Linking ≠ endorsement.
If you have an FHA-backed mortgage, for instance, you won’t be able to turn your property into a rental. The federal loan program is meant for borrowers who are buying a home to live in it. The only way around FHA restrictions on rentals is to refinance and convert to a traditional mortgage.
Well, that sent me looking around to see if things have changed so that, that statement is correct now. As far as I can tell, it isn’t correct.
Here’s the typical understanding that’s currently all over the Internet as applicable right up to the date of this posting:
When you signed final loan documents to buy your home, you acknowledged that you intended to move into the home within 60 days and live in the house as your primary residence for at least one year.
In other words, you confirmed your owner occupancy status based on guidelines structured to prevent investors from using the government-insured low down payment program to build up a portfolio of rental properties.
For the same reason, borrowers are generally allowed one FHA loan at a time. Of course, exceptions to the underwriting guidelines exist to accommodate the unexpected, for example, job transfers, an increase in family members, or a divorce.
Even so, FHA might require the homeowner to increase their equity by reducing the mortgage balance before granting a second FHA loan to the borrower.
But whether or not you would want a second FHA loan, don’t rent out your property during the first year of FHA financing before obtaining written permission. [ https://www.get-your-best-mortgage-rate.com/fha-loan-requirements-can-i-rent-out-my-home.html ]
If that’s wrong, please let us know. Thanks!
⇧ ‘Civil war’ in Britain’s Conservatives hurts pro-EU finance minister | Reuters
Britain’s leading budget analysts at the Institute for Fiscal Studies have said Osborne will have to raise taxes or go further with his unpopular spending cuts if the growth outlook for the economy weakens again.
Those would be exactly backwards. In order to boost the economy, they need to lower taxes on the lower and middle classes while increasing spending regardless of the deficit implications, though they really ought to create debt-free money to spend (money finance fiscal spending).
They won’t do that because it would work and make government stronger and the uber-rich weaker relative to the rest of the population.
George Osborne will fall on his sword for the sake of his class (the elite) rather than do the right, and therefore intelligent, thing.
⇧ Embattled landlord’s Carrick properties damaged in blaze | Pittsburgh Post-Gazette
A vacant townhouse in Carrick whose owner has been the subject of repeated code and health violations was heavily damaged in a fire Sunday.
⇧ Pierce County’s 25 largest real estate deals topped $789M in 2015 – Puget Sound Business Journal
… the Top 25 Real Estate Deals in Pierce County spotlights more than $224 million in deals for retail space — out of a total of $789.5 million for the county.
The largest deal of the year, however, went to The Fairways, a multifamily apartment complex at 4602 45th Ave. N.W. in Tacoma. The property sold for $81 million on Oct. 30.
⇧ Hot Austin housing market leads nation in recovery from the recession – CultureMap Austin
It should come as no surprise that Austin-Round Rock places in the No. 2 spot among the metro areas that have recovered the most since the recession.
⇧ City proves value in rehabbed vacant properties | Maryland News – WBAL Home
Some critics say the tactics are excessive and heavy-handed when it comes to taking over vacant, decaying properties in Baltimore. But the city offers proof its actions are improving neighborhoods.
It looks like a nice rehab completed.
⇧ Will International Investment in U.S. Real Estate Continue? – Urban Land Magazine
Changes adopted in late 2015 to the Foreign Investment in Real Property Tax Act (FIRPTA) are expected to bring additional overseas money to the United States. Foreign pension funds are now exempted from FIRPTA tax and withholding. The changes also increase the percentage of publicly traded stocks that a foreign shareholder may hold from 5 to 10 percent without incurring FIRPTA withholding and tax upon sales of stock.
Other factors make foreign investment in U.S. real estate less certain.
Home prices increased 16.1 percent to a median of $180,000 in the Tampa metro area in February and even higher in Pinellas County, where prices soared 21.6 percent to a median of $189,700 for a single family home.
Prices in Hillsborough County rose 13 percent in February, with the median price of a house at $200,000, Florida Realtors reported in its latest research release.
Inventory of homes available for sale stayed low last month, continuing a sellers market.
Is the presence of criminals depressing home values or do depressed home values attract/ create criminals?
Daren Blomquist, senior vice president at RealtyTrac, seems to imply that it’s the former: “This new index provides concrete evidence that registered criminal offenders pose not only a potential safety risk for homeowners and their families, but also a potential financial risk for what is likely a homeowner’s biggest asset.” But the reality is that they really can’t know for sure from this data.
