.e. full time residents, especially those with property values under $500,000, I feel that there was a failure in this newest revision of the property tax reform to adequately address the issues facing investors and commercial property owners.

Many feel that these people don't need as much attention but I think that the ripple effect of not helping with their tax woes will be felt more directly than Florida Legislators might realize.

Apartment Investors

These investors will have the ugly job of informing their tenants that all this news about how tax savings will pass to them is just not the case. As property taxes will only lower slightly, and not at all in some cases, Rents will have to remain high to ensure that the properties cash-flow for the investor. The onus of the currently high tax rates on commercial properties will still fall on the pocketbooks of the renters.

Strip Center & Industrial Park Owners

These Investors are usually using Triple-Net (NNN) Leases which involve CAM (Common Area Maintenance) charges. The CAM usually includes Maintenance, Taxes, Insurance and other common fees. This benefits the investor in that they know they are collecting these fees from their tenants...but high inventory and vacancy rates will suffer as CAMs will not be able to be lowered without a true overhaul of the tax codes.

Condo Owners

This is a broad range of property owners but mainly consisting of small and medium businesses. These businesses are suffering from a double dose of the tax reform blues as they see a much less aggressive tax plan on their homes AND their work places.

Shopping Center Owners

Malls and shopping centers have very high per square foot rents right now plus CAM and sometimes Gross Leases to factor in. Due to high taxes, some small businesses are settling for lesser centers because of the high cost of doing business in newer Shopping Centers. Therefore large shopping center owners are seeing higher turnover rates and are now having to offer more incentives to potential tenants.

Land Owners

Some property owners lease their land instead of selling it or constructing on it themselves. Fast Food Chains are a popular target for this type of property owner. They buy the land and lease it to the franchisee who erects the building on it and stays for a certain period. With high taxes, this is creating a burden on property owners in higher traffic areas as they are the most affected due to higher property values.

A potential fix...

Some of these problems could be addressed by a proposition which was not offered up in the most recent coverage was a change in Assessment practices. If properties were consistently assessed with the same method and with an As-Used mentality rather than with a Potential Usage mentality, a small commercial property owner would not have as much to fear when the property appraiser comes to reassess after a new record was set for a price of another property down the street.

Comparables of properties of different Zonings, Usages, and Types should not be weighed in the judgment of an entirely different property. This is the problem with the Palm Beach County Property Appraiser who prefers to base assessments on Potential use regardless of the fact that a property might have been used in the same way for fifty years and has no reason to believe it will change.

The worst part...

There are definitely more property owners that will not feel the overdue relief promised by Legislators... but what these lawmakers are not seeing is that the indirect effect of high taxes on commercial properties on the middle and lower class is felt when employers cannot afford to create more jobs or offer higher wages... when apartment owners cannot afford to reduce rents... and when small businesses just cannot expand due to ultra high costs making financing property impossible.

South Florida Affordable Housing: Political Trade Offs...

2007-06-11T14:11:00.001-05:00

South Florida Affordable Housing is a political mess because of tradeoffs that need to happen before anything real can happy in the marketplace.

Catching up on some news today, I saw some big issues being brought up in the ongoing Affordable Housing debates in Palm Beach County, Florida and Broward County, Florida.

I want to isolate a few interrelated issues to get the ball rolling as the sum total of Affordable Housing is just a big complicated mess. Hopefully this will inspire some people to start delving into some of the problems and open their eyes to the areas for improvement everywhere - not just Palm Beach County, Florida.

1) Depressed Real Estate Market

Right now, builders are seeing doom and gloom. They don't believe that the market is there for big housing projects and they are partially right. In Boynton Beach, Florida and Delray Beach, Florida, there are a few new projects that are either in the works or being completed currently.

Builders, though, sense the consumer panic and see so many listings sitting unsold. They also see their other projects having mass cancellations and houses built and empty. This creates havoc in their bookkeeping...but it also hurts their lending potential when they want to start a new multimillion dollar projects. Lenders require certain amounts of presales, certain occupancies and in Affordable Housing certain demographics targetted.

Because of this, many Builders are actually trying to scale back on their plans for new projects!!

This is not a good sign as these are the units and the buyers that we need to kick start. The ultra-luxury market moves on its own. The rental market moves in waves... the affordable market seems to be the toughest market in Palm Beach County, Florida despite scarcity... part of this is due to the property tax issues.

Scaling back the projects just means that the consumer doubt is creating a ripple effect and scaring builders.

2) Density

When developers decide to scale back, they have to make up the revenues somewhere... so they ritz up the units, make them a little bigger... and sell to a higher income bracket.

When you lower the density - the cost per unit rises so the sales price has to rise as well!

When a developer or a government agency reduces a project from a 50 unit per acre density to 30 units per acre, that means that people at the lower income levels are less likely to find suitable and affordable homes.

3) Infrastructure and Amenities

Sometimes governments overestimate the ability of existing roads and commercial areas to sustain growth - and underestimate the amount of additional growth that needs to be added in that light.

When as few as 400-500 units are added, local merchants cannot sustain the growth and need to expand. If there is not adequate new space made available, then these merchants will not be able to handle the new growth.

Also, Infrastructure also needs to assume growth of schools, fire and emergency services and police... something the current budgets don't always allow.

4) Tax Dollars

This is a double edged sword. As we focus on property tax reform, we also have to remember the effect it will have on the localities and how they will deal with the monies that may or may not come in depending on the tax plan that is adopted. Hopefully the newest tax plan will still provide some property taxes so local governments can still have revenue from these new, below median price housing. In Palm Beach County, Florida - median house price is $374,100. In Broward County, Florida it is $372,200. With the current tax plan under debate... a $200,000 home would bring in only 1/2 what it is bringing in today.

Municipalities are holding back all projects right now in reaction to the future budget cuts... and this includes - Affordable Housing!

