Renting your Silicon Valley home after sale is your best option

Property Investments 300x224 Renting your Silicon Valley home after sale is your best option
Home Prices Continues to rise

Is your home listed for sale?  Are you planning to stay in Silicon Valley after the sale?

Well you might want to hold off on closing your sale before you have inked a rental lease agreement since you will have a tough time finding a place to rent.

Ironically, this strategy my alter your sales strategy to focus on buyers who have no intention to occupy your home and want to use it as  a rental.   In fact, we have buyers who are looking for high-end rentals in Saratoga, San Jose, Campbell and Los Gatos.  These buyers have other homes in Silicon Valley and this is a pure investment for them.

These will allow you to take advantage of opportunities in Saratoga, Los Gatos,  San Jose and Campbell to sell their property without moving out.  This unique strategy could be beneficial for both home sellers and our investor since we are able to negotiate a rent-to-own option for some of our sellers.

The following steps outlines your sale and rent-back transaction:

List your home for sale:   We will list your home for sale with an aggressive marketing plan to get the highest prices possible.   This will also give you an opportunity to judge the offer you will receive from our investor.  The listing period is typically 2-4 weeks.

Review/Counter Offers:  We will deliver you cash or contingent offers to review. We will verify proof of funds before presenting these to you as part of our buyer qualification program.

Rent-To-Own:  If you are interested in remaining in your home, we will develop a lease agreement conditioned on the close of escrow.  This means that you will only work with buyers who are willing to rent the home back to you.   Naturally, the terms of the rental lease agreement will have to be negotiated with 2 parties.

So, feel free to contact us if you want to sell your house without moving!

Top 7 questions to ask before renting your Silicon Valley house

Property Management Agreement Top 7 questions to ask before renting your Silicon Valley house
Property Management Agreement (image: c-rem.com)

Are you tempted to rent your Silicon Valley home?   Are the high rents tempting you to rent your home ?

Well becoming a landlord requires some serous planning.   In fact you might want to considering retaining a property manager to help you.

But before you list your home online, you should consider these 7 questions:

Ability to Pay:  What is your tenant is unable to make the monthly payment?  Will you be able to evict them?

How Much Rent:  How much rent will you charge?   You can use an application called Rentometer to determine the range of rents being collected on homes within 2 mile radius of your home.

Eviction Help: Have you interviewed experienced eviction attorneys in case a challenge does arise?

Pets:  Will allow pets?  What kind of pets will you allow?   Will you have to buy additional insurance in case your tenants pets attacks neighbors?

Rent Collection:  How will you collect the rent?  Wire, online payments?  There are some neat options such as Cozy that will allow you to collect online rent payment for a  $9 dollar fee.

Inspections:  How often will you do a physical inspection of the property? How much advance notice you will need to provide to your tenants prior to inspection?

Repair Reserves:  Will you have funds set aside for any damage to appliances, flooring and paint?

Contact Us if you need help answering these questions on your Los Gatos, Campbell, Saratoga and San Jose rentals.

 

Best tips to screen unqualified buyers for your FSBO

Interest Rates Impact of Affordability Best tips to screen unqualified buyers for your FSBO
Pre-approved vs Pre-Qualified Buyers

Are you tempted to sell your Silicon Valley home?   Are you interested in saving on commission?

Well, you are not alone since 59% Marin County home owners expressed interest in selling their own home.  But if you do, then you have to be prepared to screen unqualified buyers for your FSBO.

In fact, telling the difference between pre-qualified and a Pre-Approved buyer is the biggest tip.  So, let’s see what each of these terms mean:

Pre-Approval:  A pre-approved buyer is the person who has gone through the complete loan application process.  The application for a pre-approval will require borrower’s full employment history, financial information, assets and other real estate holdings.    The bank or mortgage broker who is approving your buyer, completes the employment and asset verification before they issue the buyer his/her approval.

The final step in the Pre-Approval process involves the affordability calculations which determines how much house your potential buyer can afford.  Once mortgage loan application is underwritten, then the bank will issue a conditional approval with a maximum loan amount.