I can say with absolute certainty that it’s both while also depending upon the wealth of the criminals. Rich criminals can drive prices up.
⇧ Chicago-area home prices jump 7 percent; buyers struggle with low inventory – Chicago Tribune
While home affordability is becoming a deterrent to moving up in housing, Trulia said the supply of homes is also being held back by the still-large number of people upside-down on their mortgages, owing more on the loans than the current value of the property. Also, a lot of supply was taken out of the market after the housing market crash, when investors bought foreclosed homes and turned them into rentals.
⇧ United States Chicago Fed National Activity Index | 1967-2016 | Data
The Chicago Fed National Activity Index declined to -0.29 in February of 2016, following an upwardly revised 0.41 in the previous month. All four broad categories decreased from January, and three of the four categories made negative contributions….
⇧ United States Existing Home Sales | 1968-2016 | Data | Chart | Calendar
Sales of previously owned houses in the United States shrank 7.1 percent to a seasonally adjusted annual rate of 5080 thousand in February of 2016, much lower than market expectations of a 2.2 percent drop.
⇧ The new class warfare in America | afr.com
There are plenty of aspects about this linked article with which I take exception, but I’ve excerpted two paragraphs I find particularly worthy of consideration.
… Millions of Americans are anchored to blighted neighbourhoods by negative equity, or other ties that bind. Their life expectancy is falling. Their participation in the labour market is dropping. The numbers signing up to disability benefits is rising. Opioid prescription drugs are rife. Those that are white tend to vote for Mr Trump. On Super Tuesday this month, the counties with the highest rates of white mortality – whether to overdoses, suicide or other symptoms of community breakdown – came out heavily for Mr Trump. The correlation was almost exact, according to a Wonkblog study.
… In 2000, 33 per cent of Americans described themselves as “working class”, according to Gallup. By 2015 that number had risen to 48 per cent. Far from dying out, the working class now accounts for almost half of America by people’s self-perception. In some respects these measures are more revealing than statistics on median income, or income inequality. They express a feeling about being shut out from the benefits of growth. It is a very un-American state of mind. Which party represents them best? Is it the Republicans who keep cutting taxes on thresholds way above their paygrade? Or the Democrats whose organising principle is diversity?
I don’t think much about skin color except for that it comes up in the media so much. Nevertheless, if we were to do better for those at the bottom and do so across the board, I believe most of the race or color issues would take care of themselves, not that, that’s an excuse for any degree of racism or ethnic bigotry. I don’t hold with either.
Let me also say that “race” is being sensationalized and hyped for political-power purposes and that the people ought not go along with it.
⇧ Officials: Chelan County neighborhood at risk of ‘massive landslide’ | KOMO
WENATCHEE, Wash. — Chelan County Emergency management officials say a neighborhood near Wenatchee is at risk of a massive landslide at any moment.
Neighbors in the area have been asked to evacuate as the ground continues to shift and officials try to figure what has caused the potentially deadly disaster.
RISKS THAT ARE NOT ACCEPTABLE
DO NOT BIND • DO NOT SUBMIT
In a landslide area
To the extent that we fail to heed these formulaic warnings and guideposts, it won’t be because the math is wrong. It won’t be because they’re too arcane. It won’t be because they don’t have solid empirical groundings. It will be because politics and power decide to ignore them.
That’s a fact.
⇧ Bill Clinton slams Barack Obama’s ‘awful legacy’ | Washington Examiner
Oh my, did he know what he was saying?
… if you believe we can all rise together, if you believe we’ve finally come to the point where we can put the awful legacy of the last eight years behind us and the seven years before that where we were practicing trickle-down economics with no regulation in Washington, which is what caused the crash, then you should vote for her [Hillary Clinton].
That’s what Bill Clinton reportedly said.
Deregulation did cause the crash, but it did not start with George W. Bush’s administration. It started under Jimmy Carter, got rolling under Ronald Reagan, continued by George H.W. Bush, and got a real kick from none other than Bill Clinton himself.
Here’s Nomi Prins, one of my favorites:
The past, especially the political past, doesn’t just provide clues to the present. In the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial relationships and policies that remain a threat to the American economy going forward.
When Hillary Clinton video-announced her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since then, she has attempted to recast herself as a populist and distance herself from some of the policies of her husband. But Bill Clinton did not become president without sharing the friendships, associations, and ideologies of the elite banking sect…
Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991. The upcoming presidential election would not, however, turn out to alter the path of mergers or White House support for deregulation that was already in play one iota.
