Denver Real Estate Trends

Blogging on Blogspot now...

Charles Roberts (Your Castle Real Estate) — Thu, 28 May 2009 14:18:19 -0500

I've started another blog on Blogger. Check it out -

CLRHomes.blogspot.com

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Denver RE Trends: Pricing Appreciation Near Light Rail...

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:42:07 -0600

Home appreciation near T-Rex light rail line stations have out-performed the market Other cities such as Portland found that homes near light rail lines have out-performed the market in terms of price appreciation. The newest light rail line on the south east corridor (it was built during the T-REX I-25 expansion) bears this out. In the last two years, the average home within two miles has appreciated 4% while the metro Denver average is off 8%. We've shared this with our clients, and many decide to try to purchase homes near future light rail stops in anticipation of future appreciation.

Denver RE Trends: Colorado Mortgage Brokers

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:38:33 -0600

Colorado Mortgage Broker Licensing

In response to the troubled national real estate market and Colorado’s high volume of home foreclosures, efforts have increased to make higher caliber professionals involved in real estate. Licensing, rules and regulations have become more stringent for agents, appraisers, title companies and mortgage brokers. In regards to mortgage brokers, the below items are mandatory. No longer can someone open up the Yellow Pages, claim to be a mortgage broker and then be compensated for placing a loan --- what a novel concept. Before committing to a mortgage broker, please make sure that they are licensed in Colorado by searching for them on the following link: http://eservices.psiexams.com/crec/search.jsp Licensing All mortgage brokers conducting business in CO must be licensed with the Division of Real Estate and pass the criminal background check. Only those mortgage brokers who are licensed or exempt from licensure by law may broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker. Licensing Sloans Laketration and renewal is $200 every three years. Surety Bond Prior to licensing, an applicant for license shall post with the Director of the Division of Real Estate a surety bond of $25,000. Yearly premium approximately $190.00. Errors & Omissions Coverage All CO mortgage brokers must carry Errors & Omissions coverage. For mortgage brokers with less than five years of experience, the annual premium is $600. With five years or greater lending experience, the premium is $500 per year. New Pre-Licensing Education & Continuing Education 1. Complete 40 hours of licensing education and pass the two-part licensing exam (Mortgage Lending Basics & State and Federal Law) by January 1, 2009. Approximate cost for course is $250 and $74 for the exam. 2. Complete a minimum of nine hours of continuing education every three years.

Denver RE Trends: Market Improving...

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:35:28 -0600

Take a look at AUN (Aurora North).

Note these positive market trends this year: - number of active listings steadily declining - average list price pretty stable (finally!) - U/C up dramatically - Number of sales / month up (partially seasonality) - DOM dropping - Stability in average sold prices and sold price as % of list - Sold price as % original price UP a lot - banks are getting better at pricing - Number of expired listings down Every indicator is improving this year in AUN. You will see the same trends in DSW (southwest Denver County), but not as marked an improvement as AUN. By contrast look at DSE (southeast Denver County). - listings are up (they should be - seasonality) - Note the average list price ($758,000) is a lot higher than the average sold price ($418,000). Lots of expensive listings brining up the average ask price, but apparently they are not selling - DOM (Days on Market) declining as it normally would due to seasonality - Average price declining rather rapidly. Probably a mix issue - smaller, cheaper homes are probably selling better. Since these homes in DSE are pricier, it has more of an effect on the "average" sales price on metro Denver. Oddly, we could see improvement led by the cheapo neighborhoods, with the lux neighborhoods falling behind for a while. It will be interesting to watch. (C) Copyright 2008 Your Castle Real Estate

Denver Investors: Loans?!?