Again... these are only a few of the issues on the hot seat right now. There are many more we can and will discuss in the future.

Lawmakers and other local commissioners realize some of the issues. Developers realize others...

We as real estate professionals are left to debate the differences and create a sense of urgency to unite the powers that be to create a plausible and meaningful solution to this problem.

More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
www.TheMortgageGoToGuy.com
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update: Getting Closer...but very underwhelmed

2007-06-10T16:12:00.001-05:00

So Florida Lawmakers took a moment to announce they've come closer to finalizing the Property Tax Reforms that have been the subject of special legislative sessions that seem positively never-ending to residents in the state.

The local media has been buzzing with anticipation of the final announcement of where the taxes will roll back - but based on the latest numbers, I am personally quite underwhelmed.

There were issues that went untouched entirely and property owner classes who really are only getting token reductions while the "target property owner class" really didn't get that big a boost by the numbers.

Here's the breakdown:

Taxes will be frozen at 2006 levels at the City and County levels... this coming from ideas that said there would be an actual rollback as far as back to 2001.
Taxes will be reduced by 0-9%... those that get a 0% reduction are likely going to be upset... but 9% isn't a lot considering some assessed values have gone up considerably more than that in recent years. Counties and cities that have raised taxes the most in the past years will have the steepest reductions. Palm Beach County Florida is due 9% for sure. Some cities like Belle Glade Florida that have not raised taxes would not reduce taxes.
Revenue growth for Cities and Counties would be capped in the future based on growth of personal income in the state... so local surges in population and job creation would be countered if the entire state doesn't grow in synch.
Local governments could veto their caps, but only with a unanimous vote.
School Taxes will be untouched in the first year... but that's just a warning to local governments to prepare themselves. With thousands of vacant teaching positions, cutting taxes won't help when trying to fill those spots!

Homestead...ugh, what an issue. My past posts detailed homesteading and the new percentage system. Here's how it will work...but only after a majority vote (possibly not a simple majority but a 60% majority will be needed) on January 29, 2008 in the Florida Presidential Primary Election:

75% off the first $200,000 in value... house assessed for $200,000 would pay taxes on $50,000 value.
15% off the next $300,000 in value... house assessed for $500,000 would pay taxes based on $305,000 value ... i.e. $50,000 for the first $200,000 and $255,000 on the next $300,000 in value
No further exemption for homes valued above $500,000

Pros:

This plan definitely targets people who own or will own property in the low and moderate income ranges
This plan is far superior to a flat $25,000 homestead which does little at the top or bottom of value

Cons:

This plan misses the mark in many counties where median property values are higher than $200,000
This plan does not help a huge sector of middle income property owners at the $400-650K range which is a large section of future middle-income buyers. This price range is basically where the family homes come in for many of the "middle class" citizens live that Legislators wanted to help keep in the state.

Forgotten:

Portability... with only a tax freeze, many people will be frozen in their current homes and unable to upgrade or move because the issue of Portability has not been addressed. Only people that have been in their houses for longer than 4 years will really feel the significance of this plan
Assessment Practices... the big issue in South Florida has been the interpretation of assessed values by County Appraisers. The Palm Beach County Florida Appraisers office has been embattled due to their view on Highest and Best Use judgements vs Property in current use. Having the Appraiser assess your property based on what the property could be some day in the future is unfair.
Commercial Property Owners & Investors... a rollback to 2006 and a reduction of 9% for most of South Florida and other high growth Florida Counties will do little to help investors and businesses that own property. The incentive to move to Florida is diminished by the high property taxes.
Renters... without reducing taxes of Investors, the high cost of taxes must be passed on via higher rents. This is a large population and a big issue for the working class.
Snowbirds... a large part of the economy, albeit the seasonal economy, are the second homeowners from out of state. These property owners will get no further reductions. These are the people who eventually do move down full time but will not get the benefit of longer term ownership and portability if they upgrade or downgrade when they move down to Florida full time.
Foreign Investors... this is the same scenario as snowbirds and commercial property owners. A lack of further reduction will lessen potential gains for these investors and send them to other destinations instead of Florida.

All in all... it is a start... but legislators need to reconsider both the freeze date and possibly roll back further (2004??)... and also at least address Portability and Assessment Practices to benefit a broader range of Property Owners.

Florida Property Tax Update - AN EARLY VOTE!!

2007-06-05T17:29:00.000-05:00

My earlier post Florida Property Tax Update - The Compromise is Near!! details what seems to be the final answer to the Florida Property Tax Reform issue that is currently the main topic of the Florida State House and Senate special session.

Florida House Speaker Marco Rubio, R-Miami, pushed forward a plan that will create a percentage system that will reward property owners with much larger exemptions based on the type of ownerships:

Homestead
Non Homestead Residential
Investment
Commercial
etc

The only issue to resolve at this point is what the specific percentages will be for each category of ownership.

The good news out yesterday was that due to the Florida Presidential Primaries being moved up, the House and Senate have requested that instead of waiting for a vote on an amendment for property taxes to wait for the next general election in November 2008, they want to have this amendment available for vote in this upcoming Primary election!!

Yesterday Morning, Governor Charlie Crist, R, signed a bill moving the Florida Presidential Primary election from March to January 29th of 2008.

As that is only 6.5 months away, it looks like Property Tax Relief is coming soon!

Small Balance Commercial Loans: How Realtors can Crack into Commercial with these tools

2007-05-23T12:51:00.001-05:00

Thanks to Lisa Abrams-Cruz - a soon to be ActiveRainer and to Cyndee Haydon, my fellow Wildcat in the Sugar Sands of the Gulf Coast for making me think about this post enough to come up with something coherent...and thanks to Renee Burrows for kicking me off with a post that this legitimately compliments!