Pre-Qualification:   Unlike a Pre-Approval, a Pre-Qualification is a letter issued by lenders without requiring a mortgage loan application from the borrower.  Mortgage brokers, Correspondence Lenders and loan officers typically issue these Pre-Qualification letters.  As a FSBO owner you should ignore these kind of buyers since there is no guarantee that they can afford the mortgage payments to buy your home.

These pre-qualifications require no due diligence on the buyer’s employments, financial assets and reserves.   But if you decide to continue working with these kind of buyers, you should contact the Mortgage lender or Loan Officer that has been identified in the pre-approval.  You should then insist on getting a loan application completed for your For Sale By Owner (FSBO) buyer.

Feel free to Contact Us if you need help identifying qualified buyers for your FSBO.

Top 5 places to search for Saratoga fixer uppers

fixer upper1 Top 5 places to search for Saratoga fixer uppers
Saratoga Fixer Upper

Are you in the market for a Saratoga fixer upper?  Do have $2m of cash and lot of patience?

Well, that’s the minimum requirements to be able to flip properties in Silicon Valley including some of the hottest markets such as Saratoga and Los Gatos. Below are the top 5 sources of fixer upper homes in Saratoga:

Craigs List:  Some agents and owners market their homes with Criagslist.  The challenge with Criaglist is the massive volume of posts that prevents anyone from effectively managing the information posted on it.   For instance, if the ower forgets to post their Saratoga Fixer Upper every 3 days, then it will practically disappear.   and have taken the initiative to market their own home on CraigsList.  But the poor user interface is not an excuse to ignore Craigslist when you are searching for Saratoga fixer uppers.

Auctions:   As you know California is a Trustee Sale States  where homes that are being foreclosed are auctions at the Court House.   But buying homes at auction is not child play and requires serious knowledge of deed, title, escrow and loan seniority.    Without such knowledge you could get yourself into serious trouble.

In fact, we have developed series of articles on the potential of winning at auctions in different cities including San Jose,  Los Gatos, Los Altos, Redwood City, Milpitas just to name a few that you can read.

Short Sales:   Our last San Jose Short Sales which closed this month was approved in 15 days.  So, Short Sales are good sources of fixer uppers,  but because of the recent rise of home prices, the odds of finding a home seller in trouble with his home loan is slim.   But there are more than 4,500 home owners whose Wells Fargo loan is still underwater.  Add other lenders to the mix, then you should have a decent size inventory to focus on.

REOs:  Even though REOs are selling at market prices, they still represent a decent opportunity for the investors who know how to negotiate with the banks on these sales. But the inventory of Saratoga REOs has declined and it’s rare to find a Saratoga REO.   Keep in mind that a lot of Saratoga homes sell at the auction so they rarely become REOs unless the bank set much higher open bids.

FSBO:  For Sale By Owner properties can offer decent opportunity to buy fixer uppers.   Depending on the condition of the home, you might be able to quickly rehab and flip these homes.  Our recommendation is however, to have a Realtor draft the purchase contract and help you with the escrow.

Finally, we also have cash and pre-approved buyers who can close on your San Jose Fixer upper without inspection very quickly.   So, Contact Leila if you would like to sell your San Jose fixer upper.

What is a assigment option in real estate contract?

Marketitsold What is a assigment option in real estate contract?
From MarketItSold

Are you interested in selling your Silicon Valley home?   Have you developed a plan to qualify your buyers?   Well, despite the slow down of real estate sales in some California markets, there are still plenty of real estate wholesalers looking to make money from flipping your contact.

So, how will you avoid these wholesalers?   One way these wholesalers will be able to flip your home’s contract to another buyer is an Assignment Option.   The assignment options offers the buyer to assign the option for the close of escrow to another buyer.

The assignment options are added to contracts to allow enough time for a wholesaler to market the contract to another buyers for a fee.  These wholesalers collect anywhere from $5,000 to $30,000 depending on the list price of home that is listed for sale.

  Most of these wholesalers will bring you a cash offer, but they will want to close the escrow within 30-45 days which is odd.  After all no cash buyer needs that much time to close a cash deal.  Even if their offer is contingent on an inspection, they should be able to close in 2 weeks or less if they are a real cash buyer.   So, avoid these kind of offers or counter them to close in 2 weeks and watch then run.

assignment option might be added on the “buyer name” section or be part of an addendum to the purchase contract.   For instance, the name of your buyer could be listed as “John Smith or Assignee”.     And if an addendum is used to develop the assignment option, you might see language like this:

“seller agrees to cooperate with the assignment option of this contract to another buyer”.