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:33:27 -0600

Topic: Special considerations for Investor loans

The talk around the water cooler these days is all about LOANS. Who can get them? At what price? What if I already have a few loans, do I still qualify? A year or two ago the question was at what price do I get a loan (those were the days!). Today it is "am I still in the game?" Here's the deal: if you have an owner occupied loan and 3 investor loans you cannot buy any more properties and get Fannie Mae / Freddie Mac financing, meaning you can't get a conventional 30-year fixed loan. Now, my hope is that someone reads this and tells me I'm wrong. That would be great! But as far as I know that is the case. Where does this leave you? You can pursue loans that are warehoused by lenders, meaning they are not sold on the backend to Fannie or Freddie. You are probably looking at a minimum of 20% down but more importantly it will be almost impossible to get a 30-year loan. But a 5/1 ARM is not out of the question. (Lenders, please start a dialogue here and let folks know who has what products available.) There is also Hard Money available. I met with a group of high-end Hard Money lenders today to discuss options and the consensus is that they are proceeding…but with extreme caution. A final version is to contact smaller local lenders. You'll need 25% down, but if your story makes sense, you'll get your loan - and usually at an attractive rate. Let me know what your situation is and I'll try to refer you to the right person.

Denver RE Trends: Sewer Scopes

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:32:20 -0600

Topic: Investor Series: Why sewer scopes are important

A LOT of agents don't advise their clients to get sewer scopes when they purchase a property. This is a major mistake. A broken sewer can cost between $3,000 - $10,000 dollars to repair and it only costs $99 ($99Rooter - others are more expensive) to have a tech put a camera down the sewer pipe and videotape the sewer all the way to the mainline. This will tell you and the-buyer what the condition of the sewer is. So let's see, we pay to have the furnace inspected but a new furnace will only be about $2,000. We pay to have the roof inspected but that's probably a $4,000 job. So why don't we always inspect the sewer? One reason is because, let's face it, Realtors want closings. Many figure if they keep their mouth shut and don't go out of their way to recommend a sewer scope that's one less chance the deal will fall through. Inexcusable, but all too commonplace. Don't be a chump - get a sewer scope.

Denver Real Estate Investing: Estimating Rent Amounts

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:28:36 -0600

Topic: Investor Series: Estimating Rents

A lot of clients ask me how to figure out what market rents are in a neighborhood. This is a critical input into the calculations an investor needs to make in order to determine what their return on investment will be on a rental property. So you don't want to screw this up! Unfortunately, this is one of the many figures new investors get wrong. One place people go to get rents is Rent-o-Meter. Rent-o-Meter is billed as an online resource to get accurate market rents. In my experience it is anything but! However, I have a fairly simple solution. Multiply what you see on Rent-o-Meter by 80% and you'll probably be close. I can't explain why but I find rents on Rent-o-Meter to be about 25% high, so multiplying their rents by 80% will get you close (do the math, it works out). So then, how do you get market rents? Simple: start at the subject property and drive concentric circles around the neighborhood. Call every For Rent sign you see (if you don't see any this is a good sign!). Interview the landlords. A subtle but telling sign is how polite the landlords are on the phone. If they act overly solicitous and desperate it's a sign that vacancies are high and they're desperate to get tenants - not a good sign for you. If they are breezy, abrupt, and even rude, that's GREAT! It means they have too many phone calls for their vacancy and it's a strong landlord market. This is what you want to hear! In many neighborhoods around town today this is exactly what you'll find. I know. When the vacancy rate was 13% a few years ago I was very nice over the phone. Now that it's 4%...well, a little less nice. Nothing like good -ol' market research.

Denver Investing: Roofs?

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 13:27:34 -0600

Topic: Investor Series: Things to look for when you look at roofs

Have you ever driven through Aurora North looking for a rental property and taken a close look at the roofs? Here's what you'll see: a bunch of 1950's ranches in varying states of repair or disrepair, lawns that are often grassless, old handcrank windows and roofs in almost perfect condition! This surprised me at first and perplexed me for a long time. Why, in a neighborhood devastated by foreclosures with properties with massive deferred maintenance are the roofs in such condition? Really! Stand in the middle of a typical street and looking at 10 roofs simultaneously, you'll be amazed. Well, it turns out the answer is pretty simple. There was a huge hailstorm in the mid-90's and most of the roofs were replaced by insurance companies then. The result is that while you certainly need to be careful about what you buy in Aurora North, chances are your roof is going to be fine. Thank goodness for small favors.