Renee's post was titled When You are Just Getting into the Biz ~ Sphere is #1! and now I will illustrate one way for Residential Realtors to get a taste of Commercial, using their Spheres!

In a previous post, a VERY early post for me, I wrote about How to turn your C inventory into your A clients - it is a theory of Production Management that I learned during my MBA. In this case, I'm going to couple Renee's ideas with C Inventory to show you how to get a start in some Small Commercial Real Estate transactions.

So... let's review. Your Sphere of Influence is the people you know that know you. Friends, Family, past clients/customers/vendors etc... basically people that know your name when you call. Taken a step further as your have progressed in your Real Estate Career... your Sphere should have grown with your Database.

Now, you not only have that person you used to carpool with... but you have their friend Joe, their little sister and 3 or 4 of their co-workers too!

Then there are the people that bought from you a while back, you've sent some cards and such... but you really haven't heard from them in a while. They are your C Inventory. They're in your database... on a shelf... gathering dust just like that fuel pump for the '73 Camaro you restored three years ago but it still sits covered in a tarp in your driveway. In business... it is the products you stock but rarely sell.

So what does this have to do with Commercial Real Estate?

Everything! Now is the time to look through that database and RESORT your data!

What should you be looking for?

Doctors
Lawyers
Dentists
Accountants
General Small Business Owners
General Contractors
Plumbers who own their businesses

Pretty much any entrepreneur type will do.

What's the gig like?

Well, you should be keeping up with these people in their goings on - just like normal. Now, though you're going to schedule some time specifically to offer the new service of finding them Commercial Real Estate Options for their Practices and for Investment Purposes.

One scenario is:

You -, "Did you know that you, Dr. J, can BUY your office space with 100% financing to Doctors AND great rates??... No? Well, I have a mortgage partner that has access to some local lenders offering that program. Doesn't that sound great?"

This is the same Rent vs Buy scenario you pitch to first time homebuyers but now you get to talk to them about Depreciation, Tax Advantages, Long Term Gain, 1031 exchanges... all those great things that come up in a commercial talk.

Dr. J - "Well... I'm not sure I would do 100% financing in this market and I don't think I have the cash to put down on what I need."

You - "But you are interested! So maybe we just need to get David on the phone and he can talk to you about some options that might help you get there. He knows how to make these deals work out perfectly for your specific financial needs..."

Dr. J - "I did see all those Medical Office Condo signs up Jog Road in Boynton Beach, Florida and I would love to have my practice nearer to my home AND most of my clients are up there"

You - "Sounds like a match made in heaven"

Another scenario would be for a General Contractor:

You - How's business Mr. Carpenter?

Mr C. - Great... we're so busy and we're bursting at the seams. I need to grow my company but I just can't seem to get it done right

You - Well were you thinking of getting some more space? Maybe buying... and getting a Working Line of Capital to help you with expenses?

Mr C. - Yeah ... that would be great. I've got 1500 square feet and 20 employees jostling for room. I need some storage and a better office space or my secretary is going to quit again.

You - I know there are some great contractor parks out there with units for sale in this area. On top of that you might get some referrals from your neighbors in similar businesses. With today's great rates, you should also talk to my mortgage partner... he can get you great rates with 10-15% down!

Mr C. - I would love to talk about that!

You - why don't I patch him in and we'll set up a meeting right now!

Yeah Yeah Yeah - role playing is silly... but most great sales training courses have it mandated!

The point is, Now you have the list of clients to target in your list. They are your C Inventory because they haven't been taken off the shelf to sell them yet! They can become your A Inventory because you could get them into another transaction if you just know what buttons to push.

It isn't even about finding them the space. Commercial Space is easy to find - it is on the main roads. Seldom do you find normal businesses hidden away... but should you need one, you'll find it! Most office Condos are on main roads. Most Warehouse Condos and Industrial Condos are clustered in certain areas of town.

So you know what area they want to be in, you know what type of property they want, you know square footage..., start driving! Take your camera and take some notes. You'll find it for them in no time.

Between you, me and a good commercial real estate attorney, we can create your first real commercial deal and make it SMOOOOOOTH sailing!

Whether your client wants to buy an Office Condo or Office Building, a Warehouse Condo or an Industrial Park, a Retail Condo a Strip Center or a Shopping Center... or if they want to just invest in some new property...working together, we can get you on your way to selling some commercial real estate!

Boynton Beach Florida: Places To Go, Things to Do

2007-05-23T12:45:00.001-05:00

You might not think of Boynton Beach,Florida as a happening place, but it is definitely booming right now. The growth both in East and West Boynton Beach, Florida are fueling a huge retail and mixed use explosion!

In a previous post I mentioned a new Neighborhood Center - Canyon Town Center - but there is another new development on the East side of town.

Boynton Town Center.

Boynton Town Center will be a new huge Power Center in the ICSC (International Council of Shopping Centers)Scale. It will get this grade due to having three major national Anchor tenants:

Over 20 other retailers, restaurants and service providers have signed leases to fill in much of the rest of available Space. Here is a current list of future tenants.

Jason's Deli
Doc Green's Gourmet Salads
Moe's Southwest Grill
Rotelli's Pizza and Pasta
Smokey Bones Barbeque & Grill
Red Lobster
Panda Express
Pollo Campero
Shoe Carnival
Hot Heads
Bombay Co.
Game Stop
Payless Shoe Store
Mattress Giant
Jamba Juice
Hollywood Tans
Massage Envy
Sports Clips
Great Clips
Jos. A. Bank

Nestled directly across the street from the Boynton Beach Mall, this shopping center will boast over 400,000 square feet of pedestrian friendly shopping, making it the first landmark of the new Boyton Beach Florida Revitalization efforts.