So, if you are selling your own home (FSBO),  one way to spot the wholesalers is the assignment option.  According to National Association of Realtors, 28% of the homes sold by their owners were under-price which means as owners you might be starting your negotiations at a huge discount.

Contact Us if you need help with your Silicon Valley home sale.

 

The Good, the bad and the ugly about For Sale By Owner

the good the bad and the ugly 300x225 The Good, the bad and the ugly about For Sale By Owner
Good, bad and the ugly of selling your own home

Are you tempted to sell your own Silicon Valley home?  Are you romanced by the savings on commission?

Well, you are not alone since 59% of the Marin County home owners expressed interest in selling their own home.  So, let’s explore the good, bad and ugly about selling your own home.

The Ugly: In 1989 my own broker at the time advised us that we should not list our own home for sale due to the liability associated with the disclosures.    Then he explained why.

See, because you live in your home, you are required to disclose any material defect to the buyers.   What made the matters worse was that we were licensed and the which made the requirements for disclosures much harder.   So, this is the Ugly part of selling your own Silicon Valley home.   You could be inviting litigation by the sheer fact of omitting something as obnoxious as airline noise that could impact your home buyer.   Yes, it might sound strange to you but it’s wiser to disclose every possible problem inside and outside your home to make sure you are not defending your home’s sale transaction up to 5 years after the sale of your home.

The Bad:  Selling your own Silicon Valley home is a full time job.   It requires marketing, advertising, buyer selection, buyer qualification, escrow management, contract knowledge, disclosure development and much much more.   compounding the problem is that this is the largest financial transaction for most people.   So, why would you want to leave it to chance that you might select the wrong buyer who will not be able to close?

The Good:  The average commission savings on a sale of a $1M home is about $80,000.  That’s a lot of money which is tempting for most home sellers.   But can you negotiate your commission down to something less absurd?  The answer is yes.

Contact Us if you have questions about selling your Los Gatos, San Jose, Campbell and Saratoga home.

 

How to minimize your Silicon Valley rental vacancies

Happy Silicon Valley tenants How to minimize your Silicon Valley rental vacancies
Happy Silicon Valley tenants (source: flagship-pm.com)

Do you have rentals in Silicon Valley?  Do you have higher vacancy rates in Winter?

Well, you are no alone.  Winter has the worst vacancy rates, and you lose rental income every month your rental home sits empty.  Having a tenant move-out in close to Winter months is a tough challenge since it’s harder to find tenants.   After all, no one wants to move when it’s nearing holiday season.  ut at this time of year is often considered the kiss

In fact,Kevin Haag,  CEO of Douglas Realty & Development, Inc., encourages his rental property owners to offer an incentive such as  “1st week free rent” if the tenants sign a lease before Christmas.   Other offers could include gift certificates to local restaurants Haag recommends.

You should also compare your rents to similar properties to avoid losing your tenants to other landlords for a few extra dollars.    One option is our Free Rental Survey where we will generate a comprehensive rental survey.    Another option is using sites like Rentometer.  The challenge with Rentometer however is that there is no way to adjust the rental properties for any amenities.

Setting prices for your Silicon Valley renal is part science and part art.  While you need to avoid being over-price, you also don’t want to give an impression that your rents are too low since the potential tenants will assume something is wrong with the property.

Recent studies show that the vast majority of renters rely on the Internet to find rentals. And having a rental property on a landlord’s or property management company’s professional website is one way potential renters can confirm the rental home isn’t part of a rental scam. If you feel ill-equipped to take building a website on yourself, seriously considering hiring someone to help you.

Contact Us if you have any questions.

Time to winterize your Silicon Valley rentals

 Time to winterize your Silicon Valley rentals
Winterize Home (Source NY TImes)

It’s that time of the year again where some proactive planning could save you huge amount of money and damage.  Yes, it’s time to winterize your Silicon Valley rentals.  Some of the most obvious one’s include:

Adding Insulation:  Attic insulation goes a long way to reduce your heating cost on your Silicon Valley rentals.   Ironically having a well insulated attic will reduce your cost of Summer cooling as well.