Read Nomi’s whole article on it. It’s worth being reminded (or informed for the first time if you didn’t already know). There’s a 6-paragraph intro before Nomi’s article if you want to scroll down to get right to it. https://www.tomdispatch.com/post/175993/tomgram%3A_nomi_prins,_hillary,_bill,_and_the_big_six_banks/
… Keynes’s essay ‘The Economic Possibilities for our Grandchildren.’ In the midst of the Great Depression, Keynes looked with optimism towards the future and predicted that ongoing technological progress would allow humanity to eliminate the economic problem of scarcity within the next 100 years. If we would get population growth under control, another century of rapid capital accumulation and sustained technological progress would lead to an altogether new situation for humanity. The main question would no longer be how to sustain ourselves, but how we could use our time to live a wise and fulfilling life, given that we could enjoy much more leisure time. The world would not stand still: technological advances and ongoing economic change would continue unabated, but (net) capital accumulation would collapse. People would have to work progressively less while prosperity would progressively rise. In this ‘final stage,’ the rentier would become extinct and the ‘morality’ of capitalism would become obsolete. The love of money would no longer be regarded with admiration; instead it would be understood for what it is: a pathological defect.
… the IMF and the OECD. Today both argue for a more expansive fiscal policy and especially for public infrastructure investments. The BIZ, on the other hand, also identifies important risks by continuing to overburden monetary policies, but it still stops short of discussing the implications of fiscal policies. In this regard, it gets dangerously close to the positions of the Bundesbank and the German Ministry of Finance. They both continue to believe in their uninformed fantasies about the benign effects of austerity, wage cuts and ‘structural reforms’ in ‘restoring trust.’
In this, the Bundesbank celebrates Wilhelm Vocke as the founding father of its ‘independence’ and veteran German stability policy. The bank cites Vocke’s dictum that monetary policy ‘is the policy of restoring and maintaining co nfidence’ (see here). Sitting at the independent confidence switch seems to offer a good life. I can only say that this is the kind of central bankers that the world can happily do without. Only mercantilists, habitually feeding on the sounder policies pursued by others while enriching themselves through growing net export, are able to believe such hollow formulae. The dust and the stench that comes out of the Reichsbank may adequately represent the economic wisdom of Herr Vocke, councilor of the German Secret Council, but it certainly does not represent the competency of a modern central bank.
The ECB and the man who steers it, Mario Draghi, are certainly to be congratulated because they do no longer support this irresponsibly policy — this is true, even if the ECB’s monetary policy alone will not be able to prevent the failure of the euro, especially not with negative interest rates. Negative interest rates are but a sign of despair and a factual non-starter for the policies that we really need.
I like the article but disagree with the term “despair” there. Instead, I agree with Ben Bernanke’s take on negative rates as but a tool among many.
That said, the Fed’s tools are not the one’s we really need. We really need fiscal and only fiscal tools (assuming the definition of monetarism concerns interest rates). We need a debt-free currency automatically calibrated to productivity while keeping inflation and deflation balanced. It’s doable. There’s your real equilibrium.
I wonder how many years it will take before anyone else sees it. Well, you heard it here first.
On top of that, the world will never balance while having numerous currencies. There should be one global currency and one global democracy running it, not capitalist bankers.
“The love of money would no longer be regarded with admiration; instead it would be understood for what it is: a pathological defect.” Paul called it the root of all evil. I go further by saying that money itself is inherently problematic. That’s why I want to reduce it to nothing more than a means to keep track of the fair distribution of social welfare to all. Eventually, money, per se, as we know it, will disappear. I wish we were already there.
⇧ These homebuilding trends are having a major impact on the U.S. economy – MarketWatch
… how can anyone argue that housing is doing anything other than booming?
Booming for whom? Let’s not forget all the people who’ve been left behind due to low wages, high student-debts, lots of labor slack, gentrification (not that that’s bad provided people are taken care of fairly and equitably), and other factors.
I’m not doom and gloom, just realistic. Things have improved, but they are very far from optimal. Enthusiasm is great, but always look at the cons to know what they are so we may all work to correct them.
⇧ Kildee: Obsession With Austerity At Heart Of Man Made Flint Water Disaster – CBS Detroit
Austerians: penny wise and pound foolish. Plus, you can’t really put a price on a child’s life. Just ask a loving parent.