According to its Developers, Sembler and Compson Associates, Boynton Town Center will also inclue 10,000 square feet of office space (notice the 2nd level) and over 1000 residential units. This will be in direct competition to the Renaissance Commons which has 1000 residential units as well, but only in a Mixed Use type development with ancillary retail. Renaissance Commons has an Eat, Work, Play mentality with some townhome style units offering ground floor entries that will cater to those who want an office space in that area and to live above them. Renaissance Commons is also a Compson Associates development.

It is estimated that this center will see over 95,000 cars per day in North and Southbound Traffic in its Congress Road location.

The Palm Beach Post reports: "Outdoor art and benches, stone and brick finishes and a main street designed to evoke the ambiance of old-fashioned downtown main streets"

All of this development is quickly turning Boynton Beach Florida into a great place to live in Palm Beach County Florida.

Once open and with the May 4th opening of a new Muvico Theater Cinemas across the street in the Simon Properties owned Boynton Beach Mall... Boynton Beach Florida will also be a great place to play in Palm Beach County, Florida!

*images and site map courtesy of Sembler Website and Marketing Materials

Affordable Housing in South Florida: Part 2 -PreConstruction

2007-05-23T12:10:00.001-05:00

AFFORDABLE HOUSING?? - Section 2: Preconstruction

Part 1 is here.

So in November, an acquaintance of mine left me a voicemail that she had a "Hot Hot Hot" lead for me...her sister. I was flattered and called her back. She said she was in the middle of meetings so she'd be brief. There was a new community about to be announced in Boynton Beach, Florida that was affordable housing. It was going to start in the low $300's... I let out a little chuckle when she said that number. Her sister was going to get in line for reservations and she wanted me to get the mortgage. She told me she'd call me back later when she was free.

So...I did some digging into the facts of this new community to see how I could help. The rumor that I was told was that GL Homes had seen sagging sales in Canyon - their mega-community/small township in West Boynton Beach. It is a huge undertaking that will definitely alter the demographics of West Boynton. The problem is that the houses started in the high $400Ks without any upgrades or lot premiums. Most of the houses price $500K+. So GL found a parcel nearby and made some deal to move a school and build a park so they could have this space for a lower cost community.... And Greystone was born!

Greystone was to be part of the affordable housing answer in Boynton Beach. It was also likely to satisfy the affordable housing quotas that GL may not meet in Canyon! Nevertheless, I wanted to get to the nitty gritty and how I could help this family get into its dreamhome.

Here's what I found:

Presales were going to happen one weekend in December and people were already clammering to stand in line.
The first deliveries of homes was scheduled for Q1, 2008. Since they've only graded the land so far, I believe fully that this is builder time and not actual time so Q2 if we're lucky.
These were all owner occupied homes - no investors - to protect the homeowners
Reservation fees were $3,000 non-refundable
10% Deposits were required once a model was selected
Then, 10days later lots would be released 10% of the lot premium would be due at that time
A meeting with the design group would then require 10% down on all upgrades. Minimum upgrades expected to range $50-60K on the smallest model
Smallest Model was 1500sf, 3/2/2, ranch - $330K

It all sounds normal, right? All 500 homesites sold out in 5hours and the news reported that GL made $5B - that's a B as in Billion - for the builder.

So... then I did the math.

Reservation fee $3,000
10% down on small model $33,000
10% on lot premium $0 for arguments we'll say no upgrade here
10% of minimal upgrades $5,000
For a Grand Total of $41,000 due within 30 days

Still sounds normal? Ok... let's break this down

These were billed as AFFORDABLE HOMES. Advertised as suitable for some MODERATE INCOME TRACT buyers in Palm Beach County. The qualification for Moderate Income Tract for a two income family in Palm Beach County has a ceiling... a CEILING... of $96,000 per year! Divided by the deposit is 41.8% of the annual income of this family is spent on the deposit.

That $96,000 is GROSS income... not Net, not Adjusted Gross... GROSS Income. So at $96,000, that person is in the 25% tax bracket and owes around $7,000 in income tax given just the standard married filing jointly deduction and one child. This nets the income down to $89,000 but raises that percentage to 46% of the annual adjusted income!

Then, if you look at the annual average savings of a US family of 2% - let's ramp that up to 5% for argument's sake - and we're only seeing roughly $4500 socked away of the take home pay! So the deposit is 11 years of savings!!

Then, if somehow the family has the cash to put another 10% down at closing, the loan amount would be $304,000. The interest only payment at 6.25% is $1583 per month. Add $435 per month for taxes. Another $225 per month in insurance. Another $100 per month homeowners association. Total PITI (Principal Interest Taxes and Insurance) payment is $2,343. It all looks good with a 29% front end ratio... which is a little high but probably doable if you went stated income and used only the back end. But then that leaves only $1,657 per month for all the rest of the obligations before you reach a 50% back end ratio!!

How is that going to work for most people? Think about it... no savings = running up credit card debt!... no savings = no PITI reserves... no savings = no asset requirements... none of this = no loan

So the builder came out last month and said that they fully expect 20% of the contracts to just be cancelled. Now what would give them that idea??

I don't fault the builder... don't get me wrong. Canyon is beautiful and so are the rest of their communities. But what kind of answer is this to the problem of affordable housing? Why were people so elated at this "affordable" community??

More Real Estate Industry News You Can Use from
David A. Podgursky, MBA
The Mortgage Go To Guy!
Your Source for Residential and Commercial Mortgage Loans in Florida

Analysis Paralysis

2007-05-23T12:07:00.001-05:00

Thanks to Colleen K for inspiring me to continue on her topic but to elaborate enough to make a blog instead of just continue the thread.

Analysis Paralysis - I know ALL About this especially now that there is so much information! My wife claims that my business partner and I are two peas in pod (no pun w/my last name) because we're always checkign and double checking and -SHOPPING THINGS TO DEATH. We've been known to wait on a purchase because heavens forbid we buy this week and miss a sale on the same thing next week.