Clean Gutters:  Clean the gutters to prevent any roof leaks.  If the gutters are not cleaned, they would not drain the water properly.  The gutters then could collapse and crash causing more additional damage to the property.

Chimney Inspection:  Properly maintained chimney could prevent house fires in your Silicon Valley rentals.  Make certain that your chimney is equipped with a spark arrester to prevent sparks from starting fires.

Inspect Carbon Monixide detectors:  California Law requires that each bedroom should be equipped with a Carbon Monixide detectors.  You could face serious liability if your Silicon Valley rentals are not equipped with these detectors.

Space Heater Inspection:   Your Silicon Valley tenants could be using space heaters which are prone to tip and cause fire.   Space heaters also cause electrical shorts which can also cause fires.   You should also update your Residential Lease Agreement  to prevent the use of such heaters.

Contact us if you have questions about winterizing your home.

Shadow inventory of REOs might end up as rental homes

REO Shadow inventory of REOs might end up as rental homes
Bank Owned REO

For the past few years, everyone involved with Bank Owned (REO) properties is aware of shadow inventory.   The rational given for the shadow inventory is that the banks do not want to crash the real estate market and cause a massive jolt to the tepid economic recovery.

But the shadow inventory has not materialized and has given rise to the speculation of allowing inventories of the Federal Housing Administration to be leased to rental conversions.

Federal Reserve Bank of Boston senior economist and policy advisor Paul Willen, have indicated such a plan might not be successful. According to Willen, the number of properties in circulation may essentially be unchanged and the program will not necessarily address the oversupply problem.  This source notes that the Federal Housing Finance Agency is already considering program structures that might be used if the government goes forward with an REO rental conversion plan.

Depending on how the program is structured, some small investors might have an opportuinity to participate.    In our own conversations with Bank of America, they were planning on piloting a program in Arizona to rent some REOs and help home owners avoid immediate foreclosure.    However, we have not heard any updates on this plan in the past 10 months.

The challenge of shadow inventory will remain with the housing market since these solutions are just kicking the can down the road and these homes will eventually become foreclosed.

Contact Us if you are intersted in buying REOs in Silicon Valley.

How to increase your FICO score without any new cards

credit cards How to increase your FICO score without any new cards
Credit Score

Getting the lowest interest rate on your home mortgage translates to thousands of dollars during the life of your loan.   But the 1st step is understanding how the 3 major credit agencies Equifax, Experian and TranUnion determine your FICO score.

Your credit score aka FICO score that most banks utilize, is a combination of scores from 3 credit agencies.  These 3 agencies all collect data on your use of credit and your payment history to assign a score of 500 to 800.   So, let’s assume you know your credit score is low and you want to improve it.  Here are some best practices to increase your FICO score:

Keep your oldest cards:   Your oldest credit card has much more impact on your FICO score than a new credit card that you might have gotten recently even with a higher limit than your old one.   This mean you should not close your older credit cards even if you are NOT using them.  Keep them open, but reduce the limit if you are concerned about theft and un-authorized spending.

Reduce High Balance:  If you owe more than 30% of your limit on a monthly basis, then your FICO score will be poorly impacted.    For example, if you have a card with $10,000 limit and you owe more than $30,00 on it, it might be wiser to transfer some of the balance to another card, to reduce the impact on your FICO score.  This will improve your FICO score.

Pay On time:  Make your monthly payments on time and avoid missing them since this impact your FICO negatively.   In fact, it’s wiser  to pay the minimum payment if you are NOT able to pay your card’s balance every month.

Avoid Bankrupcy:   If you are considering bankruptcy, you need to think long and hard since these filings will impact your credit score for a long time.   So, consult an attorney to explore all your options before filing for bankruptcy.

Avoid Foreclosure:  The impact foreclosure is also sever on your FICO score.   This signals the lenders that you don’t take your obligations seriously since you have options to do a Short Sale and get ride of the mortgage debt much more elegantly.  In fact, Short Sale will impact your credit score much less than a foreclosure.

 Call us if you have any questions about your credit score.