Denver RE Trends: Seeing a Foreclosure

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 12:59:33 -0600

Topic: Investor Series: Things to keep in mind when seeing a foreclosed home

As investors we face a number of very real and very scary challenges. Making sense of this market is no mean feat and one has to be very careful with his or her investment. However, we usually think about danger as financial. Unfortunately, on rare occasion it can be even worse than that. The majority of the homes investors are buying these days are vacant and once in a while people break in and live in these properties illegally. The last thing you want to do is walk in on someone camped out in a house, perhaps conducting illegal an activity. This is no joke, you want to be HEARD when you walk into a property that is supposed to vacant. So make a lot of noise when you're at the front door. I always knock loudly before entering. Stomp your feet a little. Yell "Hello!" a couple of times. When you start walking down into the basement repeat the process. The goal is to have whoever is inside hear you and not panic and do something stupid. I hope you never need this advice, but keep it in mind the next time you visit a foreclosed home.

Denver Real Estate Trends: Egress Windows

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 12:58:27 -0600

Topic name: Investor Series: Understanding Egress Windows

A lot of investors ask what an egress window is and when one is needed. Technically, it's a window for a room below grade that a municipality has deemed large enough to be safe for exit in case of emergency. While there are some variations, the window needs to be large enough that a firefighter with an oxygen bottle on their back could get in, then carry out an injured person in a fire. Most often, it's associated with a basement bedroom window, making it a legal bedroom. Basement bedrooms without egress windows are illegal. Installing an egress window makes them legal. The confusion is that different cities, counties and agencies have different size requirements and height-above-floor requirements for these windows. Therefore, before you start cutting into the concrete foundation you better make sure you've visited the local building department to get their requirements. In addition, HUD, distributing Section 8 vouchers, also has their own requirements for egress windows. So if you're going to rent to a Section 8 tenant make certain you know what their requirements are. If you don't, you won't get credit for that basement bedroom and get way less rent than you expected - believe me it happens every day. To be honest, there are probably hundreds if not thousands of rentals in Metro Denver that have basement bedrooms without egress windows. In my opinion, this is not only illegal, it's immoral. And if that wasn't enough to discourage you from having one, ask yourself what happens if there is a catastrophic fire and someone dies in your illegal basement bedroom. Not good! For about $1,500 - $2,500 you can get a competent contractor to install an egress window (only one is required per basement bedroom) and sleep better at night.

Denver Investing Trends: Basement Rental Units

Charles Roberts (Your Castle Real Estate) — Sat, 03 Jan 2009 12:57:15 -0600

Topics for Investors: Basement Kitchens

You walk into a property you're looking to buy and rent and you walk down into the basement and voila! you find a full second kitchen. Great! You start calculating how much rent you could get if you could rent the downstairs separate from the upstairs and the cashflow is out of this world! But wait, there are a number of very real problems with this scenario. First of all, it's illegal unless the property is zoned for more than one tenant and the property has been converted to non-residential use. But there are even more practical reasons why having two separate tenants is often not a great idea. The first is the utilities. Since it's a house there will only be one bill for Excel and water. Who's going to pay it? Can you really get the tenants to pro-rate their share if you pay it? Good luck. Or do you just pay it, figuring the extra rent will more than offset paying the utilities? Maybe, but what you'll find is that when a tenant is not paying the utilities they have the heat at 90 degrees all winter and every time you go to the house the kitchen sink is running. Your great cashflow gets eaten up by outrageous utility bills and you're back where you started. For these reasons and many more I suggest you don't try to put two tenants into a property made for one. But that doesn't mean the second kitchen has no value. It might be useful for an extended family who needs the extra space kitchen and might actually command a larger rent. Check with your local building department and your insurance agent though, to make sure it's acceptable to have a basement kitchen in the first place.