I'm only like that on meaningless items which is all the more frustrating for my wife. Her engagement ring took me no time at all - I designed it after picking the perfect stone. My car - she didn't even believe it when I a) negotiated the deal I got and b) actually came home in it. But my laser printer took forever to buy!!

Consumers are constantly bombarded with good and BAD advice. I believe as professionals it is our duty to help them also learn when to STOP overinforming themselves!!

Paradigm Paralysis - This is the other problem we're seeing and on the other side of the table. Paradigm Paralysis is the epitome of in the box thinking. You can't see and adapt to change because you're stuck in your status quo. I said YOUR status quo... Paradigm Paralysis is what helps you get left behind by the market.

The Sellers in South Florida seem to have Paradigm Paralysis. Sellers take so long to actually decide to sell their homes, they forget that the market changed and believe it is worth what it was last year. You never see the opposite - when the market is appreciating sellers appreciate their views and prices, but when the prices decline, Sellers don't react and so their homes sit on the market.

The problem gets worse when they finally do get a buyer and an appraiser comes in with a real value and it is lower than contract price! Appraisers know that lenders will lend on the lower of the sales price or the appraised value and they also know that lenders have internal reviews of most all appraisals. Because of this they have to be careful ... first movers syndrome is not favorable for most! Meaning - it takes a sale with buyers that are maybe willing to bring extra cash to the table to get the first comp that will bring prices up in an area.

Sellers don't realize that most BUYERS won't become first movers! Most buyers know that a low appraisal is leverage!

Which brings me back to my post that Colleen quoted from - Opportunity Cost... the opportunity cost of NOT reducing the house is - more mortgage payments, the inability to move to a new property, possibly having two mortgages simultaneously, getting stale on the market... and Realtors - that means MORE MARKETING COSTS!!! Sellers hate when their agents come back with a contract and say that it is the best they're going to get when they already sold them on a higher price in the listing contract - that's the Paradigm Paralysis of Sellers. Now the Realtor needs to explain the opportunity cost!!

And the opportunity costs are higher for everyone in a market where so many buyers have analysis paralysis and the sellers have paradigm paralysis!!!

It is up to us professionals is to make sure we're not victims of either paralysis... we can only do this by being as dynamic as possible!

More Real Estate Industry News You Can Use from
David A. Podgursky, MBA
The Mortgage Go To Guy!
Your Source for Residential and Commercial Mortgage Loans in Florida

Florida Commercial Real Estate: Redevelopment of Industrial Zoned Land in South Florida

2007-05-23T12:04:00.001-05:00

Who loses most when city planners rezone commercial land in order to make room for more housing? Is it the right of a citizen who moves into an area rich in industrial zoning to complain about trucks and businesses or is this a buyer beware issue?

In Boynton Beach, Florida there is a controversy brewing about the fate of the last vestiges of Industrially Zoned land. Currently, the city planners and county commissioners are investigating an option to rezone some of it and rededicate it for residential development. The Industrial area in question lies just East of I-95 in an area of mass retail and office growth in Palm Beach County, Florida.

Boyton Beach, Florida is fast approaching becoming the largest city in Central Palm Beach County. It lies North of Boca Raton, Florida and South of West Palm Beach, Florida. It has ocean frontage and continues all the way west to the county limits. There is plenty of land in the West... but for whatever reason they have decided to cut out a parcel of the precious eastern industrial land to use for more housing. There are big blocks of space with dying retail or even further east hotly disputed redevelopment areas that would have been better suited for such housing!!

The biggest damage that it does to the area is JOB GROWTH. We're not talking about heavy industrial - we're talking light industrial mixed with office space. Light manufacturing like storm shutters, contractors, windows, doors, siding, plumbing... these are the workers that SUPPORT HOUSING GROWTH!!

If the companies cannot base themselves centrally near their clients then they have to travel further to get to their clients. This puts a strain on costs due to gas and wear and tear on vehicles. It also means that workers don't live as close to work ... these are small condos where offices and administrative personnel work. When the workplace moves, so does the workforce!

But most importantly... when you rezone land - it is SO much easier to get it zoned for residential or anything else than industrial. Industrial is a highly specialized area. It requires transportation arteries that no other zoning needs. It requires access to airports, train rails, ports, highways. It requires its own power grids. It requires environmental specialists. It requires heavier roads for machinery. It also requires far more time to fill up than a residential neighborhood - which requires PATIENCE to get it to capacity... but when it does reach capacity it makes a municipal and county government hum with tax dollars and jobs!!

When you take even one acre away, you could be taking a dozen jobs! When you take 100 acres away - you can take HUNDREDS OF THOUSANDS of tax dollars away... and when you replace it with simple residential - even high density residential, you are NOT replacing the jobs. Environmentalists argue that industrial space is harder on the environment - which is EXACTLY why city planners put it in certain areas and deny rezoning to industrial outside those areas!

What adds insult to injury is when businesses are harassed and sued for running their businesses and inconveniencing the encroaching residential neighborhoods! If you live near an industrial park, you should understand that at 7am a Semi-truck is likely to hit its horn or drive by your townhome. If you're taking your kids to the corner, you're likely to see some trucks hauling materials in the same lane as the school bus driver. And... you're bound to see people that are laborers walking around these areas on their breaks and hitting the local fast food restaurants and tearing out of there at 5pm right when you're trying to get home. It is inevitable.

If you live above a nightclub, you're gonna hear thumpa thumpa into the wee hours....

If you live next to an industrial park, you're gonna have to learn to deal with workers and industrial vehicles!

Florida Property Tax Update - UGH! The Media is messing it up again!

2007-05-21T17:27:00.000-05:00

The PalmBeachPost.com had a new opinion piece on the state of the Florida Property Tax reforms as they stand in news releases coming directly from Tallahassee, Florida.