“Our calculation is about a billion and a half dollars — now it would not have cost a billion and a half dollars for some substantial upgrades to the Flint water system. Simply replacing all those … private lead services lines is about a $55 million equation, simply providing … phosphorus treatment to the river water was about $100 a day,” he says.
⇧ Business Loans for Real Estate: Find the Best One for You
If you’re looking for financing to purchase or renovate commercial property, we’ve rounded up options for business loans for real estate.
⇧ Despite Weak Currency, Wealthy Mexicans Are Spending More On U.S. Real Estate – Forbes
Mexico ranked fourth, after China, Canada and India, in international purchases of U.S. residential real estate in the 12 month period ending March 2015, according to the National Association of Realtors. Individual Mexican buyers spent a combined $4.9 billion on real estate over the 12 months, accounting for approximately 9% of all U.S. sales to international buyers.
In Florida, Latin American buyers (including Mexicans) account for 35% of all purchases by foreign buyers. The state has seen a surge of activity in the real estate industry as brokers there aggressively court potential Mexican buyers.
The boom in real estate sales to foreigners, has Washington concerned with some of those sales, particularly of luxury housing, being used to launder money. Earlier this year, the Treasury Department issued an unprecedented order requiring real estate title companies to identify the names of all-cash buyers of high-end residences.
Last year, The New York Times NYT -0.40% published a series of articles that examined the rising use of shell companies and limited liability companies as foreign buyers increasingly sought safe havens for their money in the U.S. The investigation found that real estate professionals, especially in the luxury market, often do not know much about the buyers.
Following a $3.66 million land deal last month, a developer has filed an application to demolish buildings on three properties along Sheepshead Bay Road, near the intersection with Shore Parkway, in order to build an eight story residential building.
The development would take place across the street from the seven-story condo building that will replace El Greco diner.
⇧ Baby Boomers, Downsizing for Retirement, Create Niche Real Estate Market – Curbed
The units were designed with efficiency in mind. They are part of a shift away from traditional to more modern design. There is no living room, family room, or dedicated dining room. “None of those things exist anymore,” Vail said. “They chewed up efficiency of square footage.”
Instead, the units all have a central “great room” with very few or no hallways, higher ceilings and floor-to-ceiling windows. There is less compartmentalization of spaces — the units feel bigger than they are on paper, Vail contends.
⇧ Construction Backlog Expands Nearly 3 Percent at the Close of 2015
“For the first time in years, some contractors are reporting that they are turning away work,” said ABC Chief Economist Anirban Basu. “Skill-worker shortages are a frequently cited reason. The recent uptick in backlog suggests that demand for construction workers will remain elevated going forward, which will translate into faster wage growth, but also potentially rising costs and extended timelines.
⇧ Southeast Texas Floods Bring Federal Disaster Declaration
President Barack Obama has declared a major disaster in three Texas counties following severe storms including tornadoes and flooding earlier this month.
⇧ GOP Candidates Would Sacrifice the Social Safety Net for Tax Cuts | The Fiscal Times
What the Republican elites fear most of all is that the working class voters who have supported them in the past will come to realize that the solution is not the false promise of prosperity for all from tax cuts for wealthy “job creators,” or cuts to the programs the working class depends upon, but rather tax increases on those who have done so well within our economic system. The Republican elites are right to be afraid.
As much as I like Mark Thoma, it isn’t even higher taxes that they fear. It’s anti-privatization. They fear government doing a good job. That’s why they always want lower taxes, so government borrows more so the elites can point their deficit-hawk fingers to encourage the slashing of programs so they, the superrich, can take over that market and take their private cut in huge profits while everyone else suffers more.
The real solution isn’t higher taxes on the superrich, it’s banning government borrowing. That way, the government will issue the currency and fund the programs directly without any deficits (or inflation if done correctly).
That’s what they fear. It’s why they don’t ever talk about it.
⇧ 10 Lethal Mistakes to Avoid on Your First Real Estate Investment
This is actually the hardest part in my view. It’s why so many people do the work themselves, in addition to being able to make the money they’d be paying the contractors (at least some of it if the owner is halfway decent at construction work).
Mistake #8: Choosing Bad Contractors
My business partner and I bought our very first fix-flip deal in December of 2003. We proceeded to go through three different painters, two different heating and air companies, and two different carpet installers before we got the house looking decent.
These were expensive mistakes. We were lucky to even make a small profit on that first deal!
Finding contractors who will do good work, finish up on time, clean-up after themselves, and charge reasonable prices is harder than finding buried treasure on a beach. Yet the people who do work on your fix-flip or rental deal will make or break its success.