Here is a link to the article...Property-tax plans cut off from reality.

In this article - Glenn Henderson writes that everyone has lost their mind and that the House and Senate have proposed a scenario which would basically be the end of all state, county and city programs, jobs and infrastructure.

What has not been recognized is that there are duplicate services and functions of governments all over the State that WILL need to be cut.
What Mr. Henderson has also failed to recognize is that there is a LOT of fluff at the local level that really isn't the State's responsibility to fund.

What Mr. Henderson has seemed to downright ignore is that we are NOT a Socialist Government! We are a REPUBLIC and the Federal and State Governments need to be more lean for us to spend our monies in the RIGHT PLACES.

What difference would it make if we did not cut taxes so that we have the monies for Port St Lucie, Florida to institute Juvenile Justice programs if the Juveniles' families can no longer afford to live in Florida anyway??
What difference would it make if Martin County got the State funded Aquatics complex if no one could afford to live there and to swim!
Who would care if the gas stations along major arteries have hurricane generators if no one lives here that needs that gas??

A REPUBLIC...

A form of Government where the Federal Government provides certain services such as Law Making, Military and Foreign Relations and passes other monies and functions down to the State Governments. The monies come from Federal Taxes.
State Governments have to take care of the State as a Whole and send representation in the form of 2 Senators back to the Federal Government's Senate. The State provides monies and services for Statewide programs... the best current example is State of Emergency services for wildfire fighting and rebuilding the eroded beaches from Sub-Tropical Storm Andrea. Without the rebuilt beaches, the STATE is susceptible to widespread damage from a major Hurricane in the upcoming Hurricane Season. The State must have its own tax system to fund such programs where Federal Monies don't fill in. This is where the vast majority of our property taxes go since we have no State Income Tax
County Governments... in our case, Counties really have a lot of authority. They offer Sheriff services, land development services, parks, schools etc. Rich counties and poor counties are supposed to be getting equitable tax monies from the state so that all citizens get fair services.
City Governments... the trickle down has slowed a lot at this point. Cities are supposed to govern only the most local needs of a city/township. Things like very local development plans, very local law enforcement and planning inside of the bounds of the County's master plan.
Local Governments... these are the lowest form but serve the most specific needs. They can be community associations or minor municipalities. They can be just a citizen formed group that creates a Political Action Committee to represent a demographic area with a unified voice.

Under this structure... it is OBVIOUS that TAX CUTS will hurt the lowest common denominator if those upstream don't trim their fat as well.

Where the journalist falls off the horse altogether is:

Even crazier is the fact that the real estate market is taking care of itself, coming back down to the point tax bills will ease up on their own - without government doing a thing.

Ummm... don't we understand that the property tax issue is NOT self correcting like the market? Don't we see that a lot of the reasons the market is in the shape it is would be because of the tax issues? A lot of the people that are running for the hills are doing so because taxes are so high. Reassessing all the property values to bring down taxes is actually something wrapped up in these bills!

I think the State is at a crossroads... they MUST do something... and nothing will ever come without criticism.

The issue that rests on their shoulders right now is this:

Cities and Counties had HUGE budgets over the past few years... they got spoiled.
There was huge growth in city and county jobs... people got on board to easy money
Everyone had the money they needed to fund street art and raise salaries to all city and county employees
There was a lot of WASTE and important projects were put off
Important projects are now possibly going to miss funding requests

SURE - the state has to cut the fat. But the Cities and Counties will just have to do the same.

The news is blasting that there were 12,000 jobs lost last quarter in South Florida.... well... why don't they compare that to how many people got their real estate licenses and now are filing for unemployment? Why don't they compare that to the number of developers that moved down here, hired sales teams and left Dodge.

In my eyes smaller government is better. We don't need a Minister of Sidewalk Number Painting getting $60,000 a year that will buy a police car, or books for a school, or a van for a hospice facility.

We do need our taxes to come down... if they don't then there will be a lot of employed people in foreclosure looking at some nicely painted curbsides.

Florida Property Tax Update - The Compromise is Near!!

2007-05-11T17:25:00.000-05:00

After some interesting phone calls from people wanting to know more and learn my opinion about what's going on in Florida Taxes, and some people who didn't get what I was saying, here's some more breaking News from the SunSentinel.com regarding the Florida Property Tax:

House Speaker unveils new approach to property tax relief that could halve bill

This afternoon Florida House Speaker Marco Rubio R-Miami announced that there was a compromise on the table during a special joint session of the Florida House and Senate including the attendance of Governor Charlie Crist.

Mr. Rubio outlined his plan in an Op-Ed piece published in today's Orlando Sentinel Newspaper.

In it, he tells of how lawmakers are taking a different approach to property tax reduction that will offer large exemptions - but not wipe out property tax altogether.

In recent weeks, many people have signed a petition hoping for a total eradication of property taxes... something the House Democrats favored but is wholly unrealistic from any perspective.

Instead, the new plan would reduce all property tax and even offer measures of reductions to business owners and renters. The method that would be used would be a percentage-based exemption system. It appears that this system would be more fair and equitable to different types of property owners - while remaining flexibile enough to remain easy to manage for tax collecting authorities.

While there is yet to be a consensus as to the formulas and the exact percentages offered per property type, House Speaker Rubio offered an example as follows:

On the home's first $300,000 in just value, 80 percent would be exempt from property taxes.
On the next $700,000 in just value, 70 percent would be exempt.
On just value above $1,000,000, 30 percent would be exempt.

Essentially the exemption for a $300,000 house would be $240,000. For a $500,000 house it would be $240,000+$140,000 or $380,000. For a $1,000,000 property it would be $240,000 + $490,000 or $730,000.

This is something that would likely be seen for a Homesteaded property in the state. Businesses, Commercial Property owners, Seasonal Residents, Investors and 2nd Home owners would all have their own unique formulae.

The debate continues as House and Senate leaders now need to decide the exact percentages everyone wants to save per property type.

This plan is a variation of what House Representative David Simmons R-Maitland suggested in an earlier idea. The goal of the plan was to target the hardest hit tax payers - which are currently the homeowners with valued between $200,000 and $500,000.

The other nice effect of this plan is that there is no Sales Tax Swap... an issue much discussed in local and national media. Raising Sales Tax to accomodate lost revenue would not only cut city and state budgets to the core, but also tax lower income citizens and businesses harder than higher income citizens. It also neglects our seasonal residents and foreign nationals.

This bill would cut the overall tax-cut from $50Billion as the House originally offered to something closer to the $34Billion plan of Governor Crist - which is still much higher than the $24Billion planned cut of the Senate.

This plan may offer a choice to taxpayers benefitting under the current Save Our Homes Amendment. If the new plan would raise their taxes they may be offered the choice to stick to their old plan to save money. This will mainly affect those who bought years ago and whose property values increased the most over the past few years. With the expected rollback, to which year we don't know, this will definitely create some questions for such citizens whose property taxes will be much lower based on their long term ownership.

Also addressed was Portability... so tax payers could take a lower tax base with them when they move.

The only evident negative of this idea right now is that it may have to be issued as an amendment - which would mean it would have to wait for a November '08 vote rather than being able to claim Bill status and take effect immediately.

Local governments that have put some capital projects on hold, will be relieved if this is the case as they will still have enough budget to complete some of the most pressing projects like renovating and upgrading hospitals, firehouses and other public facilities still in disrepair from the hurricanes of 2004-2005. It will also help them afford to rebuild the beaches from this past week's mass erosion due to SubTropical storm Andrea.

2007-04-30T22:22:00.000-05:00

Florida has long had a reputation for Shuffleboard and the Early Bird Special to contrast the month of March when the state is riddled with High School and College Co-ed Debauchery, namely Spring Break.

The State has grown up a lot in the past 50 odd years though... and growing pains have left us where we are now - in the middle of a huge tax dilemma.

One demographic that has been brought to the forefront of this debate is that retirement community that the State may be neglecting in their planning as thus far nothing in the news has touched on how they will benefit directly.

Sure, they'll get a tax break with possible double homestead exemptions and rolling back taxes to their assessed levels of 4-5 years ago... but some of these people have been in their houses for 20+ years and the caps on their taxes have certainly been broken a few times...

Think about it... if you get a 3% maximum increase yearly over 20 years, you're talking some major compounding!

So now with Grandma and Grandpa as Art Blanchet and Bill Quigley refer to them well past the days when their pensions ran out and living on a VERY fixed income are watching their taxes go up and their crown molding fall down... how do they deal with the idea of higher taxes on their everyday shopping AND the fact that maybe their kids who are about to retire may not be in a place to join them in Del Boca Vista (Seinfeld-ism)?

The fact is... they ARE paying more than their fair share right now. They are not making an active income yet they are getting taxed on their properties in lieu of income tax.

Then with the measure to raise sales tax, their cost of living will be somewhat contained but their fixed income is still getting taxed despite the fact that it isn't taxed directly.

Many Florida homeowners simply have it easy. WHAT?!? Blasphemy!

NO... listen up... Florida has no State Income Tax so many people come here because Property Taxes are much lower than they'd pay if they stayed in their home-state or even home-country! I said it! YOU HEARD IT! Millionaires and Foreign Investors!

For instance... American Express was the subject of a news story specifically regarding the Centurion Card. No...99% of the people in the world have NO clue what I'm talking about. Some people have heard of it but think it is an urban myth... I know it exists. Why? Because I've held them in my hand. Yes - I've touched several REAL Black Amex Cards. There are only 1500 in the world... why do I bring them up? The highest concentration of Black Amex Holders in the world live in Palm Beach County, Florida.

What in the world does that have to do with nothing whatsoever?

well... Grandma and Grandpa live in a $125,000 condo that they paid $30,000 for 20 years ago. They're paying $2500 in Income cum Property Taxes to live there...

But... Millionaires with great credit - because that's what you have to be to get an invitation to apply for a Black AMEX after 5 years of spending $5-10K minimum PER MONTH on a Platinum AMEX - don't pay income tax on their passive and active incomes. And they live in $12.5Million Condos on the Beach... 100 times the pricetag but making FAR more than 100 times the income in MANY instances.

Oh... that's just a drop in the bucket sayeth Lawmakers.... yeah... they're right... THEIR BUCKETS.

(Ironically while this is up for debate, Former Congressman Mark Foley is paying for his defense with the millions of dollars in leftover campaign monies... why aren't those going back into the state since he's NOT campaigning?!)

Let's say ONE Black Amex holder at $5000/mo spending has to pay 2% more sales tax... Write it on paper with me people!... yes... that's $100 more per month. Oh... yeah.. .they'll feel that.... but $100/month times 12 for a year is $1200/year or Half of What Grandma and Grandpa pay in taxes! Oh yeah... and the IRS lets you deduct State Sales Tax if your State has no Income Tax!!

These people are SPENDING more in two weeks than Grandma and Grandpa are being Taxed!

So it is boiling down again to the Haves vs the Have Nots.

Grandma and Grandpa HAVE NOT so they're Taxed in their Retirement...

The HAVES are still going to get tax breaks regardless... and the net effect of their increased spending being taxed will really not amount to much at all.

So why go that route?

Because there is no State Income Tax to identify where monies are really coming from.... what?!

The Millionaire demographic is harder to identify than Grandma AT THE STATE LEVEL.