J Scott does a great job discussing this issue in The Book on Flipping Houses. He discusses the different types of contractors, when to use each, and how to manage the relationship well.
Due diligence includes vetting contractors and keeping them “honest.” It’s worth it to screen contractors as much as you screen potential tenants.
Finding truly professional contractors willing to take on small-rental rehabs is not easy. Treat them right when you find them. Always pay on time. Treat them the way you treat your lawyer, banker, lender, real estate agent, title agent, accountant, insurance broker, etc.
Take some time to learn about licensing, insurance, surety, and contract documents (including plans and specifications). If the contractor or construction manager isn’t interested in those things, find one who is.
⇧ 5 Scams That Trick Landlords Into Accepting Bad Tenants
… when it comes to avoiding tenant screening scams, be prepared to put in ALL the work, every tenant, every time.
⇧ Government debt could bring China’s credit party to a halt – MarketWatch
Zhou Xiaochuan said that “lending as a share of [gross domestic product], especially corporate lending as a share of GDP, is too high” and also that a high leverage ratio is more prone to macroeconomic risk. Corporate gearing in China is now widely estimated at some 160% of GDP.
It is these kinds of concerns that have led Moody’s to downgrade the outlook on China’s sovereign rating at the beginning of March.
Other analysts are also turning their attention to central government debt — which has long been viewed as manageable — as these funding needs could emerge as a new fault line of distress.
We’ve covered that before, but the rest of this linked article fills in some more details.
… they’ve avoided recession by encouraging the private sector to borrow and spend.
… there are two catches to this trick. The obvious catch is that getting that much extra demand out of credit necessarily increases debt much faster than it increases income — hence the runaway ratio of debt to GDP shown in Figure 1 — and this can’t go on forever. The less obvious one is that when debt is at stratospheric levels that apply in Australia today, total demand falls even if the debt ratio merely stabilises.
⇧ Stop Associating Adam Smith with Laissez-Faire Economics – Evonomics
Adam Smith was no fan of greed. And Smith fans who hold selfishness a virtue, distort what he called his best work.
⇧ The Return on Investment in Affordable Housing
The wait time to receive a Section 8 voucher was estimated in decades, not days. …
Those of us who have never applied for housing assistance might assume families that need help are eventually able to get it. But, in fact, only a quarter of those who are eligible for housing assistance receive it.
⇧ Bubble-era home buyers jumped at rising prices; today, they’re turned off – MarketWatch
In a 2007 paper, Shiller described the bubble mentality as “a feedback mechanism operating through public observations of price increases and public expectations of future price increases. The feedback can also be described as a social epidemic, where certain public conceptions and ideas lead to emotional speculative interest in the markets and, therefore, to prices increase.”
A few paragraphs later, Shiller wrote, “That the recent speculative boom has generated high expectations for future home price increases is indisputable.”
That’s vastly different than the world we live in now.
⇧ Q&A Sat — How Do You Estimate Repairs? | MassHomeSale com
Today’s question is “How Do You Estimate Repairs?”
Some of the main points covered in this video are:
1) What level of repairs are you doing?
2) The best way to estimate — Don’t, get a pro to tell you!
3) What to do if that is not an option
4) Getting out and finding out costs
5) Online resources to help you figure out repair costs
⇧ Four Must-Do Home Tips to Keep You Dry This Spring | National | Coldwell Banker Blue Matter
Spring showers may bring flowers as the saying goes, but it can also bring unwanted water into your home. Fortunately, with these home tips, you can use the transition from winter to spring to assess your home from top to bottom and stay dry this spring.
⇧ Your Spring Home Maintenance Checklist
With the days lengthening and weather warming, spring is a good time to get outdoors and tackle some larger home projects. Now that the threat of winter storms has passed, you can look for damage and make any needed repairs ….
8. Prevent mosquitoes. In recent years, we’ve become more aware of the potential danger mosquitos can pose to our health. “West Nile virus and Zika virus are just the latest diseases caused by these winged pests,” Sedinger says. The best way to prevent mosquitos around your home is simply by getting rid of any standing water. “Walk around your property [and peek at your neighbors]. If you see anything or any area where water stands, fix it, tip it, get rid of it or maintain it regularly,” Sedinger says.
⇧ Fire destroys home near Lake Lowell | KTVB COM
The five-alarm fire broke out in a two-story home on Waterview Road, just west of Lake Lowell. Neighbors reported the fire at about 2:15 p.m.