No... I'm not pretending to be Robin Hood... I don't wear tights. What I'm saying is that the issue isn't property tax, nor is it sales tax....

it isn't about EQUAL treatment of all citizens... it is about EQUITABLE treatment...something far different and far harder to create except in Utopia... an island off of Never Never Land.

That's where lawmakers just can't seem to dig in this... how do you identify taxpayers that should be paying more or less?

Income Tax

Believe me... I don't want to pay it either... but it is definitely a place where a RETIREE EXEMPTION Could be enforced!

2007-04-30T22:19:00.000-05:00

Renee's post was titled When You are Just Getting into the Biz ~ Sphere is #1! and now I will illustrate one way for Residential Realtors to get a taste of Commercial, using their Spheres!

Now, you not only have that person you used to carpool with... but you have their friend Joe, their little sister and 3 or 4 of their co-workers too!

So what does this have to do with Commercial Real Estate?

Everything! Now is the time to look through that database and RESORT your data!

What should you be looking for?

Doctors
Lawyers
Dentists
Accountants
General Small Business Owners
General Contractors
Plumbers who own their businesses

Pretty much any entrepreneur type will do.

What's the gig like?

One scenario is:

Dr. J - "Well... I'm not sure I would do 100% financing in this market and I don't think I have the cash to put down on what I need."

Dr. J - "I did see all those Medical Office Condo signs up Jog Road in Boynton Beach, Florida and I would love to have my practice nearer to my home AND most of my clients are up there"

You - "Sounds like a match made in heaven"

Another scenario would be for a General Contractor:

You - How's business Mr. Carpenter?

Mr C. - Great... we're so busy and we're bursting at the seams. I need to grow my company but I just can't seem to get it done right

You - Well were you thinking of getting some more space? Maybe buying... and getting a Working Line of Capital to help you with expenses?

Mr C. - Yeah ... that would be great. I've got 1500 square feet and 20 employees jostling for room. I need some storage and a better office space or my secretary is going to quit again.

Mr C. - I would love to talk about that!

You - why don't I patch him in and we'll set up a meeting right now!

Yeah Yeah Yeah - role playing is silly... but most great sales training courses have it mandated!

Between you, me and a good commercial real estate attorney, we can create your first real commercial deal and make it SMOOOOOOTH sailing!

2007-04-30T22:16:00.000-05:00

Saying Sweet Corn and Palm Beach County, Florida in the same breath might make you do a double take. The 6th Annual Sweet Corn Fiesta at the South Florida Fairgrounds this Sunday, April 29 from 11AM to 5PM will show you why Sweet Corn is a big part of Palm Beach County, Florida.

I would never have known that there are over 27,000 acres of Palm Beach County, Florida under cultivation for Sweet Corn! The Florida climate ensures year round growing... and the extra sun helps create an ultra sweet crop!

Actually... few counties in the country - even in Iowa - farm 1/2 that many acres!

Join in the fun of Corn Eating at the Adult International Corn Eating Contest to be crowned this year's Corn King! or you could let your kids compete in a Corn Shucking contest!

The Sweet Corn Fiesta will have fun for all ages including contests, rides, games, food and country music all free with admission.

Tours of the Yesteryear Village - an historical recreation of Florida of the past - will also be given.

Admission is adults $6, children 6-11 $4. Children 5 and under are admitted free. Parking is free. Yesteryear Village is located on the South Florida Fairgrounds in suburban West Palm Beach off Southern Boulevard one mile West of the Florida Turnpike.

For additional information, phone (561) 996-0343

Florida Mortgage | Foreign National Homebuyers: Europe has come calling!

2007-04-21T15:28:00.000-05:00

Wow... the Sun Sentinel has finally caught wind of the Europeans that are buying en masse in South and Central Florida these days!

The article speaks of why Western and Northern Europeans are growing fonder of the area for both the lifestyle and climate.

They printed this map showing that most of the European Buyers are from the UK.

There are also many from Denmark and Holland.

Right now, Mortgages for Foreign Nationals are at an all time high. It is easier now than it has been in years to get financing at attractive rates.

That was actually a point missed by the journalists. Loan Programs are available from far more banks and lenders. Also there are new options in foreign exchange that are making the conversion of funds that much quicker and easier.

Some of the other factors that are influencing the current investment boom is the strong Euro. Based on the Dollar, the Euro is dominant... and the British Sterling is even stronger.

So what does this mean to Europeans? It means they're making much more on their investments than US citizens.

How? Foreign Exchange Rate Hedging...

The Dollar has long been an international standard in currency. Even people with stronger currency have a tendency to sock some away in US currency. It was actually causing a panic a few years ago when the US believed that so many bills were out of circulation and sitting in foreign floorboards and safes that we would eventually run out ourselves.

The Dollar has also been volatile - as volatile as our politics and financial markets.

As the dollar has dipped - much like a stock, foreign investors have bought the dollar.

As the dollar has recovered - the investors would sell the dollar back and take the profits.

So... while the dollar is LOW, investors are buying up Dollars with their Euros.

Then they buy a property here in the US.

Over time, the property itself increases in value. The dollar also becomes stronger over time as we recover economically.

Then when the foreign investor sells the property, they make a profit in appreciation. They then take the Dollars and exchange them for Euros and make a profit on the appreciated Dollar!

So if they buy the US Dollar and the House.

They put $100,000 down on a $500,000 house (20%).

The House appreciates 15% over 5 years to $575,000.

and the Dollar gains 5%, to $105,000 (equity CAN appreciate in this instance).

The combined profit is $80,000 on $100,000 invested or 80% in 5 years!

subtract out the debt service and depreciation to get a true IRR

How's that for some fancy European Math!

So... who wants to start marketing overseas with me??

Florida Property Tax Update - How the Retiree Community may get helped and hurt

2007-04-21T15:26:00.000-05:00